Open Forum

Hi ALTA:

Spring Break already!! Wow, time really flies, we are all busy and boy, foreign sellers are getting "creative" when it comes to attempt avoiding FIRPTA compliance, many are misguided into forming an "LLC's" that only create way more tax compliance, not knowing that in most cases, they are still subject to the FIRPTA withholding rules.

Some foreign sellers transfer property already purchased on an individual's name to a "single member or sole member LLC" which is a disregarded entity for tax purposes and the IRS looks at the owner or beneficiary of that entity, but they insist that FIRPTA does not apply to them, the rule is clear; (below extract from IRS website) https://www.irs.gov/individuals/international-taxpayers/firpta-withholding

A disposition means "disposition" for any purpose of the Internal Revenue Code. This includes but is not limited to a sale or exchange, liquidation, redemption, gift, transfers, etc. Persons purchasing U.S. real property interests (transferees) from foreign persons, certain purchasers' agents, and settlement officers are required to withhold 15%.

Also, there has been a lot of questions about foreign beneficiaries of U.S. Estate and when the FIRPTA rules apply in those particular cases, this past week we received 5 calls about the fiscal – FIRPTA treatment of an Estate and its heirs, many times, FIRPTA goes way beyond just filling out a couple forms.

When dealing with foreign individual or entities transferring title make sure you reach out to a competent, licensed tax professional, with vast experience in this particular section of the tax code, FIRPTA withholding is a very significant amount of money, and you want to make sure the rules are followed to protect all parties involved.

I also want to thank Brian Bernal from Currencies Direct for his help receiving and transferring funds for a few of our foreign sellers, he makes the process much easier and stress free for those who do not have a bank account in the U.S. Thank you Brian!

ALTA forum is always a great resource when looking for assistance to provide an extraordinary service, Thank you ALTA

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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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Thanks for the shoutout Mary and it is our pleasure!   Always enjoy your insightful information and expertise on the topic. 

Many times clients don't have US domestic receivable accounts set up in the way that the FIRPTA is filed and in some instances how they file can dictate what the refund is.   Also, if the clients want their property sale proceeds or FIRPTA witholding overseas or crossborder,  their US bank account, if they have one, isn't always the best option as the Patriot Act prohibits them from moving their funds crossborder if they are not present in the US banking branch.   Our direct deposit from the IRS instead of a paper check and receiving property sale proceeds directly from the closing table coupled with our tech make it seamless and safe for foreign nationals and those working with these clients.   Thanks again Mary! 

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Brian Bernal
Director of Business Development
Currencies Direct
Orlando FL
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Original Message:
Sent: 03-11-2024 11:26
From: Mary Enzi
Subject: FIRPTA - Estates and its heirs

Hi ALTA:

Spring Break already!! Wow, time really flies, we are all busy and boy, foreign sellers are getting "creative" when it comes to attempt avoiding FIRPTA compliance, many are misguided into forming an "LLC's" that only create way more tax compliance, not knowing that in most cases, they are still subject to the FIRPTA withholding rules.

Some foreign sellers transfer property already purchased on an individual's name to a "single member or sole member LLC" which is a disregarded entity for tax purposes and the IRS looks at the owner or beneficiary of that entity, but they insist that FIRPTA does not apply to them, the rule is clear; (below extract from IRS website) https://www.irs.gov/individuals/international-taxpayers/firpta-withholding

A disposition means "disposition" for any purpose of the Internal Revenue Code. This includes but is not limited to a sale or exchange, liquidation, redemption, gift, transfers, etc. Persons purchasing U.S. real property interests (transferees) from foreign persons, certain purchasers' agents, and settlement officers are required to withhold 15%.

Also, there has been a lot of questions about foreign beneficiaries of U.S. Estate and when the FIRPTA rules apply in those particular cases, this past week we received 5 calls about the fiscal – FIRPTA treatment of an Estate and its heirs, many times, FIRPTA goes way beyond just filling out a couple forms.

When dealing with foreign individual or entities transferring title make sure you reach out to a competent, licensed tax professional, with vast experience in this particular section of the tax code, FIRPTA withholding is a very significant amount of money, and you want to make sure the rules are followed to protect all parties involved.

I also want to thank Brian Bernal from Currencies Direct for his help receiving and transferring funds for a few of our foreign sellers, he makes the process much easier and stress free for those who do not have a bank account in the U.S. Thank you Brian!

ALTA forum is always a great resource when looking for assistance to provide an extraordinary service, Thank you ALTA

------------------------------
Mary Enzi CAA
Tax Solutions – FIRPTA Consulting
mary.santiago@taxss.com
+1 (281) 578-1040
Barker TX
------------------------------