What Happens if FIRPTA Is Discovered After Closing?
What Happens If FIRPTA Is Discovered After Closing?
Most FIRPTA issues are resolved before closing.
Unfortunately, not all of them are.
When FIRPTA compliance problems are discovered after the transaction has closed, resolving them often becomes more complicated, more time-consuming, and more expensive.
Why This Matters
Under FIRPTA, the buyer is generally responsible for ensuring the required withholding is properly handled and remitted to the IRS when purchasing U.S. real estate from a foreign seller.
If FIRPTA withholding was overlooked or underpaid, potential issues may include:
Unpaid withholding exposure
Interest and penalties
Delayed IRS filings
Corrective filing requirements
Transaction disputes
Refund complications
In some situations, the seller has already received and transferred the sale proceeds, making remediation significantly more difficult.
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