William Byrnes' Tax, Wealth, and Risk Intelligence

International Data Exchange Service

The IRS is finalizing requirements for a Data Exchange service to allow for Financial Institutions (FIs) and Host Country Tax Administrations (HCTAs) to automatically exchange FATCA data with the United States.  The Service will also allow the United States to make reciprocal exchanges where called for by an IGA that is in force.  The International Data Exchange Service:

• Is based on business requirements collected by a multilateral working group
• Serves as a single point of FATCA information delivery for both FIs and HCTAs
• May be used for automatic exchange with all FATCA jurisdictions
• Is based on readily-available mature technology
• Requires both the file being sent (in the Intergovernmental FATCA XML Schema) and the transmission pathway to be encrypted, ensuring the security of tax data
• Can be accessed either through a Browser-Based or a Scheduled Bulk Data Transfer environment

Intergovernmental FATCA XML Schema

The IRS has finalized the format for automatically exchanging FATCA data with IGA jurisdictions.  The Intergovernmental FATCA XML Schema (version 1.1):

• Is a standard format developed in close cooperation with the OECD
• Captures required information for reporting of FATCA data from both Financial Institutions (FIs) and Host Country Tax Administrations (HCTAs)
• Will be used for automatic exchange with all FATCA jurisdictions
• Uses elements from existing reporting schemas used by the OECD and the European Union to reduce burden on reporting entities
• Uses XML to allow for easier modifications down the road in the event of legislative or regulatory changes in reporting rules
• Will facilitate safe and secure electronic data transmission using the  International Data Exchange Service

IRS Guide For Using the Intergovernmental (IGA) FATCA XML Schema

The newly published IRS Guide to completing the schema pursuant to an IGA explains the information required to be included in each data element of the FATCA XML schema v1.1. The guide is divided into logical sections based on the schema and provides information on specific data elements and any attributes that describe that data element.

The requirement field for each data element and its attribute indicates whether the element (a) must be included in the schema (mandatory or validation), (b) is optional, or (c) is not used for FATCA (null).

I. Message Header

Information in the message header identifies the Financial Institution (FI) or Tax Administration that is sending the message. It specifies when the message was created, what calendar year the report is for, and the nature of the report (original, corrected, supplemental, etc).

II. PersonParty_Type

The data elements in this section are used when the Account Holder is a natural person.

IIa. TIN Type

This data element identifies the Tax Identification Number (TIN) used by the receiving tax administration to identify the Individual Account Holder

IIb. ResCountryCode

This data element describes the tax residence country code(s) for the individual being reported upon.

IIc. NamePerson_Type

IId. Address_Type

There are two options for Address type in the schema – AddressFix and AddressFree. AddressFix should be used for all FATCA reporting unless the reporting FI or tax administration transmitting the message cannot define the various parts of the account holder’s address.

IIe. Nationality

IIf. BirthInfo

III. OrganisationParty_Type

This complex type identifies the name of an Account Holder or Payee that is an Entity as opposed to an Individual.

IIIa. TIN_Type

IIIb. ResCountryCode

IIIc. Organisation Name

IV. Reporting FI

Identifies the financial institution that maintains the reported financial account or that makes the reported payment. Examples:

• The reporting FI is the financial institution that has agreed to treat another financial institution as an owner documented FFI.
• The reporting FI is the financial institution that makes a reported payment to a territory organized financial institution that is acting as an intermediary and that has not elected to be treated as a U.S. person
• The reporting FI is the Sponsored FFI and the Sponsoring FFI is identified in the Sponsor group, see below.

If the reporting FI maintains branches outside of its country of tax residence then the GIIN for the reporting FI is the GIIN associated with the branch of the reporting FI that maintains the reported financial account.

IVa. ReportingGroup

IVb. Account Report

IVc. Pool Report

The IRS Guide is available at http://www.irs.gov/pub/irs-utl/Pub5124UserGuide.pdf

LexisNexis FATCA Compliance Guide

Fifty contributing FATCA experts, each advising major institutions and financial service companies, authored 600 pages of analysis within the LexisNexis® Guide to FATCA Compliance (2^nd Edition): many perspectives – one voice crafted by the primary author Professor William Byrnes.

The LexisNexis® Guide to FATCA Compliance (2^nd Edition) comprises 34 Chapters grouped in three parts: compliance program (Chapters 1–4), analysis of FATCA regulations (Chapters 5–16) and analysis of Intergovernmental Agreements (IGAs) and local law compliance challenges (Chapters 17–34), including intergovernmental agreements as well as the OECD’s TRACE initiative for global automatic information exchange protocols and systems. The 34 chapters include many practical examples to assist a compliance officer contextualize the regulations, IGA provisions, and national rules enacted pursuant to an IGA.  Chapters include by example an in-depth analysis of the categorization of trusts pursuant to the Regulations and IGAs, operational specificity of the mechanisms of information capture, management and exchange by firms and between countries, insights as to the application of FATCA and the IGAs within new BRIC and European country chapters.