A Form 8288 ("U.S. Withholding Return for Disposition by Foreign Persons of U.S. Real Property Interests"), is required to be filed by the Transferee (Buyer or Designated Agent) of the U.S. real property interest. In addition, Form 8288-A ("U.S. Withholding Statement on Disposition by Foreign Persons of U.S. Real Property Interest") must be attached to Form 8288. The amount of tax required to be withheld and paid to the IRS by the buyer is 10% of the amount realized on the transfer, or, 35% of the gain recognized by a domestic corporation, domestic partnership, domestic trust or domestic estate.
The tax on Form 8288 is due the IRS by the 20th day after the date of transfer. Penalty and interest will be charged on late filed Forms 8288 (received after the 20th day from the date of transfer). An extension to file Form 8288 is permitted if the taxpayer is awaiting a response to their application for a withholding certificate. Upon receipt of an approved withholding certificate or rejection letter, the taxpayer has 20 days from the date on the certificate/letter to file Form 8288. If not filed by the extended date, penalties and interest will be charged.