Foreign Investment in Real Property Tax Act (1980)
Our team of experts will help you find the best solution for your FIRPTA Withholding needs
Our services include:
Questions to consider
FIRPTA is a Withholding that was designed by the Internal Revenue Service (IRS) to ensure foreign owners (person/company) of U.S. property pay taxes on the profits (gain) when they sell. FIRPTA is a withholding and not a tax.
The buyer/transferee must find out if the seller/transferor is a foreign person/company. If the seller is a foreign person and the buyer fails to withhold, the buyer may be held liable for the tax.
A Foreign Person is a nonresident individual, foreign corporation that has not made an election under section 897(i) of the Internal Revenue Code to be treated as a domestic corporation, foreign partnership, foreign trust, or foreign estate.
FIRPTA Withholding funds must be submitted to the IRS within 20 days of closing. However, if a Withholding Certificate application has been submitted to the IRS before closing, the applicable withholding is not required to be paid over to the IRS until the 20 th day after the day that the IRS mails the Withholding Certificate or notice of denial. The IRS will normally act on an application within 90 days of receipt of all information necessary to make a proper determination.
Interest and penalties will be assessed beginning on the 21 st day after date of the transfer or by the 21 st day of the Withholding certificate date if an amount is due to the IRS. The buyer/transferor is responsible for penalties/interest.
Illustrative Chart-Withholding Percentage of Gross Sales Price