Over the longtime staunch opposition of IBAT and other banking trade groups, the IRS, as anticipated, issued a final rule last week to require reporting of interest earned on nonresident alien deposits. You may wish to review IBAT’s comment letter on the rule for background and a recap of our concerns. While not an issue for most of our banks, this is a blow to those community banks with this category of deposits as a significant part of their funding mix.
We are hopeful that pending legislation to prohibit the IRS from collecting this information will be successful, and negate what we believe to be misguided policy from the Treasury Department.
Guidance on the final rule is available here.
The rules are applicable to nonresident alien accounts beginning January 1, 2013. We will provide additional information as it becomes available.