FIRPTA withholding for buyers and closing agents: Forms 8288, 8288-A and 8288-B, the W-9 that ends it, and what Ogden does with the filing

What FIRPTA withholds, and who is the agent

The Foreign Investment in Real Property Tax Act taxes a foreign person's gain on U.S. real property as if it were effectively connected income (IRC 897), and IRC 1445 collects that tax in advance from the only party the IRS can reach: the buyer. "A withholding obligation under section 1445 is generally imposed on the buyer or other transferee (withholding agent) when a U.S. real property interest (USRPI) is acquired from a foreign person" (Instructions for Form 8288, Rev. Jan. 2026). A U.S. real property interest is any interest in real property in the United States or the Virgin Islands, certain associated personal property, and an interest (other than solely as a creditor) in a domestic corporation that is or was a U.S. real property holding corporation in the prior five years (IRM 3.21.261.1.1.1, Jan. 1, 2025). An option to acquire a USRPI is itself a USRPI (IRM 21.8.5.4, Oct. 1, 2026).

The agent is the transferee, whoever that is: "A transferee can be a Domestic or Foreign person or entity, or multiple individuals" (IRM 3.21.261.1.1.1). "If two or more persons are joint transferees, each is obligated to withhold. However, the obligation of each will be met if one of the joint transferees withholds and transmits the required amount" (Instructions for Form 8288). The title company, escrow agent or attorney is not the withholding agent; it is an agent of a party, with a narrower duty described under liability.

The amount withheld on is the amount realized: "The sum of the cash paid or to be paid (not including interest or original issue discount), the fair market value of other property transferred or to be transferred, and the amount of any liability assumed by the transferee or to which the USRPI is subject immediately before and after the transfer" (Instructions for Form 8288). It is the price, not the gain, and not the cash at closing: a mortgage the buyer assumes is part of it.

The rate

The 15% rate dates from the PATH Act: "Effective for dispositions on or after February 16, 2016, Public Law (PL) 114-113, the Protecting Americans from Tax Hikes (PATH) Act, generally increases the withholding rate from 10 to 15 percent of the amount realized" (IRM 21.8.5.4, Oct. 1, 2026). The residence tiers are in the same subsection: 10% "where the amount realized by the seller is $1 million or less" and the property is for the buyer's use as a residence, and zero when the amount realized is $300,000 or less.

"Residence" is a test about the buyer, not the seller. The buyer or a member of the buyer's family must have "definite plans to reside in the property for at least 50 percent of the number of days the property is used by any person during each of the first two 12-month periods following the date of transfer," ignoring vacant days, and "This exception does not apply if the actual transferee (buyer) is not an individual, even if the property is acquired for an individual" (IRM 3.21.261.18, Jan. 1, 2023). An LLC buying a house for its member withholds 15%.

With joint sellers, one foreign and one not, the amount realized is allocated by capital contribution (spouses are treated as 50/50), withholding applies to the foreign share, and the foreign sellers must tell the buyer by the tenth day after transfer how to credit it among them, failing which it is divided evenly (Instructions for Form 8288).

What turns withholding off

The Code and Edit manual lists the exceptions a buyer may rely on without filing anything (IRM 3.21.261.18, Jan. 1, 2023), and the Form 8288 instructions match:

A buyer who files Forms 8288 and 8288-A anyway, disclosing that one of these exceptions applies, gets nothing back: the manual tells the campus to pull the document, cancel the number and destroy it as classified waste, and "Do not enter the Form 8288-A into the INTLWebApps Database or correspond for missing information, specifically a Taxpayer Identification Number (TIN), when the transferee (buyer) discloses to the IRS no withholding is required" (IRM 3.21.261.18). The exception is claimed by not filing.

The W-9 as a FIRPTA certification

This is where FIRPTA meets the TIN compliance program. The W-9 a closing agent collects from a seller does two jobs: it supports the Form 1099-S for the sale, and it is the seller's sworn statement that no FIRPTA withholding is due. The certification must be signed "by the individual, a responsible officer of a corporation, a general partner of a partnership, or the trustee, executor, or fiduciary of a trust or estate." It can be held by a qualified substitute (the buyer's attorney or the title company) who gives the buyer a statement that it is in hand.

The protection is strong but not absolute: "If you receive a certification (or statement), the withholding tax cannot be collected from you unless you knew that the certification (or statement) was false or you received a notice from your agent, the transferor's agent, or the qualified substitute that it was false." And a buyer who decides the seller is domestic by "other means" and is wrong pays the tax. A seller who refuses a W-9, or gives one in the name of a single-member LLC whose owner is foreign, has not certified anything. The same name/TIN discipline that governs a vendor file applies: the certification is only as good as the name on it, and a disregarded entity's W-9 must carry the owner's name and TIN.

A late discovery is handled going forward. If the buyer learns after closing that the certification was false, consideration already paid is safe, but "you must withhold the full 15% of the amount realized from any consideration that remains to be paid, if possible," paying over each later installment in full until the 15% is reached, each by the 20th day after that payment (Instructions for Form 8288).

Filing Forms 8288 and 8288-A

"A transferee must file Form 8288 and transmit the tax withheld to the IRS by the 20th day after the date of transfer" (Instructions for Form 8288). "There is no official extension form for Form 8288" (IRM 3.21.261.1.1, Jan. 1, 2023). The return, the payment and Copies A and B of a Form 8288-A for each foreign seller go together to the Ogden Service Center, P.O. Box 409101, Ogden, UT 84409; Copy C is the buyer's record. The buyer is "not required to furnish a copy of Form 8288 or 8288-A directly to the transferor": the IRS does that, with the stamped Copy B.

Installment sales do not spread the withholding: "You must withhold the full amount at the time of the first installment payment," and a buyer who cannot, because the first payment is too small, needs a withholding certificate (Instructions for Form 8288; the category 3 application is described below).

When a certificate application was filed by the date of transfer, the clock moves: Form 8288 is due "on or before the 20th day from the date on the withholding certificate," entered on line 4, but "If the principal purpose for filing the application for a withholding certificate was to delay paying the IRS the amount withheld, interest and penalties will apply from the original Date of Transfer" (IRM 3.21.261.1.1.1).

What Ogden does with the filing

Form 8288 is processed at Ogden as a non-remittance return: the payment gets its own document locator number and posts separately, which is why a buyer checking the account later sees the deposit and the return as two transactions. Before the return reaches transcription, the FIRPTA unit keys every Form 8288-A into the FIRPTA database, because that record is what the seller's later credit is checked against: "populate the Form 8288-A FIRPTA database with each foreign transferor(s) (seller) Copy A information, which will be used later to perform the credit verification using Form 13698, International Credit(s) Verification Slip" (IRM 3.21.261.1.1.2, Jan. 1, 2023). The unit then stamps and mails Copy B to the seller, "or correspond[s] for a Taxpayer Identifying Number."

A Form 8288 that arrives without its 8288-A, without a date of transfer, or unsigned draws Letter 3104C, the FIRPTA processing letter, and is coded unprocessable until the answer comes (IRM 3.21.261.18 and following). A Form 8288-B attached to the Form 8288 is detached and sent to Accounts Management; it "is not supposed to be attached to Form 8288" (IRM 3.21.261.13). The Form 1099-S for the same sale is a separate filing through IRIS and is not part of this package.

When the seller has no TIN

Treasury Decision 9082 "requires all foreign transferors (sellers) of USRPI's provide their Taxpayer Identifying Number (TIN) on withholding tax returns, applications for withholding certificates, and other notices or elections under IRC 897 and IRC 1445" (IRM 21.8.5.4). Many foreign sellers have none. The route is a Form W-7 ITIN application filed with the FIRPTA package: when a W-7 is attached to the Form 8288 or 8288-A, Ogden forwards it with the forms to the ITIN unit in Austin, which assigns the number and sends the edited form back for processing (IRM 3.21.261.13, Jan. 1, 2024). On a Form 8288-B the ITIN unit "has 10 days to process the ITIN request" before the application goes on to Ogden Accounts Management (IRM 21.8.5.4.1, Oct. 1, 2026). A seller who waits to apply until the return is due has a stamped Copy B waiting at the IRS, and a Letter 3793 ("No TIN") on a certificate application.

For the closing agent the practical rule is the same as for any payee: get the TIN before closing, or get the W-7 package signed at closing. A seller without a TIN cannot be matched, cannot receive Copy B and cannot claim the credit until the number exists.

Form 8288-B: reducing the withholding before closing

Withholding is on the price; tax is on the gain. A seller with a small gain, a loss, or an exemption can ask the IRS, before closing, for a withholding certificate that reduces or eliminates the amount. "Form 8288-B ... is used to apply to the IRS for the reduction or elimination (by category of exemption or reduction) of withholding on a transfer made by a foreign seller," and "A formal letter of application is acceptable in lieu of Form 8288-B" (IRM 21.8.5.4). Either party or an agent may apply, and an agent signs under a power of attorney and certifies under penalties of perjury.

The timing rule is the one that catches people. To withhold at the reduced rate at closing, the application must be "submitted to the IRS prior to the Date of Transfer" or "mailed to the IRS (postmarked) no later than the day of the transfer," with "the complete name, address, and U.S. TIN number of both the transferor (seller) and the transferee (buyer)" (IRM 21.8.5.4.1). The buyer still withholds the full amount at closing; what changes is where it sits.

An application filed after the transfer is not processed, with one exception: a complete late application "that shows no tax is due or owed based on the transaction" is worked "to ease taxpayer burden" (IRM 21.8.5.4.1). Otherwise the buyer remits the full amount and the seller claims a refund on the return.

The IRS recognizes six categories (IRM 21.8.5.4.3, Nov. 3, 2023). The three on the form are: category 1, nonrecognition or exemption, with a description of the transfer, a summary of the law and facts, evidence of no unsatisfied withholding liability, and a good-faith value; category 2, maximum tax liability, with the amount realized and a signed contract, the adjusted basis with evidence ("Schedules of depreciation allowed for tax purposes during the period the property was held and/or settlement sheet when purchased"), recapture amounts, and the tax at 20% for individuals or 21% for corporations, or a draft return showing the estimated liability; and category 3, installment sales, with the buyer's signed agreement to withhold on each payment. Categories 4 to 6 (agreements for payment of tax, blanket certificates for up to 12 months, and other security) are sent to Ogden Examination. In working a category 2 application the examiner recomputes the gain and "Do[es] not allow taxes and interest in the calculation of adjusted basis"; the tape or worksheet must be attached, because "This is the only way to identify how the IRS determined the tax" (IRM 21.8.5.4.5, Oct. 1, 2026).

Line 8 asks about the seller's own unsatisfied withholding liability, the tax the seller should have withheld when it bought the property from a foreign person. The applicant must supply either the calculation or evidence there is none, from the list in Rev. Proc. 2000-35: purchase before 1985, a copy of the earlier Form 8288 with proof of payment, the earlier seller's certification of nonforeign status, evidence of a residence purchase at $300,000 or less, or a signed statement of the facts. Missing evidence is requested once; no response rejects the application as incomplete (IRM 21.8.5.4.5).

Entities: IRC 1445(e) and partnership interests under 1446(f)

IRC 1445(e) moves the withholding duty inside an entity for certain distributions and dispositions: a domestic corporation distributing property to a foreign shareholder, a domestic or foreign partnership, trust or estate distributing a USRPI or disposing of one on a foreign owner's behalf, and a foreign corporation distributing a USRPI. The rate for those distributions is 21% of the gain (35% before 2018), reported on Part II of Form 8288, and the parties who may hold the duty are the "Foreign Corporation, Domestic Corporation, Domestic or Foreign Partnership, Trustee of Domestic or Foreign Trust, Executor of Domestic or Foreign Estate" (IRM 3.21.261.1.1.1). The same 20-day clock and the same forms apply. A corporation with a foreign shareholder that quitclaims property to that shareholder so the individual can sell at the 20% rate is a pattern the manual names and routes to Ogden Classification; "The foreign corporation (and not the individual) is the taxable party in this transaction" (IRM 21.8.5.4).

Form 8288 also carries a different regime. Since 2018, IRC 1446(f) requires a buyer of a partnership interest from a foreign partner to withhold 10% of the amount realized where the partnership has effectively connected income, reported on Part III with Form 8288-A, and a partnership whose buyer failed to withhold must withhold from later distributions, reported on Part IV with Form 8288-C (IRM 3.21.261.1.1 and 3.21.261.1.1.3). "Only used in Section 1446(f), sale of partnership interest. Not FIRPTA" (IRM 21.8.5.4). The certifications that excuse 1446(f) withholding (nonforeign status, less than 10% effectively connected gain, a treaty claim on a Form W-8BEN or W-8BEN-E) are the partnership's or the seller's to give and are listed in the Form 8288 instructions. Publicly traded partnership interests are withheld on by brokers under separate rules.

Liability and penalties

The buyer who did not withhold owes the tax the seller should have paid, with interest, and "Under section 6651, penalties apply for failure to file Form 8288 when due and for failure to pay the withholding when due" (Instructions for Form 8288). The IRS can also pursue the seller for the underlying tax, but the statute makes the buyer liable without first exhausting the seller.

Agents have a narrower exposure. "Agents have a duty to provide notice of false certifications under IRC 1445(d). Agents are not liable for the withholding tax under IRC 1445(a) due to false certifications made by the seller unless they have actual knowledge the certification is false. In that case, their liability is capped at the amount of their compensation" (IRM 3.21.261.1.1.1; Treas. Reg. 1.1445-4(e)). A title company that knows the seller is foreign and lets a nonforeign affidavit through is liable up to its fee; one that passes the notice to the buyer has discharged its duty.

The seller's side: the credit and the early refund

The withheld amount is a credit on the seller's U.S. return, Form 1040-NR or 1120-F, claimed by attaching the stamped Copy B. Where the buyer withheld but never paid it over, the seller never receives a Copy B, and "the transferor (seller) can establish the amount of tax withheld by the transferee (purchaser/buyer) by attaching to its tax return substantial evidence (e.g., closing documents for IRC 1445(a) ...) of the amount of tax withheld" (IRM 3.21.261.1.1.2, Jan. 1, 2023). The IRS then pursues the buyer.

A seller who holds a withholding certificate issued after closing, reducing or eliminating the tax, can get the excess back before the return is due. The request is a letter or Form 843, "signed by the transferor (seller)," with the seller's TIN, a copy of the certificate and "a stamped copy of Form 8288-A, Copy B attached"; "An Early FIRPTA refund is issued within the same year of withholding. Therefore, no interest is paid on the refund," and the processing time quoted to callers is 90 days (IRM 21.8.5.4.11, Oct. 1, 2026). Without a certificate, the route is the ordinary refund on the return.

Closing checklist

• Every seller: W-9 or W-8. A W-9 with a U.S. TIN is the certification of nonforeign status. A seller that cannot give one is foreign for FIRPTA purposes until shown otherwise.
• Check the name on the W-9. A single-member LLC certifies through its owner; a foreign owner behind a domestic LLC is a foreign seller.
• Classify the buyer and the price. Individual buyer with residence plans: $300,000 or less, nothing; up to $1 million, 10%. Everything else 15%. Entity buyers never get the residence rates.
• Get the foreign seller's TIN, or the W-7 package, at closing. Without it the seller gets no Copy B and no credit.
• If the seller wants reduced withholding, file Form 8288-B before closing. Postmark by the date of transfer, both parties' TINs on it, and withhold the full amount into escrow until the IRS decides.
• Calendar the 20th day. Form 8288, the payment and Copies A and B of each 8288-A to the Ogden P.O. box. No extension exists.
• Do not file to claim an exception. A return disclosing that no withholding was required is destroyed on arrival. Keep the certification or notice in the file for five years instead.
• Keep Copy C and the closing statement. They are the buyer's proof of withholding and the seller's fallback if Copy B never arrives.

Questions people ask