The opening of the International Data Exchange Service (IDES) by the Internal Revenue Service (IRS) in January 2015 was seen as a milestone in the implementation of the provisions of the Foreign Account Tax Compliance Act (FATCA). IDES provides a secure system of automated, standardized information exchanges between the IRS and host country tax authorities (HCTAs), financial institutions (FIs), and other filers that submit FATCA reports directly to the IRS.
Over the past few months, reporting FIs have been filing FATCA reports with HCTAs in compliance with local deadlines. In recent weeks, HCTAs have, in turn, begun to report information received from their reporting FIs to the IRS through IDES. HCTAs designed their local reporting obligations based on initial IRS guidance. Consequently, the reporting standards in many partner jurisdictions do not contain the latest IRS data controls. As such, certain HCTAs received error notices from IDES based on the newly implemented IRS data controls. This could lead to a series of notices being sent to FIs in partner jurisdictions potentially requiring the resubmission of FATCA reports by FIs to reflect the updates.
For more information see PwC Tax Insights