Congress enacted the Foreign Investment in Real Property Tax Act to force Foreign Sellers to have 15% (with some exceptions) withheld from their sale proceeds of a US property sale and have that money remitted to the IRS within 20 days. Then it's up to the Foreign Seller to apply for a refund.
There are some exemptions under which FIRPTA may be reduced or eliminated.
Congress empowers the IRS to hold the Buyer responsible for the withholding, which provides a party stateside to whom the IRS may go to collect unpaid FIRPTA, penalties, interest and amounts due. So it is very important the Buyer ensure the process is done to the letter of the law.
FIRPTA withholding is on the full sale amount but the actual tax due the IRS is only on the capital gains, and offsets to those are allowed. The process of obtaining the refund then becomes a tax filing scenario. But FIRPTA tax withholding and refunds requires an Individual Taxpayer Identification Number (ITIN) in order to obtain a refund.
FIRPTArefunds specializes in the six separate undertakings to make Foreign Seller refunds a reality. These are listed in our services menu. We offer free consultations with an expert that has a minimum of 30 years FIRPTA experience. We can calculate your withholding, your refund, costs and timing as well as identify exactly what you need to do and best of all we can accomplish all this for you at low competitive pricing. We can also verify our credentials. We are IRS Certified Acceptance Agents as well which means clients hold onto their passports instead of submitting them to the IRS in the ITIN process.
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