👋The 3 phases of a FIRTPA transaction
A typical FIRPTA transaction can be understood in three key phases, each with its own requirements and timing.
1️⃣ Closing & Withholding
At closing, the buyer (or their agent) is responsible for:
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Determining whether FIRPTA applies
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Withholding the required amount (typically 10%–15%)
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Preparing and submitting the appropriate IRS forms
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Remitting the withholding to the IRS
We refer to this as the Buyer’s FIRPTA Closing Package phase, where proper preparation and execution are critical.
2️⃣ Tax Identification Numbers (ITINs)
After closing, foreign sellers may need to:
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Obtain a new Individual Taxpayer Identification Number (ITIN)
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Renew an existing ITIN (if expired or inactive)
Some sellers may already have valid ITINs or Social Security numbers and do not require this step.
As IRS Certified Acceptance Agents (CAAs), FIRPTA Refunds can obtain or renew ITINs for our clients efficiently and securely.
3️⃣ Tax Filing & Refund
The final phase is filing for the seller’s tax refund.
This may occur:
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At or near closing through a withholding certificate application
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Or later through year-end tax filings
In either case, the goal is to:
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Reconcile the FIRPTA withholding
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Determine actual tax liability
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Recover any excess withholding as a refund
FIRPTA Refunds, in coordination with CPA support when needed, facilitates this process.
🧠 A Complete FIRPTA Process
These three phases represent the core structure of a FIRPTA transaction.
FIRPTA Refunds offers a full range of services to support each step — ensuring the process is handled correctly from closing through final resolution.
👉 Navigate All Phases With Confidence
If you need assistance with any phase of a FIRPTA transaction, we’re here to help.