Treasury: Unidentified, Unaddressed Issues of FIRPTA Tax Withholding Results in Over 600 Million Dollar Discrepancy (IRC §897)

Audit of the IRS’s reconciliation processes found that it does not effectively identify and address Foreign Investment in Real Property Tax Act (FIRPTA) reporting and payment noncompliance, the Treasury Inspector General for Tax Administration released March 12. FIRPTA imposes an income tax on foreigners selling U.S. real property interests which requires buyers to withhold a percentage of the anticipated taxes due on the amount realized from the sale. TIGTA stated that the purpose of FIRPTA is to incentivize foreign sellers to file the appropriate U.S. tax return. TIGTA found over 2,900 buyers, with discrepancies of more than $688 million, between ...