Federal Court Rejects Efforts to Diminish Measures Aimed at Reducing Offshore Tax Avoidance

more+
less-
more+
less-

As of January 1, 2013, United States banks were required to report to the IRS interest earned by nonresident aliens who are residents of certain foreign countries. The reporting requirement previously existed for accounts held by nonresident aliens residing in Canada, but now extended to all other countries with which the United States had an income tax treaty or information exchange agreement.

Holland & Knight attorneys, Victor Perez and Daniel Martinez, wrote about the legislation shortly after the United States Department of the Treasury issued the final regulations on April 19, 2012. Click link to read more

Last year the Florida Bankers Association and Texas Bankers Association filed a lawsuit seeking to have the 2012 Final Regulations dismissed as being overly burdensome and on the grounds that they would discourage foreign investment from residents of countries with unstable or corrupt governments.

On January 13, 2014, the District Court in the District of Columbia dismissed the lawsuit. (Click for memorandum of dismissal.) Judge James E. Boasberg wrote that "[r]eciprocity is the key to success in such treaties. If the United States does not gather and report tax information for foreign accountholders, then other countries have little incentive to provide us with similar information."

In a Department of Justice news release announcing the dismissal of the lawsuit, Assistant Attorney General Kathryn Keneally of the Tax Division stated, “[t]his ruling advances the Department of Justice’s and Internal Revenue Service’s continuing efforts to pursue taxpayers trying to evade taxes through offshore accounts. The court’s opinion today represents an important step in our commitment to work with our treaty partners to eliminate cross-border tax evasion." (click link for Justice release.)

- See more at: http://www.hklaw.com/TaxBlog/Federal-Court-Rejects-Efforts-to-Diminish-Measures-Aimed-at-Reducing-Offshore-Tax-Avoidance-01-21-2014/#sthash.8eoPkYaF.dpuf

As of January 1, 2013, United States banks were required to report to the IRS interest earned by nonresident aliens who are residents of certain foreign countries. The reporting requirement previously existed for accounts held by nonresident aliens residing in Canada, but now extended to all other countries with which the United States had an income tax treaty or information exchange agreement.

Holland & Knight attorneys, Victor Perez and Daniel Martinez, wrote about the legislation shortly after the United States Department of the Treasury issued the final regulations on April 19, 2012. Click link to read more.

Last year the Florida Bankers Association and Texas Bankers Association filed a lawsuit seeking to have the 2012 Final Regulations dismissed as being overly burdensome and on the grounds that they would discourage foreign investment from residents of countries with unstable or corrupt governments.

On January 13, 2014, the District Court in the District of Columbia dismissed the lawsuit. (Click for memorandum of dismissal.) Judge James E. Boasberg wrote that "[r]eciprocity is the key to success in such treaties. If the United States does not gather and report tax information for foreign accountholders, then other countries have little incentive to provide us with similar information."

In a Department of Justice news release announcing the dismissal of the lawsuit, Assistant Attorney General Kathryn Keneally of the Tax Division stated, “[t]his ruling advances the Department of Justice’s and Internal Revenue Service’s continuing efforts to pursue taxpayers trying to evade taxes through offshore accounts. The court’s opinion today represents an important step in our commitment to work with our treaty partners to eliminate cross-border tax evasion." (click link for Justice release.)

Written by:

Published In:

IRS
Tax

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Holland & Knight LLP | Attorney Advertising

Don't miss a thing! Build a custom news brief:

Read fresh new writing on compliance, cybersecurity, Dodd-Frank, whistleblowers, social media, hiring & firing, patent reform, the NLRB, Obamacare, the SEC…

…or whatever matters the most to you. Follow authors, firms, and topics on JD Supra.

Create your news brief now - it's free and easy »

All the intelligence you need, in one easy email:

Great! Your first step to building an email digest of JD Supra authors and topics. Log in with LinkedIn so we can start sending your digest...

Sign up for your custom alerts now, using LinkedIn ›

* With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name.
×
Loading...
×