Tuesday, July 21, 2015

In CRS Reporting: Does a corrected Account Balance have to show a corrected FI ?

FIs are supposed to report their customers´ account balance. The Competent Authorities of the signatories collect this information and transmit it via an XML scheme as detailed in the CRS User Guide. This User Guide, even though basically a copy of the FATCA XML schema, has some shortcomings which are exemplified by the title question: When a bank wants to correct an account balance, does it have to resend the all the information pertaining to itself ?

The XML User Guide requires that each report must contain information Picture3pertaining to a FI. The field Reporting FI is mandatory (the requirement of this field is “validation” in the parlance of the CRS, which means that it has to exist or otherwise the message will fail validation). Even a correction hence needs to resend all the information previously transmitted. The CRS User Guide addresses this issue specifically for Account Reports:

“For a Correction, the whole AccountReport must be resent with all its information.“

This statement is slightly ambiguous since when explaining how to correct messages, the User Guide specifies:

”Since no data in AccountReport needs to be corrected, only the ReportingFI is sent as the correction.”

This seems to contradict another statement in the User Guide: AccountReport is mandatory under CRS. The reader is left puzzled as to whether the AccountReport is mandatory or not. An enigma wrapped in a riddle …

Once an AccountReport is being indicated as corrected, how should the information regarding the accompanying FI be labeled: New, Corrected, or Deleted? Other options are not available. None of the three available options truly captures the idea that previously submitted data is to be resent.

CRS has a mechanism to label  information as “Resend Data”, however, the current scheme provides that this field is “not used for CRS reporting”.

Maybe this discussion is overblown, since even if the information regarding the FI is labeled as “new”, the competent authority will use it and check the account holder’s tax information. The same applies to the label corrected or deleted data.

A tax payer wanting to avoid being reported should convince his financial institution to transmit the corrected information only after several corrections and some deletions. The CRS schema allows many interpretation which will lead to inconsistent implementations which in turn increase the chance that such information will simply be forgotten or discarded.

The post In CRS Reporting: Does a corrected Account Balance have to show a corrected FI ? appeared first on Common Reporting Standard.

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