Open Forum

We are monitoring IRS, U.S. Treasury news, and industry groups (AICPA, NAEA,) for developments on electronic remittances in USRPI transactions with foreign sellers. I am also communicating with NAEA and the IRS Stakeholders Liaison in Houston about this matter.

Key Issue: Starting September 30, 2025, under Executive Order 14247, U.S. Treasury bans paper checks for all payments and requires all payments be made via electronic deposit; FIRPTA deposits may qualify for limited exceptions.

Challenges and Proposed Solutions:

1.  Buyer EFTPS Setup Delays

          •  Most buyers lack EFTPS accounts; setup takes 10-15 days, but remittance deadline is 20 days post-closing. Risk: Late remittance triggers penalties.

          •  Solution: Use IRS Direct Pay with buyer's TIN. Title company disburses withholding funds to buyer for remittance.

2.  Moral Hazard and Lender Reluctance

          •  Risk: Buyer receives 15% of sales price but may not remit timely (e.g., buyer's remorse, misuse of funds).

          •  Lenders hesitant to release cash to buyer without guarantees.

          •  Impact: Buyer as withholding agent remains liable, but enforcement is uncertain.

3.  Foreign Buyers Without U.S. TIN

          •  No TIN prevents EFTPS account creation.

          •  Current: Paper check to Treasury's "Unapplied Remittance" account; apply funds once TIN assigned.

          •  Post-Sep 30 Challenge: Paper checks remittance may be unavailable or may trigger the 10% failure to deposit electronically.

          •  Proposed Solution: Develop framework allowing reporting agents (e.g., tax firms, law firms, title companies, lenders) to remit on behalf of buyers using agent's EFTPS account, credited to buyer's TIN.

Test Note: I successfully tested an EFTPS Form 8288 deposit via our company account, but funds applied to our EIN, not resolving attribution to buyer's TIN.

In our opinion, FIRPTA deposits may qualify under limited exceptions to EO 14247, as IRS has no framework in place for deposits other than through the buyer, which presents problems. This exception will apply until IRS rolls out a framework allowing title companies to remit directly or use third-party reporting agents for deposits.

We can discuss further if needed.

Thanks for the info.  Wouldn't  it be an option for the title company/closing agent to send a wire to the IRS for the FIRPTA withholding payment?  IRS says NO paper checks but I did not see where the only option was EFTPS.  I don't believe there is any title company/closing agent  who would allow the release of those seller funds to a buyer to then rely on the buyer to remit them to the IRS.  Nor could I imagine a seller authorizing that.  Wouldn't a wire transfer be the simplest solution?

We are monitoring IRS, U.S. Treasury news, and industry groups (AICPA, NAEA,) for developments on electronic remittances in USRPI transactions with foreign sellers. I am also communicating with NAEA and the IRS Stakeholders Liaison in Houston about this matter.

Key Issue: Starting September 30, 2025, under Executive Order 14247, U.S. Treasury bans paper checks for all payments and requires all payments be made via electronic deposit; FIRPTA deposits may qualify for limited exceptions.

Challenges and Proposed Solutions:

1.  Buyer EFTPS Setup Delays

          •  Most buyers lack EFTPS accounts; setup takes 10-15 days, but remittance deadline is 20 days post-closing. Risk: Late remittance triggers penalties.

          •  Solution: Use IRS Direct Pay with buyer's TIN. Title company disburses withholding funds to buyer for remittance.

2.  Moral Hazard and Lender Reluctance

          •  Risk: Buyer receives 15% of sales price but may not remit timely (e.g., buyer's remorse, misuse of funds).

          •  Lenders hesitant to release cash to buyer without guarantees.

          •  Impact: Buyer as withholding agent remains liable, but enforcement is uncertain.

3.  Foreign Buyers Without U.S. TIN

          •  No TIN prevents EFTPS account creation.

          •  Current: Paper check to Treasury's "Unapplied Remittance" account; apply funds once TIN assigned.

          •  Post-Sep 30 Challenge: Paper checks remittance may be unavailable or may trigger the 10% failure to deposit electronically.

          •  Proposed Solution: Develop framework allowing reporting agents (e.g., tax firms, law firms, title companies, lenders) to remit on behalf of buyers using agent's EFTPS account, credited to buyer's TIN.

Test Note: I successfully tested an EFTPS Form 8288 deposit via our company account, but funds applied to our EIN, not resolving attribution to buyer's TIN.

In our opinion, FIRPTA deposits may qualify under limited exceptions to EO 14247, as IRS has no framework in place for deposits other than through the buyer, which presents problems. This exception will apply until IRS rolls out a framework allowing title companies to remit directly or use third-party reporting agents for deposits.

We can discuss further if needed.

We are monitoring IRS, U.S. Treasury news, and industry groups (AICPA, NAEA,) for developments on electronic remittances in USRPI transactions with foreign sellers. I am also communicating with NAEA and the IRS Stakeholders Liaison in Houston about this matter.

Key Issue: Starting September 30, 2025, under Executive Order 14247, U.S. Treasury bans paper checks for all payments and requires all payments be made via electronic deposit; FIRPTA deposits may qualify for limited exceptions.

Challenges and Proposed Solutions:

1.  Buyer EFTPS Setup Delays

          •  Most buyers lack EFTPS accounts; setup takes 10-15 days, but remittance deadline is 20 days post-closing. Risk: Late remittance triggers penalties.

          •  Solution: Use IRS Direct Pay with buyer's TIN. Title company disburses withholding funds to buyer for remittance.

2.  Moral Hazard and Lender Reluctance

          •  Risk: Buyer receives 15% of sales price but may not remit timely (e.g., buyer's remorse, misuse of funds).

          •  Lenders hesitant to release cash to buyer without guarantees.

          •  Impact: Buyer as withholding agent remains liable, but enforcement is uncertain.

3.  Foreign Buyers Without U.S. TIN

          •  No TIN prevents EFTPS account creation.

          •  Current: Paper check to Treasury's "Unapplied Remittance" account; apply funds once TIN assigned.

          •  Post-Sep 30 Challenge: Paper checks remittance may be unavailable or may trigger the 10% failure to deposit electronically.

          •  Proposed Solution: Develop framework allowing reporting agents (e.g., tax firms, law firms, title companies, lenders) to remit on behalf of buyers using agent's EFTPS account, credited to buyer's TIN.

Test Note: I successfully tested an EFTPS Form 8288 deposit via our company account, but funds applied to our EIN, not resolving attribution to buyer's TIN.

In our opinion, FIRPTA deposits may qualify under limited exceptions to EO 14247, as IRS has no framework in place for deposits other than through the buyer, which presents problems. This exception will apply until IRS rolls out a framework allowing title companies to remit directly or use third-party reporting agents for deposits.

We can discuss further if needed.