U.S. flag

An official website of the United States government

Dot gov

Official websites use .gov
A .gov website belongs to an official government organization in the United States.

Https

Secure .gov websites use HTTPS
A lock () or https:// means you’ve safely connected to the .gov website. Share sensitive information only on official, secure websites.

Additional Controls Are Needed to Help Ensure Nonresident Alien Individual Property Owners Comply With Tax Laws

Report Information

Date Issued
Report Number
2017-30-048
Report Type
Audit
Joint Report
Yes
Participating OIG
Treasury Inspector General for Tax Administration
Agency Wide
Yes (agency-wide)
Questioned Costs
$0
Funds for Better Use
$0
View Report

Recommendations

The Director, Large Business and International Division, Withholding and International Individual Compliance Practices, should request that a revision be made to Form 1040NR to enable nonresident aliens to make an election under I.R.C. § 871(d) and revise processing procedures to ensure that the IRS records the election.

The Director, Large Business and International Division, Withholding and International Individual Compliance Practice, should request that the Wage and Investment Division, when verifying FIRPTA withholding credits claimed on Form 1040NR filed by nonresident alien sellers against information in the FIRPTA Database, also research the nonresident alien's Master File account to determine if the U.S. property was rented and depreciated. If it was, verify calculation of the property's cost basis used in the sale.
Recommendation rejected by IRS

The Large Business and International Division, Withholding and International Individual Compliance Practice, should develop a compliance initiative addressing nonresident aliens who do not report rental income generated by real property they own in the United States.