IRS Sets Up FATCA Data Exchange Service
FATCA Data Exchange Service
The Internal Revenue Service (IRS) has begun International Data Exchange Service (IDES) enrollment. The platform will enable the secure transmission of client data under the Foreign Account Tax Compliance Act (FATCA).
Foreign financial institutions (FFIs) and host country tax authorities (HCTAs) will use IDES to securely send their information reports on financial accounts held by US persons to the IRS under the Foreign Account Tax Compliance Act (FATCA), pursuant to the terms of an intergovernmental agreement (IGA), as applicable.
The US has more than 110 IGAs, either signed or agreed in substance, while more than 145,000 financial institutions have registered through the IRS FATCA Registration System.
“The opening of the IDES is a milestone in the implementation of FATCA,” said IRS Commissioner John Koskinen. “With it, comes the start of a secure system of automated, standardized information exchanges among Government tax authorities. This will enhance our ability to detect hidden accounts and help ensure fairness in the tax system.”
Where a jurisdiction has a reciprocal IGA and the necessary safeguards and infrastructure are in place, the IRS will also use the IDES to provide similar information to the HCTA on accounts in US financial institutions held by the jurisdiction’s residents.
Under FATCA, an FFI commits to the reporting requirement by registering and signing an agreement with the IRS. In most cases, FFIs that do not register with the IRS will be subject to 30 percent withholding on all US-source payments.
FFIs that register under FATCA using the FATCA Online Registration System are issued a Global Intermediary Identification Number and appear on the FFI List published by the IRS. That List is used to determine whether an FFI is registered under FATCA and therefore whether payments to the FFI must be subject to withholding.
The IDES is accessible to enrolled users over the internet and provides for an end-to-end controlled file transfer with enhanced monitoring and security features. The system only accepts encrypted electronic submissions from authorized IDES users, and each authorized user has limited access to the system based on the data-flow model described in their agreement with the US (for example, an IGA or an FFI agreement).
Source: Tax News – IRS Sets Up FATCA Data Exchange Service
