The IRS' IDES system is now open for enrollment.

The Internal Revenue Service announced in January that its International Data Exchange Service (IDES) is open for enrollment, and that financial institutions and host country tax authorities will be able to use IDES to securely send their information reports on financial accounts held by Americans to the IRS under the Foreign Account Tax Compliance Act (FATCA) or pursuant to the terms of an intergovernmental agreement (IGA), as applicable.

“The opening of IDES is a milestone in the implementation of FATCA,” said IRS Commissioner John Koskinen in a statement. “With it comes the start of a secure system of automated, standardized information exchanges among government tax authorities. This will enhance our ability to detect hidden accounts and help ensure fairness in the tax system.”

More than 145,000 financial institutions have registered through the IRS FATCA Registration System, with the U.S. having more than 110 IGAs, either signed or agreed in substance.

Financial institutions and host country tax authorities will use IDES to provide the IRS information on financial accounts held by U.S. persons.

“Where a jurisdiction has a reciprocal IGA and the jurisdiction has the necessary safeguards and infrastructure in place, the IRS will also use IDES to provide similar information to the host country tax authority on accounts in U.S. financial institutions held by the jurisdiction’s residents,” Koskinen said.

The IRS explains that in using IDES, a web application, the sender encrypts the data and IDES encrypts the transmission pathway to protect data transfers. “Encryption at both the file and transmission level safeguards sensitive tax information,” IRS said.

The IRS encourages host country tax authorities in Model 2 IGA jurisdictions (Austria, Bermuda, Chile, Hong King, Japan, Moldova and Switzerland) and financial institutions to begin the enrollment process well in advance of their reporting deadline.

However, a financial institution or tax authority will need to first obtain a digital certificate to begin transmitting information in IDES, as “digital certificates bind digital information to physical identities and provide data integrity.”

A list of approved Certificate Authorities are available on IRS.gov.

For host country tax authorities in Model 1 IGA jurisdictions, the IRS said that it will directly notify them to let them know when it is time to enroll.

Financial institutions will initiate enrollment online on their own; in order to enroll, the financial institution will need to have registered as a participating financial institution through the IRS FATCA Registration System and have a global intermediary identification number (GIIN) that appears on the IRS FATCA FFI list. The online address for IDES enrollment can be found at www.IDES-Support.com.