April 17 (Reuters) – Banks in Texas, Florida and other
southern states could face a pull-out of non-U.S. depositors due
to a new U.S. rule finalized on Tuesday, industry analysts said.
The rule issued by the Internal Revenue Service will require
U.S. banks, starting on Jan. 1, 2013, to report to the IRS
payments of interest made to non-resident aliens.
“The reporting required by these regulations is essential to
the U.S. government’s efforts to combat offshore tax evasion,”
said an IRS statement announcing the rules’ finalization.
The IRS wants to share interest payment information that it
gets under the rule with foreign governments in an effort to get
them to share more information with the United States.
Two Florida Republicans in the U.S. Congress have introduced
legislation that would block the IRS’ action, citing concerns
it could trigger a flight of non-resident capital.
“The claim that the proposed regulations will cause
nonresidents to pull their money out of U.S. banks isn’t
supported by past experience,” said Emily McMahon, the Treasury
Department’s acting assistant secretary for tax policy last
month in a letter to the editor of the Miami Herald newspaper.
Foreigners have many reasons for depositing money in U.S.
banks beyond reporting considerations, she said.
Guggenheim Partners financial policy analyst Jaret Seiberg
said the new rule “raises the risk that depositors in border
states will pull their cash from U.S. banks. At its worst, this
could threaten the viability of some of these banks.”
Capital from Latin America is a particular concern.
“We would note that banks in Florida and Texas were
especially active in arguing against this rule, which we believe
indicates that they have the most at risk,” he added.
(Reporting By Kevin Drawbaugh; editing by Andre Grenon)
