Banker associations sue U.S. over account reporting rule
NEW YORK (Reuters) - Two state banker associations sued the U.S. on Thursday over new rules requiring banks to report account information for non-resident aliens to their home governments as part of an effort to combat tax evasion.
In a lawsuit filed in the federal court in Washington, D.C., the Florida Bankers Association and the Texas Bankers Association said the rules which went into effect on January 1 unfairly burdened banks while discouraging investments.
The information, collected by the Internal Revenue Service, can be shared with 72 foreign governments, as the United States seeks to work with other countries that provide similar information to the United States to reduce tax evasion.
The lawsuit, which names the IRS and the Treasury Department as defendants, claimed that privacy concerns about exchanging such information with foreign countries is prompting non-resident aliens to withdraw millions of dollars from U.S. banks.
One member bank reported losing $50 million in deposits, according to the complaint.
A spokeswoman for the IRS declined to comment on pending litigation, while a spokeswoman for the U.S. Treasury Department said the lawsuit is being reviewed.
The new rules require financial institutions to provide the IRS with details about any non-resident alien whose account earns at least $10 a year in interest.
The bankers associations said in the lawsuit that the government failed to take account of the rules' economic impact, in violation of federal administrative procedures.
The case is Florida Bankers Association v. U.S. Department of Treasury, U.S. District Court for the District of Columbia, No. 13-529.