Liability of Buyers, Sellers & Agents

The IRS holds the Buyer/ Payer 100% liable for the full 15% of gross sale or distribution FIRPTA withholding, remitting these Seller/Payer funds to the IRS within 20 days of distribution unless legitimate exceptions apply. Buyer/ Payer are liable but so are their agents!

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• An agent is a person who represents the seller/transferor or the buyer/transferee in any negotiation with another person or that person's agent relating to the transaction or in settling the transaction.

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• A person is not an agent if the person only performs one or more of the following acts related to the transaction:

• • Receipt and disbursement of any part of the consideration,

  • Recording of any document,

  • Typing, copying, and other clerical tasks,

  • Obtaining title Insurance reports and reports concerning the condition of the property, or

  • Transmitting documents between the parties.

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This is an example of where a Seller's realtor can lose their entire commission!

• Seller/transferor's Agent or Qualified Substitute can provide exemption certifications to the Buyer/Transferee.

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• If the Agent or Qualified Substitute knows that the interest is not a real property interest, or the corporation is not a foreign corporation and that information is false, and the Agent or Qualified Substitute  does not notify you, the agent or substitute will be held liable for the tax, limited to the compensation the agent or substitute gets from the transaction.

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A Withholding Agent is personally liable for the full amount of FIRPTA withholding tax required to be withheld, plus penalties and interest. 

• A Withholding Agent is any person having the control, receipt, custody, disposal or payment of income that is subject to withholding. 

• Generally, the person who pays an amount to the foreign person subject to withholding must do FIRPTA withholding.