IRS Plan to Report on Foreign Bank Clients Comes With Compliance Strings

By Brian Monroe

A U.S. Treasury Department plan to require American banks to report the accounts they maintain for foreign clients is likely to raise compliance costs for the institutions, say tax attorneys. The Internal Revenue Service regulatory proposal, published on Jan. 7, would mandate that U.S. banks annually inform the agency of all interest-bearing accounts held for foreign clients. Under federal rules, U.S. banks now share the data with "certain designated countries," which currently includes only Canada. The plan, which is nearly identical to a 2001 Clinton Administration proposal, is intended to help foster tax data-sharing agreements with other countries, according to...