History of Tax Data File Export/Import

File import capabilities have been a staple of desktop tax applications for many years. Using the Tax Exchange Format (TXF), any tax data provider can export a TXF file and tax software can import the file. Typically, users select File > Import in the menu bar and are presented the opportunity to browse to a file.

When online tax applications began, they did not include a TXF file import feature. Instead, online tax applications began importing data using the Open Financial Exchange (OFX) API technology. 

Limitations of TXF and OFX

After 2013, the TXF file specification stopped being published and maintained. As such TXF files can still be imported – but there are gaps in the supported data due to new or changed fields on tax forms since 2013.

OFX is limited by covering a narrower set of tax forms than TXF offered. An even greater limitation is that OFX-formatted data is only delivered via API, with few exceptions. Setting up direct system-to-system API connections between each of a dozen or more tax software applications and thousands of tax data providers is impractical for the industry. Most or all investment brokers, for example, have set up an OFX API connection with just one or two software companies and consider that sufficient.

	TXF	OFX
Tax form coverage	Broader coverage Outdated, no changes since 2013	Narrower coverage Up-to-date
Delivery mechanisms	Universal file export/import	Individual system-to-system software APIs Many sites using insecure OFX versions before 2.2

FDX Standards Fill the Gap

The Financial Data Exchange (FDX) standard-setting organization defines use cases for US Tax data file export/import and has created a standard replacement for TXF using the ubiquitous JSON (JavaScript Object Notation) format. These support exchange of tax data where API relationships are not available. FDX defines data structures for over 50 tax documents. FDX JSON files also provide an alternative to proprietary CSV (Comma-Separated Value) files having to be defined by each tax data provider.

File Download & File Upload

As seen below, taxpayers open two browser windows – either simultaneously or in succession. They download a JSON file from a tax data provider website and then upload the file to their tax preparation software application. Tedious and error-prone manual data entry is eliminated and the tax prep experience is simplified and streamlined. Without having to set up an API relationship between the tax data provider and the tax software application or risk introducing data errors through upload of diverse PDF file formats.

Download File from Tax Data Provider – Example Page

Download pages would now include an option to download the data in addition to the PDFs.

Upload File to Tax Prep Software – Example Page

Tax prep software would then have corresponding upload pages accepting data files.

Industry-Standard, Open Data File Structures

FDX JSON for tax documents is an open standard. The specification is available at the FDX website simply by registering.

For More Information

If you are interested in learning more, visit https://financialdataexchange.org/tax-json or contact fdxsupport@financialdataexchange.org.