What Happens if FIRPTA Is Discovered After Closing?

In some real estate transactions, FIRPTA issues are not identified until after closing has already occurred.

This can create significant complications for buyers, sellers, attorneys, and settlement agents.

Under FIRPTA, buyers are generally responsible for ensuring that 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

• penalties and interest

• delayed filings

• corrective filing requirements

• transaction disputes

• refund complications

In some situations, the seller may have already received and transferred the sale proceeds, making remediation more difficult.

Late discovery situations often require careful review of:

• ownership structure

• residency status

• transaction documentation

• withholding exceptions

• filing deadlines

• available corrective actions

The earlier FIRPTA issues are identified, the easier they are generally to address.

At FIRPTArefunds.com, we assist buyers, sellers, attorneys, and settlement agents with FIRPTA compliance reviews, withholding certificate matters, and post-closing FIRPTA issues.

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