Econintersect: Two weeks ago Econintersect reported on the $32 trillion estimated to be moved offshore from domestic sources from where it originated. The GEI News article 
was entitled Offshore ‘Underworld’. The 05 April 2013 article reported on the year-long investigative journalism efforts of a consortium of The Guardian, BBCPanorama and the Washington-based International Consortium of Investigative Journalists (ICIJ). While some of the activity may be completely legal and have legitimate business and tax management (i.e., legal avoidance) motivation, some undetermined portion may involve illegal activities and tax evasion.
A Reuters story 18 April 2013 brings the ‘underworld’ story much closer to home for Americans.
The IRS and the U.S. Treasury Department issued new regulations effective January 1 of this year requiring banks to report all accounts owned by non-resident aliens for which $10 or more interest is earned in a year. The information can be shared with 72 foreign governments. The United States seeks to work with other countries that provide similar information to the United States to reduce illegal tax evasion.
Banks in two states have filed suit in the federal court in Washington, D.C., represented by their state associations. The Florida Bankers Association and the Texas Bankers Association said the rules unfairly burdened their members while discouraging investments. The suit alleges that privacy concerns will cause millions of deposits to be withdrawn. According to Reuters the complaint says that one of the banks has reported losing $50 million in deposits.
Sources:
- Banker associations sue U.S. over account reporting rule (Joseph Ax, Reuters, 18 April 2013)
- Offshore ‘Underworld’ (GEI News, 05 April 2013)
Hat tip to Roger Erickson.
