This past April, the Department of Treasury published final regulations (T.D. 9584) that will require U.S. financial institutions to report payment of interest to non-resident aliens (NRAs) starting Jan. 1, 2013. These rules have been introduced as part of an effort by the U.S. government to work more closely with overseas countries to exchange information on cross border income payments and to combat tax evasion.
It is estimated that upwards of $1 trillion of deposits at U.S. banks are owned directly by individual NRAs. NRAs open accounts in the United States for a variety of reasons, some explicit and some implicit. U.S. accounts facilitate the payment of U.S. bills for business and personal purposes. U.S. accounts are governed by U.S. law, which NRAs appreciate for its predictability and stability. But NRAs also open U.S. accounts to keep their assets shielded and protected from the unpredictable and unstable legal systems of their home countries.
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