FDX releases FDX API 4.2; a comprehensive tax information API in the U.S

By Pavithra R

The Financial Data Exchange has announced the release of Version 4.2 of the FDX API which now includes comprehensive tax info fields of any API in the United States.

In addition to continuing to provide the financial industry with a common, interoperable, and royalty-free standard for the secure access of user permissioned financial data Virginia based Financial Data Exchange, a nonprofit organization, now encompasses 51 different IRS forms and statements.

The FDX API paves the way for the transition from current disparate tax formats, Tax Exchange Format (TXF) and Open Financial Exchange (OFX), as well as other proprietary formats like PDF and CSV. This transition to FDX API make tax preparation and reporting more efficient and secure. Other updates contained in FDX API 4.2 include the separation of the banking & tax specification for improved readability and the addition of annuity accounts in the API.

“FDX API 4.2 represents another high-water mark for our organization and continues to deliver on FDX’s promise to give the financial industry a secure, best-in-class open standard for all different types of user-permissioned data sharing,” stated FDX Managing Director Don Cardinal. 

FDX API 4.2 puts in place a single standard data structure for exporting and importing almost all tax accounting data in the U.S. that does not ask for sharing the login credentials.

Earlier, tax information has been split between a patchwork of different standards like OFX, TXF, PDF, and CSV. FDX API 4.2 enables a secure data sharing standard for interactions between various tax software applications and companies that runs tax form data servers, such as banks, payroll companies, and brokerage firms.

“The FDX Tax Task Force’s work on the FDX API 4.2 specification will provide a huge upgrade in security for tax information reporting data,” said Clyde Cutting, Systems Architect at Wells Fargo, and member of the FDX Tax Task Force that worked to deliver the updated standard. All FDX data structures are readily generated and consumed using the ubiquitous JSON data serialization technology. 

The new version, besides supporting the array of tax forms and statements, also supports all types of royalty, business, farm, and rental income tax information. It also provides U.S. tax reporting data in a human-readable text format so as to be used to file importing and exporting with tax return preparation software. It allows QR codes to be added to annual tax documents so that smartphone apps using open QR code technology can be used by all tax filers. 

“The release of version 4.2 of the FDX API specification, and the unification of all annual tax form and statement data under one standard, will allow the tax software industry to simplify and streamline the income tax return preparation process for taxpayers and accountants alike,” said Bruce Wilcox, President of Internet Tax Information Processing Services (iTips), and member of the FDX Tax Task Force.

Founded in 2018, The Financial Data Exchange was established on the idea that consumers and businesses should have easier, more secure access to their financial data. Tax Data Exchange is an independent production of members of FDX’s API & Data Structures working group who specialize in tax data exchange.