On June 13, 2024, the IRS announced the next testing phase for the FATCA IDES. The FATCA IDES will be open for testing from Monday, July 1, 2024, to Friday, July 26, 2024. The test session will be open to users who have completed IDES enrollment by Wednesday, June 26, 2024. In order to be enrolled, the IDES account must be active with a valid Digital Certificate attached. The IRS encourages all IDES users to participate in the open system testing. Below is the process to enroll with IDES.

1. Obtain digital certificate from IRS approved certificate authority.
2. Create an account and use the enrollment tool to create a user profile.
3. Validate authorization. Validate your approved GIIN and enter your digital certificate. IDES will validate your authorization.
4. Receive enrollment approval to access IDES via email with instructions or a secure file transfer protocol (SFTP) link.
5. Prepare and upload files. (Note:  FACTA data files must be compressed and encrypted before uploading.)
6. Send package to IRS. After you transmit the data package, IDES will send a confirmation message.

Background
The Foreign Account Tax Compliance Act (FATCA) was passed as a part of the Hiring Incentives to Restore Employment (HIRE) Act of 2010. FATCA imposes a 30% withholding tax on certain U.S. source payments made to foreign financial institutions (FFIs) and non-financial foreign entities (NFFEs) unless they meet specific reporting, compliance, and withholding requirements related to identifying U.S. owned accounts. FFIs can avoid the tax imposed by the FATCA by entering into an agreement with the IRS to report information on its U.S. owned accounts and to withhold tax on certain payments to non-compliant account holders and FFIs. NFFEs are not subject to FATCA withholding if they certify they do not have any substantial U.S. owners or they identify any substantial U.S. owners to the withholding agent. The International Data Exchange Service (IDES) is an IRS system used to facilitate the exchange of FATCA data between the IRS, foreign tax administrators, and financial institutions.

How to Participate

• On the first day of testing, all users enrolled prior to the cutoff date will receive an email with links to access the current internet test servers via Secure File Transfer Protocol (SFTP) and Hypertext Transfer Protocol Secure (HTTPS). Do not attempt to use any previous tests links.
• The migration to a new system will require users to reset their password. Update your password and profile information BEFORE the enrollment cut off deadline. Remember, the IDES password expires every 90 days without notification.
• Verify your digital certificate is valid and has not expired.
• After the enrollment cutoff date, the current user profile will be transferred to a test environment. Any additional profile changes, such as adding or disabling users, updating email alert preferences, and changing passwords, are not reflected in the test environment. For example, if your password is expired or you change your password after the enrollment cutoff date, you will also need to re-set your password on the test environment using your challenge questions.
• To complete the enrollment process, obtain an IRS-issued GIIN, FIN or HCTA Entity ID/username, and a valid certificate.
• IDES customer support is available by calling IDES support at 800-613-IDES (800-613-4337) to speak with an expert.

Questions?
The experienced attorneys at RJS LAW are available to help individuals or businesses who wish to take part in the next phase of testing. Please call RJS LAW at 619-595-1655 or contact us on the web at RJS LAW for a no-cost consultation.

Written by Sean Erdman