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Issue Number: IR-2015-01Inside This Issue
IRS Launches
International Data Exchange Service; Supports Reporting under FATCA and
Intergovernmental Agreements
IR-2015-01, Jan. 12, 2015
WASHINGTON — The Internal Revenue Service announces
the opening of the International Data Exchange Service (IDES) for enrollment.
Financial institutions and host country tax authorities will use IDES to
securely send their information reports on financial accounts held by U.S.
persons to the IRS under the Foreign Account Tax Compliance Act (FATCA) or
pursuant to the terms of an intergovernmental agreement (IGA), as
applicable.
More
than 145,000 financial institutions have registered through the IRS FATCA
Registration System. The U.S. has more than 110 IGAs, either signed or agreed in
substance. Financial institutions and host country tax authorities will use IDES
to provide the IRS information reports on financial accounts held by U.S.
persons.
“The
opening of the International Data Exchange Service 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 jurisdiction has the necessary
safeguards and infrastructure in place, the IRS will also use IDES to provide
similar information to the host country tax authority on accounts in U.S.
financial institutions held by the jurisdiction’s residents.
Using
IDES, a web application, the sender encrypts the data and IDES encrypts the
transmission pathway to protect data transfers. Encryption at both the file and
transmission level safeguards sensitive tax information.
Host
country tax authorities in Model 2 IGA jurisdictions and financial institutions
are encouraged to begin the enrollment process well in advance of their
reporting deadline. To begin transmitting information in IDES, a financial
institution or tax authority will need to first obtain a digital certificate.
Digital certificates bind digital information to physical identities and provide
data integrity. IDES stores each user’s public key and related digital
certificate. All IDES enrollees (including host country tax authorities) must
obtain a proper digital certificate in order to enroll; there is a list of
approved Certificate Authorities available on irs.gov.
For
host country tax authorities in Model 1 IGA jurisdictions, the IRS will directly
notify them to let them know when it is time to enroll. Financial institutions
will initiate enrollment online on their own; in order to enroll, the financial
institution will need to have registered as a participating financial
institution through the IRS FATCA Registration System and have a global
intermediary identification number (GIIN) that appears on the IRS FATCA FFI
list. The online address for IDES enrollment can be found here.
IDES runs on all major browsers, including Chrome, Internet Explorer, Safari,
and Firefox and will support application-to-application exchanges through the
SFTP transmission protocol enabling a wide variety of users to interact with
IDES without building additional infrastructure to support
transmission.
Further information
on IDES can be found here. The IDES User Guide with instructions for enrolling
and using the IDES can be found here. The IRS has posted
Frequently Asked Questions about FATCA and IDES on irs.gov and will
continue to update the FAQs as questions are received. In addition, there is a
comments link on irs.gov to submit questions specifically on IDES and another for
other FATCA-related questions.
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