FIRPTA determination
Every closing asks
the FIRPTA question.
Answer it with proof.
FIRPTA is not a foreign-seller problem. It is an every-file problem. Federal law requires the question to be asked, and answered correctly, on every single transaction. When it is missed, the IRS bills the buyer personally. We screen every file and document the answer, with determination guidance from Foreign Tax CPA, a licensed CPA firm.
New to the rules? What is FIRPTA?
FIRPTA Determination Letter
FIRPTA withholding does not apply to this transaction. The seller has been verified as a United States person under IRC §1445.
- Seller identity and taxpayer status verified
- U.S. person status confirmed under §7701
- Entity and trust structure reviewed
- Non-foreign certification on file
retained in the file
Documentation that survives an audit. Not a dashboard badge.
the year FIRPTA became federal law. It is not going anywhere.
of the gross sale price withheld at closing when FIRPTA applies.
after closing for forms and payment to reach the IRS.
U.S. residential transactions each year involve a foreign seller.
Why it matters
FIRPTA touches every transaction, not just the foreign ones.
The withholding applies rarely. The question applies always. That asymmetry is what makes FIRPTA dangerous: it lives quietly inside thousands of routine files until the one closing where it should have fired and did not.
The question is on every file.
FIRPTA only applies to foreign sellers, but the law does not let anyone assume a seller is not foreign. Every closing runs through the same gate: the seller either certifies non-foreign status under penalty of perjury, or the withholding workflow begins. The determination has to happen, and be documented, on 100 percent of transactions, including the ones where the answer is "does not apply."
The buyer is personally liable.
The statute makes the buyer the withholding agent. If a foreign seller slips through and no withholding happens, the IRS can pursue the buyer for the full withholding amount plus interest and penalties, years after closing. Most buyers have no idea. They sign disclosures they do not read and assume someone else is handling it. That gap is exactly where claims are born.
The closer is caught in the middle.
Every major title underwriter says the same things: do not determine foreign status at the closing table, do not prepare Form 8288 in-house, refer the compliance work to a specialist. Those bulletins exist because of real claims. Yet the buyer still expects the settlement agent to "handle it," and the closing does not move without an answer.
The deadline does not wait.
When FIRPTA applies, the forms and the payment must reach the IRS within 20 days of closing. Miss it and penalties stack up fast, up to 25 percent of the withholding amount, plus interest. The most common failures are clerical: the wrong name on the form, a check mailed without the forms, a filing without the seller’s tax ID. Every one started with someone trying to be helpful.
What we provide
Three tiers. One answer on every file.
TitleTools runs the detection inside the title examination workflow. All of our FIRPTA determination guidance comes from our partner, Foreign Tax CPA, LLC, a licensed CPA firm; the files that need professional judgment or full compliance work go to them directly. Together that covers every file, from the routine to the fully foreign.
FIRPTA Cleared
For the vast majority of files
The seller is verified as a U.S. person during title examination and a documented determination goes in the file, following guidance developed with Foreign Tax CPA. Every closing gets real documentation that FIRPTA was considered and resolved, not a checkbox.
- Automated screening on every file
- Documented determination, built on CPA guidance
- Underwriter-acceptable documentation
- Audit-defense file retained
Determination Required
For the ambiguous cases
A foreign passport with a Miami address. A trust with a nonresident trustee. An LLC owned abroad. The gray cases route to CPA research: green card status, substantial presence, entity structure, all of it analyzed and resolved in writing before closing.
- Expert CPA research engagement
- Written determination in 3 to 5 business days
- Analysis of the ambiguous factors
- Professional recommendation for the file
FIRPTA Applies
For confirmed foreign sellers
When withholding is required, the full compliance package takes it off the closer’s desk: forms, tax IDs, the 20-day filing, payment coordination, and the refund the seller would otherwise never see.
- ITIN application (W-7) via Certified Acceptance Agent
- Forms 8288 and 8288-A prepared and filed under POA
- Withholding certificate (8288-B) and holdback coordination
- Nonresident return (1040-NR) to recover the seller’s refund
Our determination partner
Foreign Tax CPA, LLC
Foreign Tax CPA are the premier experts in FIRPTA determination. A licensed CPA firm focused on the tax side of U.S. real estate transactions involving foreign persons, they provide all of TitleTools' FIRPTA determination guidance and handle the professional research, withholding compliance, and refund recovery work described above. When a file needs professional judgment, it is their judgment.
FAQ
Common questions.
Who counts as "foreign" under FIRPTA?+
A seller is foreign if they are not a U.S. person. A U.S. person is a citizen (wherever they live), a green card holder, or someone who meets the IRS substantial presence test, a day-count formula over the past three years. Everyone else is foreign, including foreign corporations, partnerships, and trusts. About 95 percent of foreign sellers in residential deals are individuals, but entity and trust structures are where the genuinely hard calls live.
If the seller signs the non-foreign affidavit, is the file done?+
Mostly, yes. A non-foreign certification signed under penalty of perjury, with the seller’s taxpayer ID, generally protects the buyer unless they have actual knowledge it is false. The problem is the files where the seller cannot or will not sign, hesitates, has a foreign address or foreign wiring instructions, or where the entity structure makes the answer non-obvious. Those are the files that need a professional determination, and you do not know which ones they are until you screen all of them.
Why can’t our closers just make the call themselves?+
Every major title underwriter explicitly tells them not to. Determining foreign status is a legal and tax judgment, and making it at the closing table creates claims exposure. The same bulletins warn against preparing Form 8288 in-house, because the most expensive FIRPTA errors on record are exactly that: the title company’s name on the buyer’s form, payments the IRS cannot match, filings rejected for a missing tax ID.
What actually has to happen when FIRPTA applies?+
The withholding (usually 15 percent of the gross price) is debited from the seller’s proceeds at closing. Within 20 days, Form 8288 and Form 8288-A must reach the IRS along with the payment. The IRS stamps a copy back to the seller as proof of withholding. About 80 percent of foreign sellers also need a U.S. tax ID (ITIN) before any of this works smoothly, which is its own application process. Then, after December 31, a nonresident return can recover the overwithheld amount.
Is the withheld money gone for good?+
No. The withholding is a deposit against the seller’s actual tax, which is almost always far less. The difference comes back through a 1040-NR refund filing, typically tens of thousands of dollars. In the standard industry workflow, most foreign sellers never file and never see that money again. Tier 3 includes the refund filing so they do.
Can the withholding be reduced before closing?+
Sometimes. A withholding certificate application (Form 8288-B) filed before closing asks the IRS to cap the holdback at the seller’s actual tax. The funds sit in escrow under a holdback agreement while the IRS reviews, usually several months. It requires a detailed gain calculation that is squarely CPA territory, which is exactly the kind of work the partnership covers.
Who is behind the determinations? Is this tax advice from TitleTools?+
We partner with Foreign Tax CPA, LLC, a licensed CPA firm that provides all of our FIRPTA determination guidance. The screening framework follows their professional standards, and the files that need professional judgment, research, or full compliance work are handled by the firm directly. TitleTools provides the screening, detection, and workflow that gets every file in front of that process. This page is general information about how FIRPTA works, not legal or tax advice for a specific transaction.