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“I’m here to tell you that the sky is not falling,” began CTJ Senior Counsel for Federal Tax Policy Rebecca Wilkins as she testified Wednesday before Treasury and IRS officials in favor of new bank regulations to prevent tax evasion by foreigners.
Ten of the twelve witnesses were opposed to the regulations and predicted far-fetched consequences if the regulations are finalized, including massive outflows of capital from the U.S., failing banks, lost jobs, and even murder, extortion, and kidnapping.
The hearing was on proposed regulations that would require banks to report the interest income earned on deposit accounts held by nonresident alien individuals to the IRS in the same way that they report on U.S. customers.
The purpose of the new rules is to allow the IRS to collect information that may be turned over to foreign governments if requested under a Tax Information Exchange Agreement.
Although Wilkins addressed all of the arguments of the opponents, she concluded by saying, “This is really about tax evasion. Those who are opposed to the proposed rules have a vested interest in facilitating tax cheating. The stakes in tax evasion are very high and the forces in favor of maintaining the status quo are well-financed and very politically connected. But it’s the money of honest, tax-paying citizens of all countries that the tax cheats are stealing.”