SEC. 7. INSTALLMENT SALES

1. In general . A transferee as a result of a disposition of a U.S. real property interest occurring after December 31, 1984, is required to satisfy its withholding obligation based on the amount realized regardless of the amount of the payment by the transferee. If the transferor is a person other than a dealer and will report gain from the disposition under section 453 of the Code, a withholding certificate that permits the transferee to withhold at a reduced rate may be obtained under the rules of this section. Any withholding certificate must provide for payment of the interest on the deferred tax liability under section 453A(c) of the Code when applicable. No refund of the amount withheld will be made unless such a withholding certificate is obtained.

.02 Withholding certificate requests . With respect to installment sales subject to withholding under section 1445(a) of the Code, the Service will entertain requests for certificates based on the transferee’s agreement to do the following:

1. Withhold and pay over 10 percent, or such lesser amount as determined by the Commissioner, of any down payment, including any liabilities of the transferor assumed by the transferee or liabilities to which the subject U.S. real property interest was subject immediately before and after the transfer;

2. Withhold 10 percent, or such lesser amount as may be determined by the Commissioner, of each subsequent payment and the interest on the deferred tax liability under section 453A(c) of the Code (these amount are in addition to any other amount required to be withheld under section 1441 or 1442);

3. Pay over all amounts withheld

using Forms 8288 and 8288-A, including thereon the taxpayer identification number of the transferor; and

4. Notify the Commissioner prior to the disposition or encumbrance of the subject U.S. real property interest, and upon such disposition or encumbrance pay over to the Service the amount remaining to be withheld pursuant to section 1445(a).

5. If the transferor pledges the installment obligation in exchange for all or a portion of the proceeds due on the installment obligation and includes in gross income under section 453A(d) of the Code the net proceeds of the secured indebtedness, the transferee’s obligation to withhold under a reduced withholding certificate nevertheless continues until an amended withholding certificate is issued even though the transferor includes the proceeds in gross income.