Important IRS Update: FIRPTA Payments Must Be Made Electronically Starting September 30, 2025
- marketing669181
- 7 hours ago
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This bulletin is issued in conjunction with Bulletin SLS2016001.
The IRS has announced a significant change regarding compliance with the Foreign Investment in Real Property Tax Act (FIRPTA).
Effective September 30, 2025, all FIRPTA withholding payments must be made electronically through the Electronic Federal Tax Payment System (EFTPS). Paper checks will no longer be accepted.
Key Points to Note:
FIRPTA Requirement: The sale of U.S. real property by a foreign seller generally requires the buyer (as withholding agent) to withhold 15% of the total sale price, unless exemptions apply (such as personal residence exceptions reducing the rate to 10% or 0%).
Filing Obligation: Within 20 calendar days of the property transfer, the buyer must submit IRS Forms 8288 and 8288-A along with the withheld funds.
New Mandate: Beginning September 30, 2025, these payments must be made electronically via EFTPS. Paper checks will no longer be processed under any circumstances.
Penalties: Failure to comply may result in penalties, interest charges, and delays in processing.
Enrolling in EFTPS:
Enroll: Individuals and businesses must enroll at www.EFTPS.gov. Enrollment requires IRS validation and receipt of a Personal Identification Number (PIN) by mail.
Prepare: Users need their Taxpayer Identification Number (TIN), PIN, and bank account information.
Schedule Payments: Payments must be scheduled by 8:00 p.m. ET the day before the due date. Same-day wire options are available but require coordination with your financial institution and completion of a Same Day Taxpayer Worksheet.
Receipt: A confirmation (EFT Acknowledgment Number) is issued once payment is processed.
Action Recommended:
Given the complexity of FIRPTA compliance, buyers and their representatives should begin planning now. We strongly advise consulting with experienced real estate advisors, tax professionals, or attorneys to ensure smooth transactions and avoid potential issues under the new electronic mandate.
If you have any questions or need guidance on how this affects your transactions, please do not hesitate to contact me.
Sincerely,
Christopher J. Brown Title Officer & CEO of ClosePoint USA
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