Mr. Chairman, I have an amendment at the desk. Mr. Chairman, I would like to thank Chairman Crenshaw for his help on this amendment and for his support on this issue of critical importance to the Florida financial industry. My amendment…
Mr. Chairman, I have an amendment at the desk.
Mr. Chairman, I would like to thank Chairman Crenshaw for his help on this amendment and for his support on this issue of critical importance to the Florida financial industry.
My amendment transfers $1 million from the Internal Revenue Service enforcement division to the IRS office of the inspector general. It is my intent that this money be used to study the impact of IRS nonresident alien bank account reporting and requirements on the United States economy.
The IRS has issued a final regulation requiring all banks in the United States to report to the IRS the amount of interest paid to nonresident alien individual depositors. Now these are people who are not taxpayers, and they do not owe us taxes.
These payments are not subject to U.S. taxes, so these reports do not collect a single penny of additional revenue. This regulation also reverses a 90-year policy that the interest earned by foreign depositors in American banks would not be taxed or reported.
When the IRS first proposed this regulation in 2001, a bipartisan coalition of more than 100 Members of Congress opposed it. The IRS eventually withdrew the crazy proposal.
In 2011, the entire Florida delegation signed a letter to the Internal Revenue Service expressing concern with the economic impact of this policy, and I thank my colleague, Debbie Wasserman Schultz, for taking the lead on that initiative.
On July 25, 2012, the House passed my amendment to H.R. 4078, the Red Tape Reduction and Small Business Job Creation Act, which would have prevented the IRS from enforcing the IRS nonresident alien reporting requirement. The amendment was passed with bipartisan support, but the Senate failed to take up the bill.
The IRS regulation places United States banks at a global disadvantage relative to foreign banks that lack such reporting requirements. Furthermore, United States banks hold $500 billion in nonresident alien bank accounts.
Millions of dollars have already been withdrawn by foreign depositors, and it only promises to get worse. Because every dollar in bank deposits generates nearly $9 in lending, these withdrawals will reduce the amount of credit available to individual and commercial borrowers, hurting the United States' economy at a time when we need to be recovering, not suffering worse.
A similar IRS program imposes a requirement on foreign financial institutions to report information on accounts held by Americans overseas. This has already resulted in foreign banks canceling banking services to U.S. citizens to avoid compliance costs.
For these reasons, I ask that the money transferred to the IRS inspector general be used to conduct an economic impact study of these policies, including an analysis of the effect on capital
levels, capital flight, safety and soundness, and changes to public confidence in depository financial institutions, something Treasury is arguably required to do already under current law, but has refused to do.
I include a letter of support from the Credit Union National Association and the World Council of Credit Unions to be entered into the Record.
Credit Union National Association, Inc., and World
Council of Credit Unions, Inc.,
July 14, 2014.
Hon. Bill Posey,
House of Representatives,
Washington, DC.
Dear Representative Posey: On behalf of the Credit Union
National Association (CUNA) and the World Council of Credit
Unions (World Council), we are writing to thank you for your
efforts to address the difficulties and compliance costs
associated with the newly-implemented Foreign Account Tax
Compliance Act (FATCA). CUNA is the largest credit union
advocacy organization in the United States, representing
America's state and federally chartered credit unions and
their 99 million members. World Council is the leading trade
association and development organization for the
international credit union movement. Worldwide, there are
nearly 56,000 cooperatively owned credit unions in 101
countries with approximately $1.7 trillion in total assets
and 200 million credit union members.
FATCA is designed to create a tax information reporting and
withholding system for certain payments that are made to
financial institutions and other entities. The FATCA statute
passed by Congress in 2010 requires foreign financial
institutions to register with the IRS and detect taxable
account activity by U.S. citizens in foreign countries; these
requirements are making it difficult for U.S. citizens living
overseas, including American credit union members, to
maintain access to financial services in the countries where
they live. The Internal Revenue Service's (IRS) FATCA
regulation also requires U.S.-based financial institutions,
including U.S. credit unions, to conduct due diligence and
tax withholding on international funds transfers even though
the FATCA statute passed by Congress made no mention of U.S.-
based credit unions or banks.
CUNA and the World Council support the amendment you intend
to offer to HR. 5016, the Financial Services and General
Government Appropriations Act of 2015. Your amendment would
transfer $1 million in finding for the Internal Revenue
Service (IRS) enforcement division and instead provide $1
million to the IRS Inspector General's office to conduct an
economic impact study of FATCA. We believe this study is
necessary given the complexity of implementing FATCA, the
complex rulemaking that has taken place, and the myriad
unintended consequences of the law on U.S. financial
institutions and U.S. citizens living abroad.
We appreciate all of your work to ensure that credit unions
remain focused on their mission of serving their members
rather than spending precious time and resources complying
with unduly burdensome regulations.
On behalf of America's credit unions and around the globe,
thank you for offering this amendment. We look forward to its
consideration and enactment.
Sincerely,
Bill Hampel,
President & CEO, Credit Union National Association, Inc.
Brian Branch,
President & CEO, World Council of Credit Unions, Inc.
I yield to the gentleman from Florida (Mr. Crenshaw).
Mr. Chairman, I reserve the balance of my time.
Mr. Chairman, I yield myself the balance of my time.
This legislation would not be necessary if the IRS or the Treasury had already done what was required by law. When you promulgate a rule that has over a $100 million impact on the private sector, you are supposed to do a cost-benefit analysis, and they refused to do it in this case.
They took the position that, well, it doesn't cost that much money just to fill out a little form and try and rat out foreign bank depositors here.
The reality is studies show it clearly will have a multibillion- dollar impact.
I yield back the balance of my time.