A recent rule introduced by the Internal Revenue Service could cost Texas-based financial institutions as much as $25 billion, according the Texas Bankers Association. The rule requires any American banks to send account information about international deposits to the home countries of their account owners. This is in an effort to trade information and identify U.S. citizens who are attempting to avoid paying their taxes. While the measure aims to take in more money for the tax agency, experts say it come at a huge cost for businesses in Texas.
The Texas Bankers Association believes the new IRS regulation could scare foreign account holders to close their accounts and deposit elsewhere. This has prompted the association to join another state’s bankers association in a lawsuit against the IRS and U.S. Treasury Department. The groups claim the rule has already caused millions of dollars in decreased deposits. In fact, banks in Canada and Mexico have begun publicly advertising the rule, as they would not be subject to the rule and thus protect account owners from reports to their home nations.
According to the Texas Bankers Association’s president and chief executive officer, the change will affect both large and small financial institutions across the state. Another official with the group said that Texas banks are concerned the change could affect their lending, economic development and liquidity needs. The Texas Bankers Association also stressed that the measure could allow account owners’ information to reach criminal organizations, potentially leading to kidnappings, extortion or even murders. The association says this threatens to prompt thousands of foreign nationals to withdraw all their funds and seek banks in other countries.
Texas residents who believe the IRS’s newly introduced rule could negatively affect them are encouraged to contact financial and legal experts to learn what they can do to protect their assets and rights.
Source: bizjournals.com, “IRS rule could impact up to $25B in Texas, trade group says” Collin Eaton, Apr. 26, 2013