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Policy: Budgets & Deficits

US to use tax law on Russian banks

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Photo - FILE - This March 22, 2013, file photo, shows exterior of the Internal Revenue Service building in Washington. As the United States attempts to punish Russia for its actions in Ukraine, the Treasury Department is deploying an economic weapon that could prove to be more costly than sanctions: the Internal Revenue Service. This summer, the U.S. plans to start using a new anti-tax evasion law that will make it much more expensive for Russian banks to do business in America. (AP Photo/Susan Walsh, File)
FILE - This March 22, 2013, file photo, shows exterior of the Internal Revenue Service building in Washington. As the United States attempts to punish Russia for its actions in Ukraine, the Treasury Department is deploying an economic weapon that could prove to be more costly than sanctions: the Internal Revenue Service. This summer, the U.S. plans to start using a new anti-tax evasion law that will make it much more expensive for Russian banks to do business in America. (AP Photo/Susan Walsh, File)
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WASHINGTON (AP) — The United States is planning to use an anti-tax-evasion law to punish Russia for its actions in Ukraine, a tactic that could prove to be more costly than sanctions.

The law was passed in 2010, long before the crisis in Ukraine. But it could become a powerful economic weapon.

Starting July 1, the law targets foreign financial institutions that don't agree to share information about U.S. account holders with the Internal Revenue Service.

Russia had been negotiating an information-sharing agreement with the U.S. But after Russia annexed Crimea and was seen as stoking separatist movements in eastern Ukraine, the Treasury Department suspended talks.

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