IRS Rules Require Reporting of Bank Interest Paid to Nonresident Aliens

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Banks will have to report deposit interest paid to nonresident aliens as a way to help the United States combat tax evasion through its ability to reciprocate tax information shared by other countries, IRS says in final rules (T.D. 9584). For the first time, the agency specifically says the information would help the U.S. government in reciprocating information gleaned on U.S. accounts in foreign banks under the Foreign Account Tax Compliance Act. IRS slightly tailors the controversial rules (REG-146097-09) it proposed in January 2011 by requiring the reporting only for nonresident aliens from countries with formal exchange information agreements with the United States.