The Foreign Investment in Real Property Tax Act requires buyers in certain transactions involving foreign sellers to withhold funds for federal taxes. What if I represent a foreign seller and he cannot afford to have the tax taken out of his proceeds?
The seller may request an adjustment of the amount withheld from the IRS by filing a withholding certificate application (IRS Form 8288-B). The buyer or buyer’s agent can also request this adjustment.
The IRS will generally act on the request within 90 days of receipt of an application. A seller who applies for an adjusted withholding must notify the buyer in writing that the certificate has been applied for no later than the closing date. Since the seller’s agent may not make the request on behalf of the seller, the seller’s agent should discuss the withholding certificate with the seller as an option during the negotiation process.
I think the LISTING agent should start this discussion at the time of taking the listing if IRS can take 90 days …
The seller’s agent (mentioned in the article) IS the listing agent.
About 8 years ago, I had a client who needed the IRS to first, give an amount to pay off a “surprise lien” on a property that should have had zero liens and then, once paid, given a receipt and release of lien. Being that this was a hefty 6 figures and also a billionaire client, I got out of my comfort zone and went directly to the IRS in person. There is a different group of IRS employees that you don’t usually see when visiting the IRS offices. These, in my case, were agents with guns and badges that… Read more »
Scott, this is AWESOME. I’m 4 years late to the article and your comment, but it will probably help me one day, and this is what I would probably do. What IRS office did you go to? I mean, not necessarily what location, but rather, what department?
How can the seller’s agent verify or ask about the seller being a foreign person.
Ask them for their social security number or green card.
A little different note. I have a seller who inherited a property in Texas. However, she is not a US Citizen. I’ve tried to get her an ITIN number, because she does not have a social security number. I’ve taken her to the IRS, but the IRS has not help her at all. Any suggestions?
Contact Blanca Ruiz 972-754-8615 for help. She’s my assistant and is knowledgeable about these matters.