An IRS Form 8288 is basically a form for US withholding tax return for dispositions by a foreign person of US real estate property interests. There are usually 2 forms that are used when it comes to reporting and paying tax to the IRS which concerns the purchase of US real estate property interests. The 2 forms are the Form 8288 and Form 8288-A.

If you need help filing IRS Form 8288 we will gladly help you. Call us at 407-502-2400, or email us at [email protected].

These forms are also used by partnerships, estates, trusts and corporations who withhold tax on distributions and other US real estate property interests which include other transactions. The forms must include the US TIN (taxpayer identification number) for the transferee and the transferor on both of the forms. Here, you can find out about what kinds of forms are available for you to fill out and their purpose and who files IRS forms.

What Is The Purpose Of This Form?

The purpose of this form is that there is a withholding obligation in section 1445 and it is for the buyer as well as other transferees, who are the withholding agents, for times when a real estate property interest in the US is shown by a foreign person. This withholding form is based on collecting US tax that the foreign person owes. The form is used to report and transmit the withheld amount.

What Are The Types Of Forms?

There are two types of forms, Form 8288 and Form 8288-A.

Form 8288

  • This form is used when there is tax that is withheld on the need of the US real estate property interest from a foreign person and the form is used to report and pay for it.
  • This form is also used as the transmittal for the copies of A and B of Form 8288-A.
  • If you want to file for this form 8288; it is advised that you file the form latest by the 20th day after the transfer date has been assigned.
  • If you are primarily applying for a withholding certificate with this form because you want to delay your pay over for the withheld tax to the IRS, your transferee will be subject to interest and penalties. These interests and penalties will be will be evaluated on the 21st day after the transfer has been made and it will end on the day when you have made your payment.

Form 8288-A

  • The agent withholding the file needs to prepare a form 8288-A for every person who has been withheld from tax. You will need to attach your copies A and B of your form 8288-A and keep the copy C for yourself.
  • The IRS has to stamp your copy B and will then get it sent to the person who is withholding your file. That person is the one who will be filing a US income tax return and will then have to attach it to the stamped form 8288-A so that they receive any credit for the withheld tax.
  • If the transferors TIN (taxpayer identification number) is not included in the form, the stamped copy of the form 8288-A will not be given to them. If this is the case, then the transferor needs to attach closing documents and other such documents that will include a statement that consists of the required information including the transferors TIN (taxpayer identification number) in order to show evidence of withholding.
  • Person subject to withholding: If you are a foreign person that is getting rid of real estate property in the US, whether you are a seller or a transferor, the person who is buying from you or the other transferee will have to withhold 10% of the given amount. There are certain foreign interest holders who are shareholders of income tax and who are allowed to withhold 35% of the given amount.
  • Other forms such as 1040NR, 1041, 1065 B or even 1120 F will tell you that you need to file a US tax return in order to report any sale or disposal of a business or a trade within the US.
  • If you want to get credit for federal income taxes, you must attach your form 8288-A with your tax return.
  • You can send in your applications for withholding certificates and applications for getting an early refund at the Ogden Service Center, P.O. Box 409101, Ogden, UT 84409.

Instructions for the Agent Who Is Withholding Form 8288-A

  • You must attach the copies A and B to your form 8288 US withholding tax return for dispositions by foreign persons of US real estate property interest
  • Your copy B of the form should be stamped strictly by IRS and then should be sent to the withholding person once the form is complete, and should also include the identification number of the transferor.
  • You should keep a hold of your copy C of the form safely and you don’t have to give this form to the withholding person.
  • Identification Number: The AUS taxpayer identification number, also known as TIN, the social security number (SSN), the employer identification number (EIN), or the IRS individual taxpayer identification number (ITIN), can be found attached in form 8288-A and should also be attached in the instructions form for form 8288.
  • Address: You will have to mention the foreign home address or your foreign office address for the person who is withholding. You can also add an additional mailing address in the given extra space.

    If it’s necessary and if it’s given, the IRS will use the additional mailing address so that they can forward the copies of copy B to the person who is withholding. You must take note that the home or office address of the individual who is withholding should be an outside address not from within the US. If given, the name of the foreign country must be given and the complete foreign mailing address must also be provided.

  • Box 1: Fill in the transfer date and if you have withheld under the section of 1445, e2, e3 or e6, then enter your distribution date.
  • Box 2: You must fill in the federal income tax that was withheld for the foreign person who you have mentioned in the given form.
  • Box 3: In this box, you must provide the given amount realized by the foreign person who you have mentioned in the form.
  • Box 4: You should complete this form only if you are a foreign corporation that is supposed to withhold under the 1445, e2 section.
  • Box 6: You must check the box that is applicable to identify whether the foreign person who is withholding is actually an individual or a corporation. If it is ‘other’. then you must specific whether it is a trust, an estate or a partnership.
  • Box 7: You need to enter the 2 letter code which is valid in the list on the given website: countrycodes. This is for the foreign home address and the foreign office address of the withholding person. You can find out more instructions in the form 8288.

If you need help filing IRS Form 8288 we will gladly help you. Call us at 407-502-2400, or email us at [email protected].

Who Files IRS Forms 8288?

Now you must know who needs to file for an IRS form. Anyone who is a buyer or a transferee of the US real estate property interest, or a corporation, or qualified investment entity, or even a fiduciary, who is required to withhold the tax, must file the form. These are the people who should be filing for the form 8288 so that they can report and get the amount withheld transmitted. If there are 2 or more than 2 transferees, then both of them or all of them will be obligated to withhold the amount.

Foreign Person: What Is The Definition?

  • According to FIRPTA, a foreign person is defined as someone who is a non resident alien individual, a foreign partnership, a foreign trust, a foreign corporation, or a foreign estate.
  • A foreign person is someone who is a resident alien individual which includes a non resident alien who is electing because they want to be treated as a US resident and not a foreign person.

What Is A Withholding Certificate And Who Applies For It?

  • The tax amount which is required to be withheld under the FIRPTA requirements should never cross the maximum tax liability of a transferor. Usually, the maximum tab liability is lesser than 10% which is required for withholding.
  • The policies clearly state that the procedure that the IRS, which is the Internal Revenue Service, will agree to, is a certain amount less than 10% which is required for withholding. If you want to reduce the amount, it can be reduced by applying for a withholding certificate.
  • You can complete this procedure by submitting a completed IRS form 8288-B and the seller or buyer, also known as the transferor or transferee can both apply for the withholding certificate.

What Is The Purpose Of A Withholding Certificate?

A withholding certificate is usually always needed before a transfer and it notifies the buyer, also known as the transferee, and the agent who is withholding that either there is no requirement for withholding or that the tax be withheld with a lesser rate.

  • When you get a withholding certificate after you make a transfer of the property, it will give you the authority for either an earlier refund or a regular refund.
  • A withholding certificate gives you the authority to reduce or to give you a form of exemption where the withholding can be provided when the general rates go above the seller’s maximum tax liability. If you are withholding a reduced amount, this has no effect on the tax collection.
  • The seller is usually excused from the US tax for all gains that are recognized by the transaction.
  • Notice of non recognition: This is when the seller or also known as the transferor, informs the buyer, also known as the transferee, in a written form that the correct percentage for withholding is not needed by the buyer anymore on the USRPI due to the fact that the seller isn’t recognizing any losses or gains when it comes to the transfer.
  • You can make an agreement with the IRS which will provide you with the security for the payment of tax liability which will be implemented by either the buyer or the seller, or also known as the transferee or the transferor.
  • You can request for a withholding certificate even for an installment sale.

What Amount Should Be Withheld When Filing For An IRS Form?

  • For those who file IRS form 8288, the amount for withholding should be 15% of the amount that is on the disposition given by the transferor.
  • Since February 2016, the amount being withheld will now be 10% of the disposition amount.
  • If there is more than one foreign person and more than one US person who are joint together for this transfer of the US real estate property interest, then for example if a husband and wife are joint together, they will be contributing 50% each, as will the rest of the persons involved, getting an equal amount each.

When Is The Right Time To File The IRS Form 8288?

The form 8288 must be filed by the transferee by the 20th day after the transfer date and also after they have transmitted the withheld tax to the IRS. Your application must be withheld even if an application for withholding certificate has been submitted to the IRS on the same transfer date.

You won’t have to file the form 8288 and make the transmittance of withholding until 20 days after the transfer date and until the IRS provides you with a copy of the withholding certificate or notice of the denial.

If your prime reason for filing the application for a withholding certificate was mainly because you wanted to delay paying the IRS the withheld amount, the interest and penalties will still apply and will also begin on the 21st day after the transfer date and will finish once the payment has been made.

Installment Payments: When the first installment payment is being made, you have to withhold the full amount for that time. If you can’t do this because the payment doesn’t involve enough cash or because there aren’t enough liquid assets, then you can get hold of a withholding certificate from the IRS.

Where Can You File Your Forms?

Are you looking to file your forms? If you are among those who file an IRS form 8288, you can send them at Ogden Service Center, P.O Box 409101, Ogden, UT 84409 with your amount withheld and with your copies of A and B forms of form 8288-A.

Must Attach Forms 8288-A

For those who file form 8288 and have completed it, it is necessary for you to complete your form 8288-A for every person who is subject to withholding.

  • If you are filing for your form 8288, you must make sure to attach your forms 8288-A copies A and B and attach them all to the form 8288.
  • Keep the copy C for your own records and keep it safe.
  • There will be multiple forms that are related to the form 8288-A and they can be all filed with one form 8288.
  • You shouldn’t give your transferor a copy of the form 8288 or form 8288-A.
  • The IRS will then stamp your copy B of each of the forms 8288-A and it will then get forwarded to the foreign person who is subject to withholding and their address will be written on the form 8288-A.
  • In order for the person to receive any credit, the transferor has to attach the copy B of form 8288-A that is stamped and send it to the US income tax return.

What Are The Penalties?

For people who file IRS form 8288, there are interests and penalties involved.

  • You will find under the 6651 section that the penalties will apply when the person fails to file the form 8288 when it is due and fails to pay for the withholding when that is due too.
  • If you are supposed to withhold tax and do not do so, the tax including the interest will be taken from you.
  • The penalty for no payment will be up to about $10,000 for neglecting and failing to pay over the tax on the due date.
  • If you are a corporate office, or someone who is responsible for others, you will also be subject to a penalty which will be equivalent to the amount that should have been paid to the IRS and also should have been withheld.

If you need help filing IRS Form 8288 we will gladly help you. Call us at 407-502-2400, or email us at [email protected].

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