On Thursday, December 19, 2013, we posted FATCA FFI List Resources and FFI List FAQs are Now Available where we discussed that what taxpayers representatives should be paying attention to in these FATCA discussions, among other things, is that the form of the FATCA submissions entitled "Schema" is a uniform computer readable report. This is the same language/requirement which is being utilized in discussions regarding intergovernmental agreements.
So effectively, in the not-too-distant future, we may be seeing foreign banks submitting their "Schema" to their government to be shared with the US and other foreign governments; which can then be used by the IRS or the other home country to match up the information in the "Schema" against that depositors local tax report!
Some of the requirement currently being discussed include that these "Schema" contain the taxpayers home country identification number. So for a US taxpayer it would contain their Social Security number.
Now the IRS has released the actual guide which explains, in detail, the information required to be included in each data element of the FATCA XML schema v1.1. The guide is divided into logical sections based on the schema and provides information on specific data elements and any attributes that describe that data element. Where a data element is not used for FATCA reporting, the associated attribute(s) are also not used.
The requirement field for each data element and its attribute indicates whether the element must
be included in the schema (mandatory or validation), is optional, or is not used for F
ATCA (null).
The following terms are used:
• Validation – The data element is required for schema validation and must be included
• Mandatory –The data element is not required for schema validation but IS required for
FATCA reporting
• Optional – The data element is not required for FATCA reporting but may be provided if
available
• Null – The data element is not used for FATCA reporting and may be left blank
The version of the schema is identified by the version attribute on the schema element.
The version consists of two numbers separated by a period sign: major and minor versions.
The target namespace of the FATCA schema contains only the major version.
Element Attribute Size Input Type Requirement
FATCA_OECD version xsd:string Mandatory
The root element FATCA_OECD has a version attribute. The version attribute on the root
element in the report must be set to the value of the FATCA schema version. This allows
identification of the schema version that was used to create the report. The version attribute on
the root element in the schema is not fixed. This allows creating a report with a lower compatible
version of the schema and validating it with the current schema.
Example: The schema version 3.1 is updated with a new currency code to a new version 3.2,
which is backward compatible with the previous version. Bank A created a report using schema
3.1. The report contains a version attribute 3.1. The report from Bank A will be validated with
the schema 3.2. Bank B created a report using schema 2.4, which is incompatible with the
current version 3.2. By checking the version attribute in the report, which is 2.4., the processing
application will identify that the report was created with incompatible version and Bank B will
be notified that it needs to update the schema.
Now that this is happening, tax advisers need to advise their clients that it's no longer a question of if; rather it's a question of when, the US and other governments are able to match the information from these intergovernmental agreements to an individual US taxpayers transcript information or other country's tax information.
No one can tell exactly when this ability to cross match foreign information with US taxpayers transcripts will occur; however a good guess would be as soon as 3 to 5 years in the future; given all the logistics associated with such a program.
Do You Have Unreported Foreign Income?
Contact the Tax Lawyers at
Marini & Associates, P.A.
for a FREE Tax Consultation
Toll Free at 888-8TaxAid (888 882-9243
888 882-9243 begin_of_the_skype_highlighting 
888 882-9243888 882-9243 FREE end_of_the_skype_highlighting)
888 882-9243 begin_of_the_skype_highlighting 
888 882-9243
