Multiple foreign sellers? Unequal ownership?
Under IRS FIRPTA regulations, withholding must be evenly split by default-unless a signed written allocation agreement is submitted.
✅ IRS Rule (Form 8288 Instructions):
"If the transferor is more than one person, the amount withheld is to be allocated among the transferors based on their agreement. The transferee must receive this agreement within 10 days of transfer. Otherwise, the withholding is allocated equally."
- IRS Form 8288 Instructions, pg. 2
Why It Matters to Title Professionals:
- If no allocation is submitted, the buyer must withhold equally, even if ownership is 70/30 or 90/10
- Incorrect 8288-A reporting may delay seller refunds or trigger IRS scrutiny
- Transferee (buyer or title) can be held personally liable for underwithholding under IRC § 1445(d)
- IRS penalties include 100% of tax due, plus interest and potential $290 per form filing penalties under IRC § 6721/6722
What to Do:
- Foreign sellers must prepare a simple letter showing ownership percentages
- Must be signed by all foreign sellers
- Delivered to buyer/title company within 10 days of closing
- Kept in the file (not submitted to the IRS unless requested)
Note: This is a legal document-not a CPA form.
We're happy to explain the FIRPTA compliance side, but sellers should prepare this agreement independently or with legal support.
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Kat Rodgers
Foreign Tax CPA, LLC
Cocoa Beach FL
+1 (321) 784-8329
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