JASON FREEMAN, JD - The FIRPTA Withholding Obligation

Section 1445 of the Internal Revenue Code generally imposes a withholding obligation on purchasers (i.e., the “transferee”) with respect to a seller’s disposition of a “U.S. real property interest” (USRPI).  Under section 1461, the transferee/purchaser is liable for withholding tax on the disposition.  Withholding is a mechanism to collect the tax that is imposed by the Foreign Investment in Real Property Tax Act (“FIRPTA”).  Notably, though beyond the scope of this article, the FIRPTA statute and regulations contain several exceptions to the withholding requirement, and in certain circumstances, allow a transferee to obtain a withholding certificate to reduce the withholding agent’s withholding liability.

The FIRPTA regulations impose liability on any person required to withhold who fails to do so.  The regulations provide that:

Read More

On Tuesday, December 3, the American Bar Association, Section of Taxation: United States Activities of Foreigners & Tax Treaties Committee (“Committee”) submitted to Congress various “Options” offering proposals for simplification and clarification of various international tax provisions of the Internal Revenue Code. The Committee made some excellent suggestions and one can only hope Congress will take heed. The Committee noted that a remedy is needed to remove many “traps for the unwary” and to ease compliance burdens that cannot reasonably be met.

Tax professionals can learn a great deal about the current law in the areas discussed by reading this proposal. Tax traps are carefully pointed out and the proposal should be required reading for practitioners involved with international tax issues. Read More