What Are the Instructions for Form 8288-A?

The Foreign Investment in Real Property Tax Act (FIRPTA) requires tax withholding when a foreign person sells United States real estate. This process is managed with two documents: Form 8288 and Form 8288-A. The buyer, known as the withholding agent or transferee, must withhold a portion of the sales price and send it to the Internal Revenue Service (IRS).

Form 8288-A serves two purposes. It is the transmittal slip that accompanies the main Form 8288 and the tax payment sent to the IRS. For the foreign seller, or transferor, a stamped copy of Form 8288-A from the IRS is the official proof that the tax was paid, which they use to claim a credit on their U.S. income tax return.

Information Required to Complete Form 8288-A

Properly completing Form 8288-A requires the withholding agent to gather specific information about the transaction and the parties involved. This form is submitted to the IRS along with Form 8288, and the information on both is interconnected. The withholding agent must prepare a separate Form 8288-A for each foreign seller involved in the disposition of the property. Current versions of both forms should be downloaded from the IRS website to ensure compliance.

A primary requirement is the identification of all parties. The form requires the full names and addresses for both the transferor and transferee. A critical piece of information is the U.S. Taxpayer Identification Number (TIN) for both parties. For the foreign seller, having a TIN—which can be a Social Security Number (SSN), Individual Taxpayer Identification Number (ITIN), or Employer Identification Number (EIN)—is necessary for the IRS to process the form correctly and for the seller to later claim the withholding as a credit on a U.S. tax return.

Financial details of the transaction must be accurately reported. This includes the “Amount Realized,” which is generally the total cash paid, the fair market value of other property transferred, and the amount of any liabilities assumed by the buyer. The withholding is generally calculated as 15% of this amount realized. The “Date of Transfer,” which is typically the closing date, must also be entered.

The form itself is divided into parts that organize this information. Part I of Form 8288-A captures the withholding agent’s details, while Part II is for the foreign transferor’s information. The agent must enter the total amount of federal income tax withheld in box 2 and the amount realized in box 3. A detailed description of the property, including its location and any distinguishing features, is also required. The withholding agent retains Copy C for their records, while Copies A and B are sent to the IRS.

The Filing Process for the Withholding Agent

The withholding agent must assemble a submission package containing the summary Form 8288. Attached to it must be Copy A and Copy B of Form 8288-A for each foreign transferor from whom tax was withheld.

The package must include payment for the full amount of tax withheld. Payment can be made electronically through the Electronic Federal Tax Payment System (EFTPS), or by a check or money order made payable to the “United States Treasury.” The withholding agent is responsible for ensuring the payment matches the total withholding amount reported on Form 8288. The complete submission package must be mailed to: Ogden Service Center, P.O. Box 409101, Ogden, UT 84409.

There is a strict deadline for this submission. The withholding agent must file the forms and remit the tax payment by the 20th day after the date of the transfer. Failure to meet this deadline can result in penalties and interest charges for the withholding agent. It is important to note that the agent is not required to provide a copy of the filed forms directly to the seller.

Once the package is received and processed, the IRS will stamp Copy B of Form 8288-A to indicate receipt of the funds. The IRS is then responsible for mailing this stamped Copy B directly to the foreign seller at the address provided on the form. This action completes the withholding agent’s primary responsibility in the FIRPTA process.

Using the Stamped Form 8288-A

The stamped Copy B of Form 8288-A will have a control number and an IRS stamp. This signifies that it has been processed and the payment has been credited to the seller’s account, provided they supplied a valid U.S. TIN.

To account for the tax withheld and to determine their final U.S. tax liability, the seller must file a U.S. income tax return for the year in which the property was sold. For a nonresident individual, this is done using Form 1040-NR, U.S. Nonresident Alien Income Tax Return. The tax return is where the seller reports the property sale, calculates the capital gain, and determines the tax due on that gain.

The seller must physically attach the stamped Copy B of Form 8288-A to their filed return to claim a credit for the amount that was withheld. The amount shown as withheld on Form 8288-A is treated as a payment of tax. If the amount withheld exceeds the seller’s actual tax liability calculated on their income tax return, they may be entitled to a refund from the IRS.