IRS to Do More to Ensure Tax Compliance on Foreign Investments in Real Property
The Internal Revenue Service plans to take additional actions to improve taxpayer compliance with a law related to the disposition of foreign investments in U.S. real property, according to a new government report.
The report, from the Treasury Inspector General for Tax Administration, noted that Congress passed the Foreign Investment in Real Property Tax Act of 1980 (FIRPTA) to provide federal tax rules for the sale of U.S. real property by foreign persons. The Deficit Reduction Act of 1984 imposed a withholding tax on the anticipated taxes due on any capital gain from the sale of a U.S. real property interest by a foreign seller. This is generally the only method that the IRS has to ensure the collection of any taxes on the capital gains resulting from these sales. Read more on Accounting Today.