Clearing House Association L.L.C.

Clearing House Association L.L.C., letter

Dear Chairman Neal and Ranking Member Tiberi:

The Clearing House Association L.L.C. (‘‘The Clearing House’’), an association of
major commercial banks,1 welcomes the opportunity to present comments on the
Foreign Account Tax Compliance Act of 2009 introduced by the Chairmen of the
House Ways and Means and Senate Finance Committees on October 27, 2009 (the
‘‘Bill’’). We believe a detailed and thoughtful comment letter that represents the
views of our members will be the most helpful to you. Therefore, we intend to submit
a more detailed comment letter that will express our members’ views and concerns
once we have had the opportunity to fully review and discuss these matters.

In recognition of the November 19th deadline for submitting written comments to
be included in the record of the November 5th hearing on the Bill we wanted to
inform you of the provisions of the Bill upon which we expect to comment, including:
(i) the provisions in Section 101 of the Bill that impose a 30% withholding tax on
all US-source payments received by a foreign financial institution unless that institution
(and each of its foreign affiliates) enters into an agreement with the Treasury
Department to report certain customer information; (ii) the provisions in Section 101
of the Bill that require withholding on payments to foreign entities that have not
identified their substantial U.S. owners; (iii) the provisions of Section 102 of the
Bill, which would repeal the exception to registration for foreign targeted issuances
(i.e., the bearer debt provisions); (iv) the provisions of Section 301 that would require
a ‘‘material advisor’’ to notify the IRS if they assist a U.S. individual in the
direct or indirect acquisition of a foreign entity; (v) the provisions in Sections 201,
202 and 203 of the Bill that relate to newly proposed FBAR-like reporting by holders
of foreign assets; and (vi) the provisions in Section 501 of the Bill that would
impose a withholding tax on dividend equivalent amounts. Perhaps most importantly
we expect to comment on, and suggest several changes to, the effective dates
in the Bill as the Bill would impose substantial new reporting requirements that
would take substantially more time to implement than the current effective dates
contemplate. We expect that our comments will include suggestions that further the
policies espoused by the Bill’s sponsors while minimizing the burdens that would
be placed upon financial institutions and others by the Bill as currently drafted.
We would also like to express our concurrence and support of the views set forth
in the November 19, 2009 letter sent to you by Securities Industry and Financial
Markets Association.

We appreciate your consideration of these comments and those to be set forth in
our upcoming letter. If you have any questions or if the members of The Clearing
House can assist you in considering these important issues, please contact me at
(212) 612–9234.
Sincerely,

JRA:kp

1The members of The Clearing House are: ABN AMRO Bank N.V.; Bank of America, National
Association; The Bank of New York Mellon; Citibank, N. A.; Deutsche Bank Trust Company
Americas; HSBC Bank USA, National Association; JPMorgan Chase Bank, National Association;
UBS AG; U.S. Bank National Association; and Wells Fargo Bank, National Association.
Accordingly, a foreign financial institution would be required to withhold or report,
obtain the necessary certification, etc. and a non-financial foreign entity would be
required to treat all trusts as a ‘‘substantial U.S. owner.’’ Such monitoring and review
of trust documentation will be nearly impossible. Foreign financial institutions
may have thousands of trust accounts, which would place the foreign financial institution
at risk.