Rep. Charles Boustany (R-La.), chairman of the House Ways and Means Committee, sent a letter (PDF) Tuesday demanding that the Internal Revenue Service (IRS) suspend its proposed regulation that would require banks to disclose the amount of interest paid to nonresident aliens.
In the letter to Treasury Secretary Timothy Geithner and IRS Commissioner Doug Shulman, Boustany wrote that the regulation could potentially drive foreign investment out of the U.S. economy and reduce access to capital. He called for a Treasury-provided cost-benefit analysis detailing the administrative burdens of the regulation before the IRS approves it.
“This is not the first time the IRS has attempted to issue this regulation,” Boustany wrote. “At the close of the Clinton Administration, the IRS tried to put in place similar reporting requirements. However, after members of Congress, the Federal Deposit Insurance Corporation, and the U.S. Small Business Administration raised strong concerns, the proposal was eventually withdrawn. It is disappointing to see the IRS once again try to impose unnecessary regulations and costs on U.S. banks.”
Under Executive Order 12866, agencies are required to conduct a cost-benefit analysis of all “significant regulatory action.”
What do you think? Would the proposed regulation prove too burdensome for banks? How would the economy be affected?