Published On: Thu, Oct 8th, 2015

U.S. bankers associations seek to protect depositors’ privacy

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WASHINGTON — The Texas and Florida Bankers Associations have requested a rehearing before the U.S. Court of Appeals (D.C. Circuit) of its August decision to dismiss their case challenging the validity of 2012 IRS regulations requiring deposit interest income to be reported and setting up an exchange agreement on U.S. bank accounts held by Mexican and other non-U.S. citizens.

James Butera, with the law firm of Jones Walker LLP in Washington, D.C., represents the two bankers associations.  He said the initial appellate decision was on procedural grounds rather than the merits of the case revolving around the dangers of having the personal asset information of individuals exchanged without proper inter-governmental safeguards in place.

Eric Sandberg, president of the Texas Bankers Association said, “It is important that the public have the right facts in order to avoid any confusion. U.S. banks are not reporting any information to Mexican tax authorities directly nor are they required to do so.”

According to William Gerhardt, Tax Consultant at Padgett, Stratemann & Co., L.L.P,  “Contrary to recent news reports in Mexico, we have no information that an exchange of financial information under the regulations before the court has actually commenced. Those regulations are separate from the Foreign Account Tax Compliance Act (FATCA) which requires foreign financial institutions to report to the IRS on accounts held by U.S. taxpayers and the two are often confused.”

Sandberg added that in the past week, some Texas banks, particularly in border areas, have been receiving calls about the reports from worried foreign depositors.  “These individuals look to the U.S. for the safety and security of its banking system and there is no reason that should change.”

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You may also find of interest: http://www.theyucatantimes.com/2015/09/u-s-irs-and-mexican-sat-begin-sharing-info-on-bank-accounts/ 

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In its filing this week, the Florida and Texas Bankers Associations are requesting a hearing before the full U.S. Court of Appeals in Washington, D.C. According to Butera, “The litigation continues with the latest step being the Court of Appeals ordering the government to file a reply brief to our petition for a rehearing en banc.”

In the litigation, the Florida and Texas Bankers Associations argue the following:

•           This is not a case about U.S. tax avoidance, as interest earned by foreign non-residents on bank accounts is not subject to federal taxation in the United States;

•           All bank accounts in the United States are already subject to extensive depositor identification requirements, including strict controls under the Bank Secrecy Act;

•           Bank deposit information is already accessible by federal tax and law enforcement agencies, as well as state and local authorities, through individual administrative requests;

•           The concern on the part of the banking industry is the new feature of the regulation calling for the sharing of depositor information with home countries including countries where bank customers understandably fear the unauthorized release of their personal financial data.

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About the Florida Bankers Association: The Florida Bankers Association allows Florida financial service providers to work in unity to influence the state and federal legal and regulatory environment in which they serve their customers.  Established in 1888, the FBA is one of Florida’s oldest trade associations and has a membership of approximately 300 financial institutions ranging in size from small community banks, thrifts, and trust companies to medium sized banks operating in several parts of the state, to large regional financial institutions that are headquartered in Florida or outside the state. 

About the Texas Bankers Association: Representing all Texas banking institutions, the Texas Bankers Association brings together community and regional banks and branches, bank holding companies and saving institutions.  Founded in 1885, TBA is the largest and oldest state bankers association in the nation.  The association is located in Austin and is governed by a board of directors representing member banks of all asset sizes from across the state.

Source:  Florida and Texas Bankers Association

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