WASHINGTON — Treasury Secretary Timothy Geithner sought Wednesday to soothe concerns from banks about a soon-to-be-released Internal Revenue Service rule that will require U.S. banks to report interest on accounts held by certain foreigners.

Banks, particularly those located in states like Texas and Florida that have a large share of deposits from residents of Latin American countries, argue the IRS plan may spark a flurry of withdrawals as depositors seek to evade the reporting requirement.

But Geithner downplayed those fears, which have been raised by many on Capitol Hill, during an appearance before a House appropriations subcommittee.

Geithner was responding to comments from Rep. Mario Diaz-Balart, a Florida Republican, about the rule's impact on Florida's economy and about the potential danger posed to wealthy residents of countries such as Venezuela and Mexico. Diaz-Balart argued that those people could be endangered if authorities in their countries leaked information about their U.S. assets.

"This proposed rule, in my opinion, would have a devastating effect on the economy of a number of states, including the one that I represent. And I think it would potentially put people, lives at risk," Diaz-Balart said.

Geithner responded, "We expect to come out with it soon. And we think you're going to find it reassuring in the sense that it's not going to carry the risk you're concerned about."

"I've heard from a number of members of Congress about those concerns and talked to many of you," Geithner added. "And maybe just for the rest of the group, it's worth pointing out that we cannot share and will not share information with countries we do not have tax agreements with, or tax information sharing agreements with, and where countries do not have adequate safeguards in place to protect the confidentiality of those exchanges."

"And because of that, I am much less concerned about the concerns you raised, that this rule would be damaging to banks in your state or elsewhere."

Under the IRS proposal, banks would have to report interest earned in individual accounts by a category of people known as non-resident aliens. Often these people spend part of the year in the United States, but they are citizens and residents of another country.

Supporters of the IRS regulation, which was proposed in January 2011, argue that it will aid in the fight against tax evasion.

Interest on foreigners' bank deposits is not taxable in the United States, but the money in those accounts could be evidence of tax evasion in another country. If the U.S. tax authorities had more information about those accounts, they could share it with officials in nations with which the United States has tax treaties.

Venezuela and Mexico are on the list of countries that have tax agreements with the United States.

But Geithner's comments seemed to suggest that the IRS will not turn over information about foreign-held U.S. bank accounts merely because a nation has a tax agreement with the United States. Rather, the Treasury secretary suggested, the IRS will also need to be assured that foreign governments are going to protect the confidentiality of the information.

Opponents of the IRS proposal include the Independent Community Bankers of America and the American Bankers Association.

In a letter Wednesday to Diaz-Balart, ABA President Frank Keating wrote that the IRS rule will weaken the U.S. economy by squeezing the ability of community banks to hire and make loans.

"Moreover, this proposal adds additional burdens to financial institutions that are currently in the process of implementing and complying with three new tax reporting rules," Keating wrote.

Ten years ago, the IRS attempted to impose the same regulation, but it received blowback from Congress. Ultimately, the IRS adopted a regulation in 2002 that limits the rule's application to depositors from Canada.

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