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FATCA Alert: IDES System Will Require Taxpayer Identification Numbers From Model 1 Financial Institutions in 2018

May 11, 2017

As part of FATCA compliance, Model 1 IGA foreign financial institutions are required to report U.S.-held account information to the IRS and may utilize a special e-filing system known as the International Data Exchange Services (“IDES”) for reporting.  Starting January 1, 2018, the IRS announced that Model 1 foreign financial institutions must also provide the Taxpayer Identification Numbers (“TINs”) of U.S. account holders as part of their IDES data submissions.  This additional requirement in 2018 may prove onerous as foreign financial institutions may have a difficult time obtaining this information from their U.S. account holders.
As noted above, the new rule is applicable to “Model 1” foreign financial institutions in jurisdictions that have intergovernmental agreements (“IGAs”) with the U.S.  Larger Model 1 financial institutions with a voluminous number of U.S. account holders or those Model 1 financial institutions that have had chronic issues contacting their existing U.S. account holders will particularly be burdened with this new compliance requirement.
The IRS issued relevant guidance on this new requirement through a question and answer format which can be found here. Importantly, per the guidance (Question and Answer # F15), any account information submissions that places nine “0’s” as the taxpayer ID will be rejected by the IDES system in 2018. Therefore it is incumbent for affected foreign financial institutions to obtain U.S. account holder TINs well beforehand and continue with their FATCA compliance in 2018.
Any financial institutions that will be impacted by this major change are encouraged to consult and coordinate with their tax advisor to ensure they are not caught off guard.

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