IRS Unleashes Global FATCA Data Exchange, Offshore Transparency Everywhere

Some of the folks down at the IRS may have been ‘confused‘ about how to apply the tax exempt organization rules, especially those rogue employees in Cincinnati. But the IRS isn’t confused at all about the power of FATCA, the Foreign Account Tax Compliance Act. It is America’s global tax reporting law. Never before has an American tax law attempted such an astounding reach. It got off to a slow start after passing into law in 2010.

But it took effect in 2014, and has literally swept the globe. FATCA requires foreign banks to disclose the identity and details of Americans with foreign accounts over $50,000. Non-compliant institutions worldwide could be frozen out of U.S. markets, so everyone is complying. Now, the IRS has unleashed a new data exchange to implement the law. The IRS announced the opening of the International Data Exchange Service (IDES). Financial institutions and host country tax authorities will use IDES to securely send their information reports on financial accounts held by U.S. persons to the IRS.

So far, over 145,000 financial institutions have registered through the IRS FATCA Registration System. The U.S. has more than 110 intergovernmental agreements (IGAs), either signed or agreed in substance. Financial institutions and host country tax authorities will use IDES to provide the IRS information reports on financial accounts held by U.S. persons.