Apply for a FIRPTA refund within 3 years or lose it permanently!

IRS Statute of Limitations are Strict.

Periods of limitation on filing claims for refunds with the IRS are strictly delineated in the IRS Code Sections. Claims for refunds must be filed within 3 years from the time the return was filed or 2 yeas from the time the tax was paid, whichever of such periods expires later, or if no return was filed by the taxpayer, within 2 years of the time the tax was paid.

FIRPTA transactions require the FIRPTA withholding tax period to begin on the date the real estate transaction closed. Strict adherence to the remittance of FIRPTA withholding must also be followed. For this reason it is generally considered that the closing date of a FIRPTA real estate transaction or other non-real estate FIRPTA disbursement is the date of closing or payment.

This means that after the 3 year period, the IRS basically gets to keep the FIRPTA withholding if no claim for refund filing has been made in that time. Therefore it is critical to apply for a refund within the statute of limitation period.

IRS has a strict 3 year statute of limitations on filing for a FIRPTA tax refund.