The IRS plans to migrate to a new schema format for next year’s Foreign Account Tax Compliance Act (FATCA) filing and the IRS has recently released its long awaited Publication 5124, which is the user guide for the IRS’s FATCA XML schema.
While the Publication is listed in draft, the IRS has been clear that it should be treated as final. The IRS reasons that it would be too confusing to have two final versions of its schema and user guide contemporaneously. Instead, the draft label will come off sometime in late December to early January.
The new user guide goes hand-in-hand with the IRS’s new schema (version 2.0) that was released in May and will explain when each field or element is to be used and explain how it should be formatted. Since the IRS’s schema is required by all Model 2 and non-IGA filers, and a majority of Model 1 jurisdictions, this new schema will have a significant impact on next year’s reporting.
Key changes include new data elements to report closed accounts and filer categories, updates to the substantial owner field, and a new way to submit nil reports. The new Publication also contains useful information such as a list of other FATCA related IRS publications, definition of general terms in the schema, and special rules for non-GIIN filers. Finally, the user guide will now inform readers whether or not a field is required to pass the initial validation (a schema requirement), and whether it is necessary to pass the second level of validation (an application requirement).
The IRS has also provided samples that can be viewed on its FATCA XML Schemas page along with a zip file containing the new version 2.0 schema.
Financial Institutions with FATCA reporting requirements should review Publication 5124, the new user guide for the IRS’s FATCA XML schema.
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