FIRPTA Withholding Forms: Form 8288, Form 8288-B, and Penalties

The two FIRPTA withholding forms are Form 8288 and Form 8288-B. Form 8288 is the return a buyer files with the IRS to report and pay the tax withheld from a foreign seller’s proceeds on the sale of a U.S. real property interest. Form 8288-B is the application either party files ahead of closing to ask the IRS for a reduced withholding amount when the statutory 15% would exceed the seller’s actual tax liability. Together they carry out the collection mechanism in IRC Section 1445, which puts the buyer, not the foreign seller, on the hook for getting the tax to the Treasury.¹

When the Forms Are Needed

Withholding is triggered any time a foreign person, meaning a nonresident alien individual, foreign corporation, foreign partnership, or foreign trust or estate, disposes of a U.S. real property interest.² The obligation runs against the buyer regardless of whether the seller actually made a profit; the withheld amount is a deposit against the seller’s eventual U.S. tax bill.

The standard rate is 15% of the amount realized. Residential sales get relief: no withholding on qualifying personal-residence purchases at or below $300,000, and a 10% rate on residence purchases from $300,001 to $1,000,000 that meet the same occupancy test.³ Sales above $1,000,000 always use the full 15% rate, and commercial property uses 15% at any price.

When You Can Skip the Forms Entirely

The most common reason a real estate closing never touches Form 8288 is a non-foreign affidavit. If the seller signs a statement under penalty of perjury that they are not a foreign person and provides their U.S. taxpayer identification number, the buyer has no withholding obligation and no form to file.² The affidavit can be delivered to a qualified substitute, usually the title or settlement agent, who then confirms to the buyer that it is on file. This is why FIRPTA never surfaces in most U.S. residential transactions.

A nonrecognition transaction, such as a properly structured like-kind exchange under Section 1031, also removes the withholding duty. The seller gives the buyer written notice that no gain or loss is recognized, and the buyer forwards a copy to the IRS within 20 days of the transfer.³

Form 8288: Reporting and Paying the Withheld Tax

Form 8288 is the buyer’s return. For each foreign seller in the deal, the buyer also completes a Form 8288-A; Copies A and B of that form get attached to Form 8288 when it goes to the IRS.⁴

The form asks for:

The legal names and mailing addresses of the buyer and every foreign seller
A valid taxpayer identification number for each party (SSN or ITIN for individuals, EIN for entities)⁵
A description of the property
The date of the transfer
The amount realized

Filing Deadline and Where to Send It

Form 8288 and the payment are due within 20 days of the transfer date.⁴ Payment is by check or money order to the United States Treasury, with the buyer’s TIN and a Form 8288 reference on the payment so it posts correctly. Everything goes to:

Ogden Service Center
P.O. Box 409101
Ogden, UT 84409⁶

There is no e-file option and no EFTPS payment for Form 8288. The IRS requires paper filing by mail.⁴

Form 8288-B: Applying for a Reduced Withholding Amount

When 15% (or 10%) of the sale price would come out to more than the seller’s maximum tax on the actual gain, either party can file Form 8288-B asking the IRS to authorize a smaller withholding amount, or zero.⁷ The IRS response, called a withholding certificate, sets the amount the buyer must ultimately send in.

The application has to lay out the math. Expect to provide:

The seller’s original purchase price
The cost of any improvements
Depreciation taken
The anticipated gain and the tax on it
Supporting documents: the purchase contract, the closing statement, and records establishing adjusted basis
If a U.S. tax treaty benefit is claimed, the specific treaty article and proof of residence in the treaty country

Timing While the Application Is Pending

The IRS normally acts on a Form 8288-B application within 90 days of receiving everything it needs.⁸ That clock starts only when the file is complete, so gaps in the documentation push the wait out.

If Form 8288-B is filed on or before the closing date and is still pending when the property transfers, the buyer must still withhold the full statutory amount, but can hold it in escrow rather than remitting it to the IRS.⁹ Once the IRS mails its decision, the buyer has 20 days to send in whatever the certificate specifies (or the full withholding if the application is denied). That 20-day window runs from the IRS mailing date, not from when the buyer opens the envelope.

Getting a TIN in Time to File

Both buyer and seller must have a valid TIN on the withholding forms. A foreign individual without an SSN applies for an ITIN on Form W-7.⁵

An ITIN application normally has to be attached to a U.S. tax return, but FIRPTA transactions qualify for Exception 4. Under that exception, the applicant can submit Form W-7 with a completed Form 8288, 8288-A, or 8288-B and a copy of the sales contract or closing disclosure, without a return.¹⁰ Write “Exception 4” on the dotted line next to box h on Form W-7. Sellers also attach copies of the Forms 8288 and 8288-A submitted by the buyer. Start the ITIN process well before closing; the withholding filing deadlines do not wait.

What Happens After the IRS Processes Form 8288

Once Form 8288 and the attached Form 8288-A are processed, the IRS stamps Copy B of the 8288-A and mails it to the foreign seller at the address on the form.⁴ That stamped copy is the seller’s proof of withholding and is required to claim credit on a U.S. tax return.

To recover any excess, the foreign seller files a U.S. income tax return reporting the actual gain or loss, typically Form 1040-NR for individuals or Form 1120-F for corporations, with the stamped Copy B attached.⁴ If the withholding exceeded the actual tax, the difference comes back as a refund. Since 15% of the sale price is rarely the final tax figure, filing the return is the step that actually recovers the money.

Mismatched names or TINs across the closing documents, the 8288 package, and the return are a common source of processing delays. Make everything consistent at closing.

Penalties If the Buyer Doesn’t File

The buyer is personally liable for the full withholding amount whether or not it was actually deducted from the seller’s proceeds.¹¹ On a $2,000,000 sale to a foreign seller, that is $300,000 the IRS can collect from the buyer, plus interest, after the buyer has already paid the seller in full.

Alongside the tax itself, a late or missing Form 8288 exposes the buyer to interest running from the 20th day after the transfer under IRC Section 6601, failure-to-file and failure-to-pay penalties under Section 6651, a willful-failure penalty of up to $10,000 under Section 7202, and, for responsible corporate officers, a personal penalty under Section 6672 equal to the full tax that should have been withheld.⁴

One safety net exists. If the foreign seller files their own U.S. return and pays the tax on the sale, the IRS will not also collect the withholding amount from the buyer, unless the buyer’s failure was fraudulent. Interest for the late period still applies, but the principal liability is treated as satisfied.¹¹

Late-Filing Relief

A buyer who missed the deadline may qualify for penalty relief on reasonable-cause grounds. File the overdue forms with “FILED PURSUANT TO REV. PROC. 2008-27” written across the top and a written explanation of what went wrong, sent to the same Ogden address.⁴ Confusion about the seller’s foreign status or reliance on an error by the title company are the kinds of explanations the IRS has historically accepted.

1
Internal Revenue Service. IRM 4.61.12 Foreign Investment in Real Property Tax Act
2
Office of the Law Revision Counsel. 26 USC 1445
3
Internal Revenue Service. Exceptions from FIRPTA Withholding
4
Internal Revenue Service. Instructions for Form 8288
5
Internal Revenue Service. ITIN Guidance for Foreign Property Buyers/Sellers
6
Internal Revenue Service. Where to File – Forms Beginning with the Number 8
7
Internal Revenue Service. About Form 8288-B, Application for Withholding Certificate for Dispositions by Foreign Persons of U.S. Real Property Interests
8
Internal Revenue Service. Form 8288-B (Rev. December 2025)
9
Internal Revenue Service. Reporting and Paying Tax on U.S. Real Property Interests
10
Internal Revenue Service. Instructions for Form W-7 (Rev. December 2024)
11
GovInfo. 26 CFR 1.1445-1 – Withholding on Dispositions of U.S. Real Property Interests by Foreign Persons