International Financial Law Prof Blog

Editor: William Byrnes
Texas A&M University
School of Law

Wednesday, January 14, 2015

FATCA International Data Exchange Services (IDES) FAQs

Several FATCA IDES frequently asked questions (FAQs) have been added and updated on IRS.gov. The  FAQs  are focused on IDES technical issues such as data transmission, data security, and system design.

General Questions

# Questions Answers

A1.

What is the International Data Exchange Services (IDES) system?

 

System that allows IRS to exchange tax payer information with foreign tax authorities (e.g., HCTA and/or FFI). An overview of data transmission to the IDES system is currently available on the IRS website at FATCA International Data Exchange Resources and Support Information (IDES)

A2.

What is the International Compliance Management Model (ICMM) system?

System that allows IRS to receive, process, store, and manage FATCA data received from various sources to support needed compliance activities.

A3.

What is the frequency of IRS request for information on recalcitrant accounts?

 

The transmission can occur on the ad-hoc basis as HCTA receives the information from FFIs, or the HCTA can provide a single submission at or before the submission date and time as specified in the IGA. This applies to all jurisdictions.

A4.

What is IRS expectation for HCTA response to request for information on recalcitrant accounts?

Standards for request and/or response to information requests are defined in the IGAs.

A5.

What are IRS standards for HCTA data validation on recalcitrant accounts through the FATCA XML schema?

All data provided should fully comply with FATCA Form 8966 response.

A6.

How can HCTA and FFI obtain information as to system development progress and status?
Updated:  1-5-2015

The IRS publishes this information on the FATCA site on IRS.gov making it universally available at the same time. Additionally, users can subscribe to the FATCA newsletter for updates on the latest IRS news, guidance, regulations and other public information related to FATCA.

A7.

What types of technical support will be present during integration testing? How will the HCTAs and FFIs report issues with integration testing back to the IRS?
Updated:  1-5-2015

The IDES vendor will provide help desk support under their contract with the IRS during testing as well as when the system goes live.  The IRS will provide contact information for the vendor help desk prior to enrollment..

A8.

What is the protocol for HCTAs to contact the IRS with technical issues or questions regarding IDES?

 

The IDES vendor will be responsible for resolving technical issues or questions regarding IDES.  The IRS will provide contact information for the vendor help desk.

A9.

What is the protocol for HCTAs to contact the IRS with issues or questions regarding reporting requirements?

 

The HCTA should direct questions regarding reporting requirements to the United States Competent Authority.

A10.

When can I enroll to use IDES?

 

The IRS will notify all participants when they can begin enrolling in IDES via the IRS web page at Foreign Account Tax Compliance Act.  For HCTAs, the IRS will issue a letter to the Competent Authority to let it know when it is time to begin the process.  For Financial Institutions, enrollment will occur online; in order to enroll, the FFI will need to have registered as a Participating FI through the IRS FATCA Registration Portal and have a GIIN that appears on the IRS Participating FI list.  The IRS will notify participants in advance of the web address to be used for enrollment.

System Availability and Design

# Questions Answers

B1.

When will the IDES system be accessible for HCTA and/or FFI use?

The IDES is designed to be "always on" and available to receive the files. The system will be unavailable for  planned maintenance periods. These periods will be announced on the FATCA IRS.gov website.

B2.

What methods of file transfer are available for the IDES system? 

The IDES system is intended to support both SFTP and HTTPS transfers.

B3. Is the IDES system IPv6 compatible?

No, IDES will be IPv4 compatible only at the current time. Information about IPv6 compatibility will be published at a later date.

B4.

What information will be contained in the IDES Alerts?  

The IRS is planning to publish a user guide which will contain information on IDES Alerts by the end of 2014. This will also include the definition and meaning of the Alert codes.

B5.

What information will be contained in the ICMM Notifications?  

The IRS is planning to publish a user guide which will contain information on ICMM Notifications by the end of 2014.

B6.

When will the IDES system be accessible for User Acceptance Testing? 

User Acceptance Testing is planned for December 2014. The system go-live date is set for January 12, 2015.

Data Format and Structure

# Questions Answers

C1.

What format should data be provided for the FATCA Report?

Data should be provided in the XML format, which complies with the Inter-governmental FATCA XML schema as agreed by the International Community and published on the IRS FATCA web site. See IRS Publication 5124 FATCA XML v1.1 User Guide.

C2.

Is there a naming convention for files pertaining to IRS request for information on recalcitrant accounts?

No, there is currently no naming convention required at this time.  If there is a change to this requirement, it will be published on the IRS FATCA web site.

C3.

When will a template pertaining to the request for information on recalcitrant accounts be provided? 
Updated:  1-5-2015 

A sample Competent Authority Request (CAR) is planned for release as soon as possible on the FATCA page of the IRS.gov web site.

  When will sample XML files related to FATCA submissions be available?
Added:  1-5-2015
Sample XML documents for the FATCA NIL reports, sender metadata, and notifications have been uploaded to the IRS.gov website and can be found at FATCA XML Schemas and Business Rules for Form 8966.
C4. What is the format for sending metadata for file transfers to IDES (e.g., indicate a specific sender / receiver)?Updated:  1-5-2015

Procedures for sending metadata files are documented in the IDES User Guide, which can be found at IDES User Guide.

C5. Is the XML data based on UTF-8 character encoding?  Are there any restrictions on the range of characters that can be used?

Yes, the FATCA XML schema v1.1 was developed using UTF-8.  Additional specifications regarding acceptable characters can be found in the Competent Authority Arrangements.

C6. Is there a "not to exceed limit" on the size of the transmitted data file?  Is there a method to associate and/or merge files if transmission split due to size restrictions?

At the current time, the maximum recommended file size is 200MB compressed. There is currently no method to merge files; this will be addressed at a later date if this becomes a recurring need. There is no need to associate the files, all the information can be sent in as many transmissions as needed.

C7. Within the XML schema, is the SendingCompanyIN data element used to determine the origin of the file?

The IRS will not rely on the SendingCompanyIN data element to determine the origin of a file. The Sender will be identified in the metadata that accompanies each IDES transmission.

C8.

Can HCTA bundle responses from FFIs for the recalcitrant accounts?

See the FATCA Report XML schema documentation. The XML can include multiple financial institutions.

C9.

How will the DocTypeIndics reserved for testing purposes will be used in production and test environments?

There is a 'test' Doc Type Indicator in the schema that corresponds to each production indicator.  It is expected all partners will include the 'test' doc type indicators during testing periods.

C10.

How will the IRS handle updates to the XML schema? Will the system still be able to accept older versions of the schema or will prior years' files need to be updated to the current schema version?

The IRS will publish information regarding updates to the schema on IRS.gov. The methods for handling multiple schema versions will be published as soon as possible.

C11. If an individual has only received certain payment types, should the other payment types be listed with a zero amount or should they be omitted from the report for that individual?
Added:  1-5-2015
If an individual has not received a particular payment type, zero amount is acceptable. If a particular payment type is not relevant to the individual, it is preferred that the information be omitted.
C12. What is the procedure for FFIs and HCTAs to verify test data prior to the launch of IDES?
Added:  1-5-2015
IDES is planning to allow enrolled users to upload test files beginning on January 5th, 2015. Specific procedures will be published as soon as possible on IRS.gov.
C13. Can an HCTA create it's own standard numbering format for the MessageRefID in the 8966 XML Schema for its financial institutions to use?
Added:  1-5-2015
Yes. The only requirement is that the field be be unique for each sender for the lifetime of the system and that it not exceed the maximum length of 200 characters.

Data Transmission

# Questions Answers

D1.

What are the procedures for sending files to IDES and/or ICMM systems?
Updated:  1-5-2015

All files will be submitted through IDES.  IDES supports transfers through HTTPS and SFTP.  Specific operational procedures for data preparation are documented in the IDES User Guide.

D2.

What are the procedures for sending metadata for files to IDES?
Updated:  1-5-2015

Metadata files needs to be included in the transmission file submitted to IDES.  Specific operational procedures for sending metadata files are documented in the IDES User Guide.   Additionally, a sample metadata XML file can be found at FATCA XML Schemas and Business Rules for Form 8966.

D3.

Will requests from the IRS for information on recalcitrant accounts be transmitted via email?
Updated:  1-5-2015

No, all IRS requests for information will be transmitted via IDES. Format of the message exchange between IRS and HCTA will be published on IRS.gov as soon as reasonable. This only applies to Model 2 jurisdictions.

D4.

Will IDES be used for transmitting the ICMM notifications?

Yes, IDES will be used as the transmission path for ICMM Notifications.  A message type in the metadata will be used to distinguish Notifications from FATCA Reports.

D5.

How will reciprocal data from the IRS be sent to an HCTA and in what format?

The data will be sent through IDES. The format of the XML specification is the same as the Form 8966 XML schema published on the IRS website and can be found in the IRS Publication Intergovernmental FATCA XML Schema v1.1.

D6.

How will the HCTA notify IDES of outages of their systems that will be receiving data?

The HCTA should direct information regarding system outages to the United States Competent Authority.

D7.

What is the procedure for sending corrected and/or amended data to receiving HCTA? Will the resubmission need to include only the corrected / amended entries or will the entire report need to be resubmitted?
Updated:  1-5-2015

Procedure for submitting corrected or amended data will be the same as the submission of a new report.  Specific operational procedures for data preparation are documented in the IDES User Guide.  The resubmission should only include the corrected / amended entries, with a reference to the original report.  Please refer to the FATCA XML User Guide for preparing corrected or amended reports.

D8. What is the procedure for submitting zero messages and filing a zero report? A Model 1 IGA does not require Nil reports. For other jurisdictions, Nil reports must provide Reporting FI information. The report contains Reporting Group, but it does not contain any account reports or pooled reports. Reporting group can be empty or can contain Sponsor and Intermediate information.
D9. What required data validation should be done on the FATCA Report data prior to being submitted to IDES? The FATCA Report data XML file must be validated against FATCA XML schema published on IRS site. IRS Publication 5124 FATCA XML v1.1 User Guide contains all information required to ensure data is valid within the report. The User Guide outlines which fields are mandatory as well as specific business rules for each data element.

Data Encryption and Security

# Questions Answers

E1.

What type of data encryption should be used prior to XML data transmission?

A digital signature shall be applied to XML and Notification files, referred to hereafter as data files.  FATCA digital signatures use the SHA-256 hashing algorithm in conjunction with the private key for the HCTA/FFI. The private key corresponds to the public key (RSA 2048-bit) that is stored on IDES. Following the creation of a digital signature and compression, the data file is encrypted using the AES algorithm and a randomly generated 256-bit key. The AES key is stored in a separate file and encrypted using the IRS’ public key, which is obtained from IDES. Both the data file and the key file shall be combined into a single zip file for transmission to IDES.

E2.

What encryption standard will be implemented on the transmission path?

As recommended by the National Institute of Standards and Technology (NIST) Special Publication 800-52, Transport Layer Security (TLS 1.2) will provide the mechanism to protect sensitive data during electronic dissemination across the Internet”.

E3.

How will passwords and keys be controlled for data transmission?
Updated:  1-5-2015

The public keys for the users will be available through IDES. Each user will have a unique password

E4.

Who is responsible for data transmission security via encryption?
Updated:  1-5-2015

Each HCTA will initiate a secure transmission to IDES via encrypted session. Likewise, the IRS will initiate a secure transmission to IDES to retrieve data.  More information can be found in the IDES User Guide

E5. What type of data encryption is used for reciprocal data sent to a HCTA? The encryption tools and processes are the same regardless of the direction of the transmission.
E6. What are the requirements for digital certificates?
Added:  1-5-2015
IDES currently requires digital certificates from one of seven different certificate authorities.  During the FFI and HCTA enrollment process, the digital certificate must be uploaded to the IDES website.  A list of acceptable certificate authorities and products can be found at Digital certificates.
E7. Can the AES 256 key be re-used for subsequent data transmissions or does the key have to be different each time?
Added:  1-5-2015
The AES key must always be considered a “one time use” key. Software used to perform AES256 encryption can generate a new AES key for each use.

https://lawprofessors.typepad.com/intfinlaw/2015/01/fatca-international-data-exchange-services-ides-faqs.html

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Comments

Very useful... could you please comment on how a nil report can be submitted for a M2IGA FFI if we do not want to develop (and spend money) on a system and prefer to do it manually? HMRC has developed this functionality in their portal for UK FFIs and it is extremely useful and has no cost to the FFIs. Thank you!

Posted by: Carolina | Jan 15, 2015 2:23:15 AM

Hi Carolina, there is a tool called IDEASY available at www.section11.ch, which generates a transmission archive. As an optional step you can generate a FI Nil Report - maybe this helps. cheers, Jochen

Posted by: Jochen | Feb 5, 2015 1:53:34 AM

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