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October 09, 2013
Groups challenge IRS on interest reporting
Oct. 9, 2013 – IRS's final rule requiring reporting of interest paid to nonresident aliens is being challenged by the Florida and Texas Banking Associations, which filed a request for summary judgment Friday.
The final rule, published this April, requires banks, credit unions, savings associations and others to file reports with the IRS on annual interest payments of $10 or more to nonresident aliens regardless of where they reside; this is greatly expanded from the previous rule, which focused on Canadian residents.
The expanded requirements apply to payments of interest made after Jan. 1, 2013. NAFCU opposed the rule when it was proposed, citing undue regulatory burden for credit unions.
The final rule, published in April, requires banks, credit unions, savings associations and others to file reports with the IRS on annual interest payments of $10 or more to nonresident aliens regardless of where they reside; this is greatly expanded from the previous rule, which focused on Canadian residents. NAFCU opposed the rule when it was proposed, citing undue regulatory burden for credit unions.
The current lawsuit challenges the rule, stating it is not for the purpose of determining tax liability, since nonresident aliens are not required to pay federal income tax. Instead, it is to provide IRS information it may exchange with treaty partners.
The suit is in the U.S. District Court for the District of Columbia. IRS has 30 days to respond to the request for summary judgment.
The final rule, published this April, requires banks, credit unions, savings associations and others to file reports with the IRS on annual interest payments of $10 or more to nonresident aliens regardless of where they reside; this is greatly expanded from the previous rule, which focused on Canadian residents.
The expanded requirements apply to payments of interest made after Jan. 1, 2013. NAFCU opposed the rule when it was proposed, citing undue regulatory burden for credit unions.
The final rule, published in April, requires banks, credit unions, savings associations and others to file reports with the IRS on annual interest payments of $10 or more to nonresident aliens regardless of where they reside; this is greatly expanded from the previous rule, which focused on Canadian residents. NAFCU opposed the rule when it was proposed, citing undue regulatory burden for credit unions.
The current lawsuit challenges the rule, stating it is not for the purpose of determining tax liability, since nonresident aliens are not required to pay federal income tax. Instead, it is to provide IRS information it may exchange with treaty partners.
The suit is in the U.S. District Court for the District of Columbia. IRS has 30 days to respond to the request for summary judgment.
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