Reporting and Paying the Tax

Transferees must use Forms 8288 and 8288-A to report and pay over any tax withheld on the acquisition of a USRPI. These forms must also be used by corporations, estates, and QIEs that must withhold tax on distributions and other transactions involving a USRPI. You must include the U.S. TIN of both the transferor and the transferee on the forms.

For partnerships disposing of a USRPI, the manner of reporting and paying over the tax withheld is the same as discussed earlier under partnership withholding on ECTI.

Publicly traded trusts must use Forms 1042 and 1042-S to report and pay over tax withheld on distributions from dispositions of a USRPI.

QIEs must use Forms 1042 and 1042-S for a distribution to a nonresident alien or foreign corporation that is treated as a dividend, as discussed earlier under qualified investment entities (QIEs).

Form 8288. The tax withheld on the acquisition of a USRPI from a foreign person is reported and paid over using Form 8288. Form 8288 also serves as the transmittal form for copies A and B of Form 8288-A.

Due date. In most cases, you must file Form 8288 by the 20th day after the date of the transfer.

If an application for a withholding certificate (discussed later) is submitted to the IRS before or on the date of a transfer and the application is still pending with the IRS on the date of transfer, the correct withholding tax must be withheld but does not have to be reported and paid over immediately. The amount withheld (or lesser amount, as determined by the IRS) must be reported and paid over within 20 days following the day on which a copy of the withholding certificate or notice of denial is mailed by the IRS.

If the principal purpose of applying for a withholding certificate is to delay paying over the withheld tax, the transferee will be subject to interest and penalties. The interest and penalties will be assessed for the period beginning on the 21st day after the date of transfer and ending on the day the payment is made.

Form 8288-A. The withholding agent must prepare a Form 8288-A for each person from whom tax has been withheld. Attach Copies A and B of Form 8288-A to Form 8288. Keep Copy C for your records. The IRS will stamp Copy B of Form 8288-A and will forward the stamped copy to the transferor. To receive credit for the withheld amount, the transferor must file a U.S. income tax return and attach the stamped Copy B of Form 8288-A to the U.S. income tax return. See the Instructions for Form 8288 for more information.

Caution: The stamped Copy B of Form 8288-A will not be provided to the transferor if the transferor’s TIN is not included on that form. The IRS will send a letter to the transferor requesting the TIN and providing instructions for how to get a TIN. When the transferor provides the IRS with a TIN, the IRS will provide the transferor with the stamped Copy B of Form 8288-A.

Form 1099-S. In most cases, the real estate broker or other person responsible for closing the transaction must report the sale of the property to the IRS using Form 1099-S, Proceeds From Real Estate Transactions. For more information about Form 1099-S, see the Instructions for Form 1099-S and Pub. 1099 .