• Final Regulations Implementing Nonresident Alien Deposit Interest Reporting
  • May 24, 2012 | Author: Edward Tanenbaum
  • Law Firm: Alston & Bird LLP - New York Office
  • The United States has maintained a longstanding policy of not taxing bank deposit interest of nonresident aliens as a way in which to encourage foreign investment in U.S. banks. Furthermore, except with respect to nonresident aliens from Canada, the United States has not required the reporting of such bank deposit interest income to the IRS. On April 19, 2012, however, the IRS reversed this policy of the non-reporting of bank deposit interest. Pursuant to new final regulations under Sec. 6049 (T.D. 9584) (the “final regulations”), deposit interest income will still not be taxed, but when paid to certain nonresident aliens, it must soon be reported to the IRS. The final regulations under Treasury Regulations § 1.6049-4(b)(5)(i) and § 1.6049-8 will require U.S. financial institutions to report certain deposit interest aggregating $10 or more paid to nonresident alien individuals commencing on or after January 1, 2013.