US financial institutions will be required to report to the IRS interest payments made to certain nonresident alien individuals

US financial institutions will be required to report to the IRS interest payments made to certain nonresident alien individuals

Beginning on December 21, 2012, US financial institutions will be required to report to the IRS interest payments made to certain nonresident alien individuals. The new regulations were enacted in concert with the Foreign Account Tax Compliance Act, which provides for a greater exchange of tax information between member countries. While the new regulations do change the reporting requirements, they do not alter IRS regulations which allow nonresidents to avoid taxation on interest income. However, the IRS regulations alter 50 years of tax law that encouraged nonresident aliens to bank within the U.S. free from reporting requirements.

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