The qualified intermediary program allows foreign financial institutions to assume certain tax responsibilities ordinarily borne by U.S. withholding agents. The purpose of the program is to collect more foreign taxpayer information by creating a more direct link between the I.R.S. and recipients of foreign income payments. By accepting more responsibility, qualified intermediaries are provided numerous benefits that make business less costly. Nevertheless, the program has recently come under attack due to perceived abuse by wealthy U.S. citizens who use the system to evade income taxes. In response, the Obama Administration proposes numerous changes to the program, intended to strengthen it. But these changes fail to appreciate the balance of values at stake in reforming the qualified intermediary system. This Note argues that until more benign changes are made, the unique jurisdictional dilemma created by the U.S. international income tax system should not be solved by shifting from a “carrot” to a “stick” approach for foreign intermediaries.