Mexicans worried about disclosure rules for U.S. banks
Share Now on:
Mexicans worried about disclosure rules for U.S. banks
Jeremy Hobson: It is Tax Day, so if you haven’t filed yet, you might be trying to figure out the difference between line 42a and 42b or whatever on your tax form. Well, get ready for another potential rule.
The IRS wants to require U.S. banks to report the interest payments they make to wealthy foreigners. That’s creating some trouble down on the Mexican border where banks are worried
about losing customers.
From KUT in Austin, Texas, Nathan Bernier reports.
Nathan Bernier: The IRS is trying to hunt down tax evaders. In order to do this, they created a deal with other countries. They’ll track down information on U.S. banks and the IRS will get information from banks in other countries.
But here’s the problem.
John Dorsey: As you may know, Mexico is undergoing a period of unfortunate political instability, and a significant number of those clients are concerned about information being shared by the Internal Revenue Service with Mexico’s tax authority that could be placed into the wrong hands.
That’s John Dorsey. He’s a tax attorney in Austin, and his client list includes many rich Mexican citizens. By the wrong hands, he means the drug cartels.
Dorsey: The real risk in Mexico is kidnapping and security.
Some Mexican nationals are already pulling out their money. And that scares banks, according to John Heasley with the Texas Bankers’ Association. His informal survey suggests Texas banks hold at least $20 billion in deposits from foreigners — and most of that comes from Mexico.
John Heasley: Many banks have 40, 50, 60, 70 percent of their deposits. Obviously it is more extensive in places like Laredo and San Antonio. If that kind of capital leaves, it could cause a liquidity crisis.
Opponents of the proposed rule have some powerful political allies, including Florida Sen. Marco Rubio and both Senators here in Texas, John Cornyn and Kay Bailey Hutchison. But others say the banks are just trying to scare people.
Rebecca Wilkins: I think their claims are greatly exaggerated.
Rebecca Wilkins is with Citizens for Tax Justice, a nonprofit that helps low- and middle-income families. She thinks depositors have nothing to fear from regulations as long as their money is legitimate.
Wilkins: I think those are depositors who are hiding their money and not paying taxes on it in their home country. And I wonder do we really want to protect a bank whose primary business is facilitating tax evasion?
The IRS will not comment on the rule and won’t say when it could take effect. But either way, banks won’t have to start reporting interest paid to foreigners any time before Jan. 1st.
In Austin, I’m Nathan Bernier for Marketplace.
There’s a lot happening in the world. Through it all, Marketplace is here for you.
You rely on Marketplace to break down the world’s events and tell you how it affects you in a fact-based, approachable way. We rely on your financial support to keep making that possible.
Your donation today powers the independent journalism that you rely on. For just $5/month, you can help sustain Marketplace so we can keep reporting on the things that matter to you.
