(Citco) The US Department of Treasury introduced new rules that will require US financial institutions to report payment of interest to non-resident aliens starting January 1, 2013.
It is important to note that this legislation is NOT PART OF FATCA legislation and is NOT POSTPONED. Therefore, it will start on January 1, 2013 as indicated.
These rules have been introduced as part of an effort by the US government to work more closely with overseas countries to exchange information on cross border income payments and to combat tax evasion.
The key features of this new regulation are the following:
· The reporting requirement only pertains to interest paid to non-resident individuals (not to corporations such as a company established in the BVI);
· It applies to payments of interest made on or after January 1, 2013;
· The reporting requirement applies to a broad range of financial institutions –banks, brokerage firms, credit unions, insurance companies– but only to interest paid on deposits maintained at the US offices of these institutions (and not at overseas offices or branches);
· The exchange of information will not be automatic (except with Canada under pre-existing rules), but only upon request, although the Treasury Department indicated that this may change in case certain countries agree to automatic exchange of information with the USA going forward. Several European countries –France, Germany, Italy, The Netherlands, Spain and The United Kingdom– are already discussing automatic exchange of information with the USA;
New US Tax Rules have you Puzzled?
Contact the Tax Lawyers at Marini & Associates, P.A. for a FREE Tax Consultation at www.TaxAid.us or www.TaxLaw.ms or Toll Free at 888-8TaxAid (888 882-9243).