The amount that must be withheld from the disposition of a U.S. real property interest can be adjusted pursuant to a withholding certificate issued by the IRS. The transferee, the transferee's agent, or the transferor may request a withholding certificate. The IRS will generally act on these requests within 90 days after receipt of a complete application including the Taxpayer Identification Numbers (TIN's) of all the parties to the transaction. A transferor that applies for a withholding certificate must notify the transferee in writing that the certificate has been applied for on the day of or the day prior to the transfer.

A withholding certificate may be issued due to:

1. A determination by the IRS that reduced withholding is appropriate because either:
   • The amount that must be withheld would be more than the transferor's maximum tax liability, or
   • Withholding of the reduced amount would not jeopardize collection of the tax,
2. The exemption from U.S. tax of all gain realized by the transferor, or
3. An agreement for the payment of tax providing security for the tax liability, entered into by the transferee or transferor.

All applications for withholding certificates are divided into six basic categories. This categorizing provides for specific information that is needed to process the applications. The six categories are:

1. Applications based on a claim that the transfer is entitled to non-recognition treatment or is exempt from tax,
2. Applications based solely on a calculation of the transferor's maximum tax liability,
3. Applications under special installment sale rules,
4. Applications based on an agreement for the payment of tax with conforming security,
5. Applications for blanket withholding certificates, and
6. Applications on any other basis.