Open Forum

On August 28, 2025, the IRS released a draft revision of Form 8288 (Rev. Jan. 2026), the U.S. Withholding Tax Return for Dispositions by Foreign Persons of U.S. Real Property Interests. This draft provides a clear signal that changes are coming for FIRPTA reporting and compliance in 2026.

Key Changes in the Draft Form

• Integration with Section 1446(f):
  The new draft adds cross-references to reporting under IRC §1446(f), which covers withholding on dispositions of partnership interests. This means Form 8288 will now serve as the reporting vehicle not only for traditional FIRPTA property sales, but also for certain partnership transactions that include U.S. real property interests.
• New Part V – Refunds and Direct Deposit:
  The draft includes a brand-new section that allows taxpayers to request a refund via direct deposit. Historically, refunds tied to FIRPTA over-withholding were issued only by check. This update signals an IRS move toward faster and more modern refund processing.
• Expanded Information Requirements:
  The draft requests additional details on withholding certificates, transferee/withholding agent information, and tracking of multiple types of transactions. These changes reflect the IRS's emphasis on closing compliance gaps. 

Why This Matters

1. Greater Responsibility for Withholding Agents: The expanded form ties together multiple withholding regimes. Closing agents should expect more detailed information requests at the time of filing.
2. Faster Refunds for Sellers: Foreign sellers who historically waited months for paper checks may soon see refunds processed more efficiently through direct deposit-provided all documentation is accurate and timely. 

Timing

• The draft was posted August 28, 2025 on the IRS Draft Forms site.
• Until finalized, the current January 2018 version of Form 8288 remains in effect.
• Once issued (expected January 2026), the new form will apply to filings submitted thereafter.

I am very confused about the new 2026 DRAFT FORM 8288 Part V section!

Form 8288 identifies the Withholding Agent (Buyer) in a foreign seller transaction with all the pertinent Withholding Agent (Buyer) information.

The Form 8288 Part I (7) identifies the "Withholding tax liability"

The Form 8288 does not identify in any way the Foreign Seller(s) identity or any information even though it is the Foreign Seller's funds that are subject to the FIRPTA Withholding.

The Modified "PART V To Be Completed by Buyer/Transferee Claiming a Refund of Withholding under 1446(F)(4)" is asking for the Withholding Agent's (Buyer) bank account information including Routing and Account Number.

I know that Form 8288 must be filed with actual Withholding payments together with the Form 8288-A which does identify the Withholding Agent (Buyer) including TIN and the Foreign Seller With ITIN Foreign Seller address information.  

In order for the Foreign Seller to obtain a refund of any of the FIRPTA Withholding funds the Foreign Seller must file a tax return(s) together with the IRS stamped 8288-A form acknowledging receipt of the funds.

Please advise how the Withholding Agent (Buyer)'s Banking information will help the Foreign Seller receive any of the Withholding Funds.  Does IRS presume that the funds will go back via direct deposit to the Withholding Agent (Buyer)'s account and then the Withholding Agent will forward (OR NOT) the refund to the Foreign Seller?

This needs further thought and revision.

On August 28, 2025, the IRS released a draft revision of Form 8288 (Rev. Jan. 2026), the U.S. Withholding Tax Return for Dispositions by Foreign Persons of U.S. Real Property Interests. This draft provides a clear signal that changes are coming for FIRPTA reporting and compliance in 2026.

Key Changes in the Draft Form

• Integration with Section 1446(f):
  The new draft adds cross-references to reporting under IRC §1446(f), which covers withholding on dispositions of partnership interests. This means Form 8288 will now serve as the reporting vehicle not only for traditional FIRPTA property sales, but also for certain partnership transactions that include U.S. real property interests.
• New Part V – Refunds and Direct Deposit:
  The draft includes a brand-new section that allows taxpayers to request a refund via direct deposit. Historically, refunds tied to FIRPTA over-withholding were issued only by check. This update signals an IRS move toward faster and more modern refund processing.
• Expanded Information Requirements:
  The draft requests additional details on withholding certificates, transferee/withholding agent information, and tracking of multiple types of transactions. These changes reflect the IRS's emphasis on closing compliance gaps. 

Why This Matters

1. Greater Responsibility for Withholding Agents: The expanded form ties together multiple withholding regimes. Closing agents should expect more detailed information requests at the time of filing.
2. Faster Refunds for Sellers: Foreign sellers who historically waited months for paper checks may soon see refunds processed more efficiently through direct deposit-provided all documentation is accurate and timely. 

Timing

• The draft was posted August 28, 2025 on the IRS Draft Forms site.
• Until finalized, the current January 2018 version of Form 8288 remains in effect.
• Once issued (expected January 2026), the new form will apply to filings submitted thereafter.

Hi David, 

Under FIRPTA (IRC §1445), refunds belong to the foreign seller, and those are still issued only after the seller files a U.S. tax return with the IRS-stamped Form 8288-A. The buyer's banking details in Part V would not be used to return FIRPTA withholding to the seller.

The new Part V is being introduced primarily to align Form 8288 with Section 1446(f) (partnership interest withholding). In that context, the buyer/withholding agent can claim a refund directly if too much was withheld. It does not change how FIRPTA refunds are processed or issued.

So, to your point, the IRS is not planning to send FIRPTA refunds back to buyer accounts. Those remain seller-driven refunds through the standard tax return process.

I am very confused about the new 2026 DRAFT FORM 8288 Part V section!

Form 8288 identifies the Withholding Agent (Buyer) in a foreign seller transaction with all the pertinent Withholding Agent (Buyer) information.

The Form 8288 Part I (7) identifies the "Withholding tax liability"

The Form 8288 does not identify in any way the Foreign Seller(s) identity or any information even though it is the Foreign Seller's funds that are subject to the FIRPTA Withholding.

The Modified "PART V To Be Completed by Buyer/Transferee Claiming a Refund of Withholding under 1446(F)(4)" is asking for the Withholding Agent's (Buyer) bank account information including Routing and Account Number.

I know that Form 8288 must be filed with actual Withholding payments together with the Form 8288-A which does identify the Withholding Agent (Buyer) including TIN and the Foreign Seller With ITIN Foreign Seller address information.  

In order for the Foreign Seller to obtain a refund of any of the FIRPTA Withholding funds the Foreign Seller must file a tax return(s) together with the IRS stamped 8288-A form acknowledging receipt of the funds.

Please advise how the Withholding Agent (Buyer)'s Banking information will help the Foreign Seller receive any of the Withholding Funds.  Does IRS presume that the funds will go back via direct deposit to the Withholding Agent (Buyer)'s account and then the Withholding Agent will forward (OR NOT) the refund to the Foreign Seller?

This needs further thought and revision.

On August 28, 2025, the IRS released a draft revision of Form 8288 (Rev. Jan. 2026), the U.S. Withholding Tax Return for Dispositions by Foreign Persons of U.S. Real Property Interests. This draft provides a clear signal that changes are coming for FIRPTA reporting and compliance in 2026.

Key Changes in the Draft Form

• Integration with Section 1446(f):
  The new draft adds cross-references to reporting under IRC §1446(f), which covers withholding on dispositions of partnership interests. This means Form 8288 will now serve as the reporting vehicle not only for traditional FIRPTA property sales, but also for certain partnership transactions that include U.S. real property interests.
• New Part V – Refunds and Direct Deposit:
  The draft includes a brand-new section that allows taxpayers to request a refund via direct deposit. Historically, refunds tied to FIRPTA over-withholding were issued only by check. This update signals an IRS move toward faster and more modern refund processing.
• Expanded Information Requirements:
  The draft requests additional details on withholding certificates, transferee/withholding agent information, and tracking of multiple types of transactions. These changes reflect the IRS's emphasis on closing compliance gaps. 

Why This Matters

1. Greater Responsibility for Withholding Agents: The expanded form ties together multiple withholding regimes. Closing agents should expect more detailed information requests at the time of filing.
2. Faster Refunds for Sellers: Foreign sellers who historically waited months for paper checks may soon see refunds processed more efficiently through direct deposit-provided all documentation is accurate and timely. 

Timing

• The draft was posted August 28, 2025 on the IRS Draft Forms site.
• Until finalized, the current January 2018 version of Form 8288 remains in effect.
• Once issued (expected January 2026), the new form will apply to filings submitted thereafter.

Hi David, 

Under FIRPTA (IRC §1445), refunds belong to the foreign seller, and those are still issued only after the seller files a U.S. tax return with the IRS-stamped Form 8288-A. The buyer's banking details in Part V would not be used to return FIRPTA withholding to the seller.

The new Part V is being introduced primarily to align Form 8288 with Section 1446(f) (partnership interest withholding). In that context, the buyer/withholding agent can claim a refund directly if too much was withheld. It does not change how FIRPTA refunds are processed or issued.

So, to your point, the IRS is not planning to send FIRPTA refunds back to buyer accounts. Those remain seller-driven refunds through the standard tax return process.

I am very confused about the new 2026 DRAFT FORM 8288 Part V section!

Form 8288 identifies the Withholding Agent (Buyer) in a foreign seller transaction with all the pertinent Withholding Agent (Buyer) information.

The Form 8288 Part I (7) identifies the "Withholding tax liability"

The Form 8288 does not identify in any way the Foreign Seller(s) identity or any information even though it is the Foreign Seller's funds that are subject to the FIRPTA Withholding.

The Modified "PART V To Be Completed by Buyer/Transferee Claiming a Refund of Withholding under 1446(F)(4)" is asking for the Withholding Agent's (Buyer) bank account information including Routing and Account Number.

I know that Form 8288 must be filed with actual Withholding payments together with the Form 8288-A which does identify the Withholding Agent (Buyer) including TIN and the Foreign Seller With ITIN Foreign Seller address information.  

In order for the Foreign Seller to obtain a refund of any of the FIRPTA Withholding funds the Foreign Seller must file a tax return(s) together with the IRS stamped 8288-A form acknowledging receipt of the funds.

Please advise how the Withholding Agent (Buyer)'s Banking information will help the Foreign Seller receive any of the Withholding Funds.  Does IRS presume that the funds will go back via direct deposit to the Withholding Agent (Buyer)'s account and then the Withholding Agent will forward (OR NOT) the refund to the Foreign Seller?

This needs further thought and revision.

On August 28, 2025, the IRS released a draft revision of Form 8288 (Rev. Jan. 2026), the U.S. Withholding Tax Return for Dispositions by Foreign Persons of U.S. Real Property Interests. This draft provides a clear signal that changes are coming for FIRPTA reporting and compliance in 2026.

Key Changes in the Draft Form

• Integration with Section 1446(f):
  The new draft adds cross-references to reporting under IRC §1446(f), which covers withholding on dispositions of partnership interests. This means Form 8288 will now serve as the reporting vehicle not only for traditional FIRPTA property sales, but also for certain partnership transactions that include U.S. real property interests.
• New Part V – Refunds and Direct Deposit:
  The draft includes a brand-new section that allows taxpayers to request a refund via direct deposit. Historically, refunds tied to FIRPTA over-withholding were issued only by check. This update signals an IRS move toward faster and more modern refund processing.
• Expanded Information Requirements:
  The draft requests additional details on withholding certificates, transferee/withholding agent information, and tracking of multiple types of transactions. These changes reflect the IRS's emphasis on closing compliance gaps. 

Why This Matters

1. Greater Responsibility for Withholding Agents: The expanded form ties together multiple withholding regimes. Closing agents should expect more detailed information requests at the time of filing.
2. Faster Refunds for Sellers: Foreign sellers who historically waited months for paper checks may soon see refunds processed more efficiently through direct deposit-provided all documentation is accurate and timely. 

Timing

• The draft was posted August 28, 2025 on the IRS Draft Forms site.
• Until finalized, the current January 2018 version of Form 8288 remains in effect.
• Once issued (expected January 2026), the new form will apply to filings submitted thereafter.

I am very confused about the new 2026 DRAFT FORM 8288 Part V section!

Form 8288 identifies the Withholding Agent (Buyer) in a foreign seller transaction with all the pertinent Withholding Agent (Buyer) information.

The Form 8288 Part I (7) identifies the "Withholding tax liability"

The Form 8288 does not identify in any way the Foreign Seller(s) identity or any information even though it is the Foreign Seller's funds that are subject to the FIRPTA Withholding.

The Modified "PART V To Be Completed by Buyer/Transferee Claiming a Refund of Withholding under 1446(F)(4)" is asking for the Withholding Agent's (Buyer) bank account information including Routing and Account Number.

I know that Form 8288 must be filed with actual Withholding payments together with the Form 8288-A which does identify the Withholding Agent (Buyer) including TIN and the Foreign Seller With ITIN Foreign Seller address information.  

In order for the Foreign Seller to obtain a refund of any of the FIRPTA Withholding funds the Foreign Seller must file a tax return(s) together with the IRS stamped 8288-A form acknowledging receipt of the funds.

Please advise how the Withholding Agent (Buyer)'s Banking information will help the Foreign Seller receive any of the Withholding Funds.  Does IRS presume that the funds will go back via direct deposit to the Withholding Agent (Buyer)'s account and then the Withholding Agent will forward (OR NOT) the refund to the Foreign Seller?

This needs further thought and revision.

On August 28, 2025, the IRS released a draft revision of Form 8288 (Rev. Jan. 2026), the U.S. Withholding Tax Return for Dispositions by Foreign Persons of U.S. Real Property Interests. This draft provides a clear signal that changes are coming for FIRPTA reporting and compliance in 2026.

Key Changes in the Draft Form

• Integration with Section 1446(f):
  The new draft adds cross-references to reporting under IRC §1446(f), which covers withholding on dispositions of partnership interests. This means Form 8288 will now serve as the reporting vehicle not only for traditional FIRPTA property sales, but also for certain partnership transactions that include U.S. real property interests.
• New Part V – Refunds and Direct Deposit:
  The draft includes a brand-new section that allows taxpayers to request a refund via direct deposit. Historically, refunds tied to FIRPTA over-withholding were issued only by check. This update signals an IRS move toward faster and more modern refund processing.
• Expanded Information Requirements:
  The draft requests additional details on withholding certificates, transferee/withholding agent information, and tracking of multiple types of transactions. These changes reflect the IRS's emphasis on closing compliance gaps. 

Why This Matters

1. Greater Responsibility for Withholding Agents: The expanded form ties together multiple withholding regimes. Closing agents should expect more detailed information requests at the time of filing.
2. Faster Refunds for Sellers: Foreign sellers who historically waited months for paper checks may soon see refunds processed more efficiently through direct deposit-provided all documentation is accurate and timely. 

Timing

• The draft was posted August 28, 2025 on the IRS Draft Forms site.
• Until finalized, the current January 2018 version of Form 8288 remains in effect.
• Once issued (expected January 2026), the new form will apply to filings submitted thereafter.