The US District Court in the District of Columbia has rejected a challenge filed by the Florida Bankers Association and Texas Bankers Association challenging regulations governing offshore tax avoidance in the Caribbean and other places.
The two banking associations challenged the 2012 amendments to the Department of the Treasury’s interest-reporting regulations.
The regulations require US banks to inform the Internal Revenue Service (IRS) about accounts earning more than $10 of interest beginning in 2013 that are held by nonresident aliens of all countries with which the US has a tax treaty or other information exchange agreement.
The court upheld the regulations’ 2012 amendments, finding that the Internal Revenue Service (IRS) "reasonably concluded that the regulations will improve US tax compliance, deter foreign and domestic tax evasion, impose a minimal reporting burden on banks, and not cause any rational actor, other than a tax evader, to withdraw his funds from US accounts".
Commenting on the ruling, Assistant Attorney General Kathryn Keneally of the Tax Division said: "This ruling advances the Department of Justice’s and IRS’ continuing efforts to pursue taxpayers trying to evade taxes through offshore accounts.
"The court’s opinion today represents an important step in our commitment to work with our treaty partners to eliminate cross-border tax evasion."
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