Hello ALTA:
I want to share with you a situation we came across with last week, a title company reached out to us after they closed a transaction involving a seller exempt from FIRPTA under the SPT rules, the buyer received an IRS letter and I thought, this is one of so many IRS letters sent for no reason other than, "can you please do my job for me because I don't know if I am coming or going?", but this time the seller, who has "spent more than 183 days in the U.S. for over 2 years" and "meets SPT" was a foreign student with a SSN and attends school in the U.S. EXCEPT...... days of presence under an F1 visa do not qualify for SPT.
Who is going to pay the over $37,000 in withholding plus P&I? The seller was informed of this matter and was asked to send 15% FIRPTA withholding to the IRS to which he, of course said, "NO WAY".... story to be continued....
I think this scenario highlights the importance of hiring a licensed tax firm to verify the compliance in this SO CRITICAL part of a real estate transaction.
Trust but verify is our motto...
What are your policies when a foreign seller is involved in a transaction?
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Mary Enzi CAA
Tax Solutions – FIRPTA Consulting
mary.santiago@taxss.com
+1 (281) 578-1040
Barker TX
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