Introduction to FATCA Reporting
The financial institutions must oblige to obtain and exchange information for reportable accounts in the Internal Revenue Service (IRS) prescribed format, and maintained at any time during each calendar year. This feature provides the rules for information reporting which is applicable to participating Foreign Financial Institutions (FFIs) with respect to US accounts. The following are the key features for a participating FFI are:
- Reporting by the time and in the format prescribed in the regulation.
- Reporting the information required with respect to accounts that it is required under its FFI agreement.
- Defining the regulation to treat as US accounts maintained at any time during each calendar year.
FATCA focuses reporting by:
- Notifying US taxpayers about certain foreign financial accounts and offshore assets.
- Informing foreign financial institutions about financial accounts held by US taxpayers or foreign entities in which US taxpayers hold a substantial ownership interest.
FATCA is applicable for the following types of business:
- Individuals - If the total value exceeds the appropriate reporting threshold, then US individual taxpayers must report information about certain foreign financial accounts and offshore assets, and attach it to their income tax return.
- Financial Institutions - To avoid withholding, a foreign financial institutions may register with the IRS, obtain a global intermediary identification number (GIIN) and report certain information on US accounts to the IRS.
The US financial institutions must withhold 30% on certain payments to foreign entities that do not document their FATCA status and report information about certain non-financial foreign entities.
- Governments - If a jurisdiction enters into intergovernmental agreement (IGA), to implement FATCA, the reporting and other compliance burdens on the financial institutions in the jurisdiction may be simplified. Such financial institutions does not subject to withholding under FATCA. Hence, IGA will be put in place
Product Configuration
This section orients the user towards the parameter setup required for building the reporting database and reporting under FATCA. The FATCA reporting feature is licensed under FATCA Reporting (FE) module. This module has a dependency with FATCA (FA) module that deals with FATCA client identification.
FATCA.REPORTING.PARAMETER
The FATCA.REPORTING.PARAMETER application specifies the high level parameters governing the yearly reporting required under FATCA. This table determines the US accounts which need to be reported.
| Field Name | Description |
|---|---|
| @ID | The company ID is the ID for this record. The parameter setup for the company is defined here |
| Rep Extract Date | Denotes the date on which the base data for reporting is extracted and consolidated in the FA.REPORT.BASE application. The COB runs on the set date to update the base file with the base data for all users. It is recommended for the user to set the date to 31st December of the year always. If the set date is a holiday, the extraction is on previous working day. The account balances are always updated on the last working day of the calendar year. This is recycled to the next date when the base update for a year is done |
| Reportable Status | Identifies the status which is to be reported to the regulator. The base file records are built based on these status only |
| Own Rep Status | Displays the statuses for which the owner (beneficial and substantial) details are to be reported. For the accounts where the owner details are to be reported based on the status (classifications) defined here, the system extracts the details of beneficial and substantial owners (as applicable) and updates the base file. The beneficial and substantial owner roles are identified based on roles defined in FATCA.ROLE.TYPE. As per the Form 8966 reporting, this is required for OD FFIs and passive non-financial foreign entities (NFFEs) with identified US owners |
| Status Type | Identifies the various classifications that falls under the following category:
|
| FATCA Status | Identifies the recalcitrant, non-participating, dormant or any of the statuses above. All the statuses that are to be reported needs to be included in reportable status as well. This field is associated with the Status Type field |
| Default Address | Specifies whether the address of the user must be from CUSTOMER or DE.ADDRESS |
| Address Record | If the Default Address field is set to DE.ADDRESS, the record in DE.ADDRESS from where the address of the customer is fetched is specified in this field. For example, if the Address Record field is set as PRINT.1 for customer ID (100252) in Company 1 (GB0010001), the system reads the record GB0010001.C-100252.PRINT.1 in DE.ADDRESS and gets the address. If there is no matching record in DE.ADDRESS, then there are no default |
| Owner Type | Specifies the type of the owner (JOINT, BENEFICIAL or SUBSTANTIAL) |
| Rel Identifier | If set to FCSI, the related customers are identified from the FCSI record. If left blank, the related customers is from the customer or account (based on relation level defined in FATCA.AGGREGATION.PARAMETER). For beneficial and substantial ownership, the relationships are only from the FCSI. Whereas, for joint owners the relationships can be at FCSI level or customer or account level. So, if the Owner Type field is Beneficial or substantial and only FCSI is allowed |
| Rel Code | If the Rel Identifier field is left blank, the relation codes that are used for the identifying the owners in Owner Type is considered. This field specifies the multiple relation codes. This field must be left blank, if the Rel Identifier field is set as FCSI. This field is only used for defining relation codes for joint owners, if the relationships are not defined in FCSI or in FATCA.AGGREGATION.PARAMETER |
| Owner Address | Specifies whether the address of the owner type (defined above) is to be from CUSTOMER, FCSI or DE.ADDRESS. If customer records does not exists for the owner specified in FCSI, the address is from FCSI irrespective of the settings done in this field |
| Owner Add Record | If the Owner Address is set to DE.ADDRESS, the record from DE.ADDRESS from where the address of the owner is picked up. For example, if this field is set to PRINT.1, for customer ID (100252) in Company 1 (GB0010001), the system reads the GB0010001.C-100252.PRINT.1 record in DE.ADDRESS and gets the address. If there are no matching for the record in DE.ADDRESS, then the value is not defaulted |
| Country Sub Entity | This field is one of the elements that needs to be part of FATCA reporting (XML schema). The field from where this data is obtained (can be a field in CUSTOMER or DE.ADDRESS – core or local) is defined in this field |
| FCY Acc Report | If the non-US currency accounts is to be reported in the currency in which they are denominated, this field is set to ACCOUNT. Alternatively, if they are to be reported in USD, this field is set to USD. By default, all accounts are reported in USD. For portfolios, if the accounts are to be reported in the currency in which they are denominated, the system reports in the reference currency |
| Recal Report | If a pool report is to be prepared for the aggregated balances of recalcitrant accounts (recalcitrant, recalcitrant with indicia, dormant, dormant with indicia), this field must be set to YES. The system updates FATCA.RECAL.POOL.BALANCE with the aggregated balance of such accounts. The pool report is for FATCA Status defined above (associated with Status Type field except PASSIVE_NFFE, OD_FFI and SPEC_US_PERSON) |
| NPFFI Report | Aggregate reporting on non-participating (NPFFI) payments is not required in 2014. So, the field is set to NO in 2014 and changed in 2015. The FATCA.POOL.BALANCE for NPFFIs is not updated, if this field is set to NO |
| Min Bal Check | If this field is set to YES, the accounts with balance less than USD 50000 (as on closure date or year-end date) is excluded from reporting. The base record is not built for such accounts |
| Agg Bal Check | If this field is set to YES, the minimum balance check as above is applied only if aggregate balance (total of either custody or depository accounts) is below USD 50000. If not, all the accounts are reported. If this field is left blank, then the minimum balance check is based on individual accounts |
| Base Retention | Indicates the number of years for which the data on base file needs to be retained. If set to six, the 2014 base data is retained till the end of 2020 |
| Update Inc Base | If the withholdable income (FDAP from 2014 and gross proceeds from 2017) needs to be updated in base, then set this field to YES |
| New Account Only | If this field is set to YES or 2014, then only those accounts opened after 1st July 2014 are included in the base file |
| New Account Ent | If this field is set to YES, the accounts for entities opened till 1st Jan 2015 are considered pre-existing and are not included in the base file |
| New Acc Exist | If a new account is opened for an existing user, then this field controls all the accounts of the users which must be included in base or only the accounts opened after 1st July 2014. If this field is set to YES, it include all the accounts. If set to NO, the accounts included are based on the value in New Account Only field |
| XML Dir | Defines the name of the directory used to hold XML messages. The UNIX or NT path name for the directory can be specified with '/' separators |
| HMRC Schema | Indicates the UK specific schema |
| FATCA ID | Stores the FATCA ID (assigned to the bank by Her Majesty's Revenue and Customs (HMRC)) |
| Due Diligence Ind | Indicates whether an account is a reportable account or an account held by a non-participating financial institution |
| Threshold Ind | Indicates thresholds in the due diligence process |
Since the bank’s system reports only specific customers, the reportable statuses (based on FATCA Status field of the customer in FATCA.CUSTOMER.SUPPLEMENTARY.INFO) are also specified in FATCA.REPORTING.PARAMETER. For certain clients (passive NFFEs, owner documented FFIs), the details of substantial and beneficial owners are also reported. The statuses for which the ownership details need to be reported are also defined in FATCA.REPORTING.PARAMETER.
Specified US persons, passive NFFEs, owner documented FFIs, recalcitrant and dormant statuses are identified based on the value in FATCA Status field associated with each of these status types. The reporting varies based on the type above (for example, substantial owner details need to be reported for passive NFFEs, recalcitrant accounts may be subject to pool reporting).
The parameter is also used to specify default address to be used for reporting (CUSTOMER or DE.ADDRESS), whether pool reporting is required for recalcitrant clients, whether accounts are to be reported in account currency or USD and whether accounts with balance less than USD 50000 needs to be reported or not.
Banks or financial institutions must report annually with the first reporting due in 2015 (for 2014 year-end balance). As part of the Close of Business (COB) on the report extraction date (as per the date specified in parameter – the last working day of the calendar year), a record is built in FATCA.TAX.BASE for all the reportable clients.
For closed accounts, the base is updated on the date the closure notice is received from the client. When a client gives notice for closure (closure of the relationship with the bank), FATCA Status field is updated manually by the users in FATCA.CUSTOMER.SUPPLEMENTARY.INFO. The status should be the same as the value in FATCA Status field defined for inactive status type in FATCA.REPORTING.PARAMETER. As part of the COB on that day, FATCA.TAX.BASE is updated with the details of the client and his account balances (as on date).
Only the accounts of reportable clients (US accounts, passive NFFEs and so on) is reported when closed. It is advised to use separate FATCA Status field for reportable closures and non-reportable closures (for example, non-US account).
The following are the income reporting related fields in FATCA.REPORTING.PARAMETER.
| Field | Description |
|---|---|
| Payment Type | Indicates the payment type |
| Txn Code | Indicates the transaction code of the income to be reported. This field is mandatory when the Payment Type field is set |
| Payment Amt | Indicates the transaction amount |
| USD Payment Amt | Indicates the transaction amount in USD |
| Rep Pymt Type | Indicates the payment type used in FATCA XML report |
| Rep Pymt Ccy | Specifies the transaction currency |
| Con Pymt Amt | Used in FATCA XML report |
| Con USD Pymt Amt | Used in FATCA XML report when FCY report is set as USD |
| Filer Category | Defines the category of the reporting financial institution |
| Account Closed | Indicates whether the FCSI is INACTIVE |
| No Accts to Rep | Indicates that there are no FCSIs reported for the present year |
| Closed Accts Bal | Specifies the balance to be captured while building FATCA.TAX.BASE for inactive FCSIs. This field is applicable only for the FCSIs whose FATCA Status field change date is set as today. When no value is selected, the Close Day is considered as default |
| Rep Pmt Income Only | Defines the FATCA Status for which, only payment related information has to be displayed in report and account balance will be reported as 0 |
|
Filer Category |
Specifies the code under which the filer is reported and is defined in this field. The following are the values in EB.LOOKUP:
|
The following are the year end snapshot related fields in FATCA.REPORTING.PARAMETER.
| Field | Description |
|---|---|
| Maintain Static Info Copy | This field can be enabled or disabled as required to provide maximum flexibility to the users. Accepts Yes or No values, the default value being No |
| Actual Rep Date | This field is accessed by the FATCA.REPORTING.SERVICE to update the record in FATCA.STATIC.INFO.COPY in comparison against the Rep Extract Date |
Read FATCA reporting section for more information on Year End Processing.
Illustrating Model Parameters
Parameters configured in Model Bank are given below:
| Parameters | Description |
|---|---|
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FATCA.TAX.BASE
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User can access this system-generated file with data to be reported such as Customer name, address, tax identification number (TIN)/EIN/GIIN details, ownership details (passive NFFEs, Owner documented FFIs), client type and account balance details (in 2015, the 2014 year-end account balance is reported) including details of accounts or in which the client is a joint owner |
Illustrating Model Products
Model products are not applicable for this module.
In this topic
