There are multiple reformed rules introduced by the Internal Revenue Service (IRS) to fill out forms. These rules are often revised by the IRS in the first quarter of every New Year. In order to fully understand the usability and filling out of those forms issued by the IRS, all applying individuals or parties must understand and fulfill these requirements completely. All those who have filled out a Form 8288 before or are in the process of doing so, know how complicated it can be if not filled out following the instructions set by the IRS. Since many individuals care little for them, it doesn’t come as a surprise that Form 8288 is one of the most misunderstood forms of all the forms issued by the IRS. The importance of Form 8288’s understanding and usability makes it easier for a taxpayer to fill out the form on their won without the help of a lawyer or financial advisor. Therefore, before proceed to learn how to fill out the Form 8288, it is best if we first elaborate what Form 8288 is, its purpose, eligibly criteria, penalties and when can an individual file for a Form 8288.

If you need help with the FIRPTA Form 8288, please call us at 407-502-2400, or email us at [email protected].

What is Form 8288?

Every year when US citizens have to file their taxes on their real estate property, they have to file them using either of the two forms. The first one is the Form 8288 and the second one is the Form 8288-A. there is also a third form that the IRS has issued, known as the Form 8288-B, but that isn’t of any concern to a taxpayer. Therefore, in this blog we shall only discuss the Form 8288 and Form 8288-A in detail. For now, let’s explain what Form 8288 and Form 8288-A really are.

Form 8288

Under IRS’s Tax Obligations section 1445, the government is liable to obtain property taxes from all those foreigners and immigrants who hold any real estate property in the USA. The same goes for all those corporations –domestic or foreign, qualified investment entities and fiduciary of trusts and estates owned or operated by foreigners. Form 8288 is used to file taxes for such person or corporations run by outsiders living inside the US. The same Form 8288 can also be used if the foreigner wishes to pay any withholding taxes on owned real estate in the US.

On the other hand, Form 8288-A is mostly used by transferees or buyers. They can use the Form 8288-A to account the disposed real estate properties to calculate the amount of withheld taxes.

Since there are many spaces to be filled out in each form, most of them requiring complex details about the property and personal information, many individuals find it difficult to fill out the Form 8288 or Form 8288-A on their own. Therefore, in order to offer assistance, we shall be presenting a complete guide on how to fill out the Form 8288 in the later sections of this blog. For now, we shall move on to understand the purpose of the Form 8288.

Purpose of Form 8288

According to the section 1445 of the IRS tax obligations, a withholding obligation will be imposed on the buyer or the transferee when a real estate property in the US is being acquired from a foreign owner. The same withholding obligation will be subjected if the real estate interest is a qualified investment entity, foreign and domestic corporation, fiduciary of a trust or estate etc.

This withholding obligation serves as a means to collect U.S. taxes that may have been owed by the previous foreign owner. Form 8288 can also be used to report and pay the withheld amount.

Who Files Form 8288?

As per the section 1445 of the IRS tax obligations, all those individuals, corporations, qualified entities, real estate business interest or a fiduciary trust are entitled to submit the Form 8288 to make note of the withheld taxes to the IRS. But what about those real estate properties that are owned by multiple people? In such cases all the parties will be subjected to fill the Form 8288. Their obligations will then be calculated and met if either of the party transmits the withheld amount.

Guidelines to Complete Form 8288

This section will discuss all the processes, steps and techniques involved in filling out Form 8288. The detailing of the Form 8288 has been divided into two separate parts for the reader’s ease.

Part 1

This section will provide details on how an interested candidate can fill out the Form 8288. In general, the Form 8288 is a single-page document, but the filing candidate may be asked to attach a copy of the Form 8288-A along with the form.

In case you are wondering how one can completely fill out the Form 8288, mentioned below are all the classifications of different parts and what to fill in them. To begin, one must know that the Form 8288 consist of two parts. The buyer or the transferee will fill out the first part of the Form 8288 and leave the second part blank. The second part will be filled by Entity Subject to the Provisions as per the rules mentioned in the section 1445 (e) of the IRS Tax Obligations.

Filling out the Form 8288

In the first line, the individual must mention his/her full name in block letters. If there is more than one transferee, each one of them will have to submit a separate Form 8288 with their personal details mentioned. When multiple transferees are filing Form 8288, ensure that all transferees have mentioned their ITIN number in the form. As per the revised 2003 tax laws, the IRS has now allowed the transferees to fill out and submit their forms without an ITIN number. But even then, all transferees will be required to request an individual identity number form the IRS, if they don’t already have one.

The next section will request transferees to fill in their address and street number. Most candidates mistake that for the PO Box number. It must not be written.

Next, the transferee will be asked to put in his/her town, city, state, and province and country name. Ensure that you mention your home address and not that of the company/real estate property you wish to transfer or buy. With multiple transferees, there is no certainty that all will be from the same state, province or country, therefore it is best that every transferee writes his/her own personal address and contact number when filling out the Form 8288 to ensure quick access if needed. The phone number must be listed down in the box in front of the address bar. Note that phone number isn’t obligatory and therefore, the space can be left empty if the candidate wishes not to disclose it.

The fourth section consists of a few questions about the interest real estate property that you have received, acquired, purchased, or accepted as a gift. In these sections, ensure that you provide a comprehensive description of the property’s location. It is best not to disclose the exact location, however, street number and nearby places can be mentioned.

The following section involves details about the Date of Transfer. So, if you are attaching the copy of the Form 8288-A along, fill the next boxes. If more than one form is being attached, ensure that you mention the number of total forms attached in the box. Next, mention the total capital or amount realized at the time of the transfer. If another owner of the same property is filling out the Form 8288, communicate among yourself the final amount to be realized at the time of the transfer. This will greatly help in preventing any figurative complications in the future.

The upcoming section will ask the filling out candidate to mention the amount withheld. Tick all the boxes correctly. External help can also be requested if the candidate is unsure about the amount of withheld taxes. If there is more than one transferee, ensure to communicate with them before ticking the boxes.

Lastly, you will be asked to write the amount withheld in the box number 7. Once you do, you have completed the first section of the Form 8288. We shall now proceed towards the second part of Form 8288.

If you need help with the FIRPTA Form 8288, please call us at 407-502-2400, or email us at [email protected].

Part 2

As mentioned earlier, this section will be left blank by the transferee or the buyer as it will be filled by the Entity Subject to the Provisions. For further information about who this entity is, interested individual can visit the IRS website or get hold of an IRS consultant via phone, email or fax.

The second section of the Form 8288 consists of similar information as the one in the first section. As soon as you have signed the form, your job here is done. The last few boxes require information about the preparer. The preparer is any external help that you consulted to fill out the Form 8288. If you took help of a tax lawyer, financial advisor or legal tax agent, he/she will fill out their personal information in the last boxes. However, if you are filling out the Form 8288 completely on your own, you will have to fill in your personal information in the last boxes again.

When Is The Perfect Time to File For Form 8288?

The ideal timeframe to file Form 8288 by a transferee is during the first 20 days after the transfer date and also after the transferee has transferred the withholding tax to the IRS. The transferee must withhold an application even of he/she has already submitted an application for withholding certificate to the IRS. This should be done on the same date as that of the transfer.

The transferee won’t have to file the Form 8288 or make the transmittance of the withholding certificate until the first 20 days after the transferring date or until the transferee is provided the copy of withholding certificate or notice of denial issued by the IRS.

If the prime reason an individual filed an application to the IRs for a withholding certificate only to delay paying taxes or withheld amount back to the IRS he/she must understand that penalties and interests will become applicable from no later than the 21st day after the transfer date and will continue to do so until the taxes haven’t been filed or the withheld amount hasn’t been paid back to the IRS.

Another important detail an individual must know is that as soon as the first installment of the payment is made to the IRS, the individual must withhold the total amount for that time period. However, if the individual can’t do so because there aren’t enough liquidity assets or very little cash is involved, he/she will have to file an application for the withholding certificate from the IRS as soon as possible.

Valuable Tips to Remember When Completing the Form 8288

We are sure that with the detailed guide above, an individual must not face any difficultly filling out the Form 8288. However, there are still some basics he/she must be aware of when completing the Form 8288. Rest assured, these valuable tips for completing a Form 8288 will be of great help to ensure smooth and error-free completion of the Form 8288.

  • It is pivotal that the transferee fills out both the Form 8288 and the Form 8288-A before submitting the interests payable. But then again, it is no essential for the transferee to fill out both the forms at the same time, except in some cases. the transferee must consult his/her legal advisor on whether he/she needs to fill out only Form 8288 or also Form 8288-A. if one doesn’t have a legal advisor, it is best to make direct contact with the legal authority, in this case the IRS.
  • Candidates must know that in order to submit Form 8288-A or Form 8288-B, Form 8288 will be required. If the transferee finds that he/she needs to fill out any of these two forms, he/she must ensure that before submission it is attached with the Form 8288.
  • If you have already submitted or plan to submit your withholding taxes with the Form 8288 under “Application for Withholding Certificate for Dispositions by Foreign Persons of US Real Property Interest”, know that your application will be considered pending until the transfer date. As a transferee, you won’t have to worry about paying withheld taxes or report it to anyone; however, you will be requested to submit the application obtained for any legal proceedings. This is a crucial step in completing Form 8288 and therefore must not be forgotten or neglected.

That is all an individual needs to know about completion of Form 8288. Now that the interested candidate has all the information he/she needs to fill out the form, it is time to begin. If there still remain any queries or unclear instructions, be sure to seek assistance from tax lawyers or legal advisors as they have more experience to clarify. If one is filling the form on his/her own and sill needs a little help along the way, legal assistance can also be taken from IRs regarding the Form 8288.

If you need help with the FIRPTA Form 8288, please call us at 407-502-2400, or email us at [email protected].

The Penalties and Interests Involved In the Form 8288

Lastly, taxpayers filling out Form 8288 must also be aware about the interests and penalties involved in the process. Although there aren’t any strict penalties, one must still ensure that no mistakes are made in filling out the Form 8288. Here is a brief overview of the interests and penalties of the Form 8288

  1. As per the penalties mentioned under section 6651, an individual will be charged with a penalty, if he/she fails to file the Form 8288 when it is due and also fails to pay the required withholding amount until the due date. In both these conditions, the taxpayer will be issued with additional interest rates or penalty as per the policies of the IRS.
  2. If a person who is supposed to withhold tax doesn’t do so, all the tax plus the interest will be taken from him/her.
  3. The penalty for not being able to pay over the taxes on the due date or not paying at all includes up to $10,000 fine as the person is charged for neglecting or violating the rules set by the IRS.
  4. If an individual files his/her taxes as a corporate office or is responsible for other and fails to file taxes on the due date or simply neglects the payment, he/she will be subjected to a penalty that is equivalent to the amount of payment that should have been paid to the IRS in the first place and also be subjected to pay the amount that should have been withheld.

That is all there was to know about the Form 8288. For further inquiries about the Form 8288, interested individuals must consult their legal advisors or IRS directly via phone, fax or mail.

If you need help with the FIRPTA Form 8288, please call us at 407-502-2400, or email us at [email protected].

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