FIRPTA Withholding Certificate

According to IRS.gov, the amount that must be withheld from the disposition of a U.S. real property interest can be adjusted pursuant to a withholding certificate issued by the IRS. The transferee, the transferee’s agent, or the transferor may request a withholding certificate. The IRS will generally act on these requests within 90 days after receipt of a complete application which includes the Taxpayer Identification Numbers (TIN’s) of all the parties to the transaction. A transferor that applies for a withholding certificate must notify the transferee in writing that the certificate has been applied for on the day of or the day prior to the transfer.

Conditions

A withholding certificate may be issued under the following conditions:

  1. A determination by the IRS that reduced withholding is appropriate because either:

    A.  The amount that must be withheld would be more than the transferor’s maximum tax liability, or

    B.  Withholding of the reduced amount would not jeopardize collection of the tax,

  2. The exemption from U.S. tax of all gain realized by the transferor, or

  3. An agreement for the payment of tax providing security for the tax liability, entered into by the transferee or transferor.

There are six general categories for withholding certificate applications:

  1. Applications based on a claim that the transfer is entitled to nonrecognition treatment or is exempt from tax,

  2. Applications based solely on a calculation of the transferor’s maximum tax liability,

  3. Applications under special installment sale rules,

  4. Applications based on an agreement for the payment of tax with conforming security,

  5. Applications for blanket withholding certificates, and

  6. Applications on any other basis.

What We Do

FIRPTA Solutions, Inc. can help to determine if you are eligible to apply for a FIRPTA withholding certificate and under which category the application should be made. We will work with you to gather relevant documents and then submit them in a timely manner to the IRS. Then we will follow up with IRS until the withholding certificate is issued ensuring that critical deadlines are not missed.

Want to see if you qualify for a withholding certificate? Give us some basic information about your sale: