Millions of Dollars in Discrepancies in Tax Withholding Required by the Foreign Investment in Real Property Tax Act Are Not Being Identified or Addressed

The Commissioner, Wage and Investment Division, should initiate actions to address the accuracy of existing data in the FIRPTA database. Subsequent to an initial clean-up, implement processes and procedures to ensure accuracy of the information input into the FIRPTA database.

The Commissioner, Wage and Investment Division, should conduct additional training to ensure that tax examiners understand established procedures for processing Forms 8288 and Forms 8288-A.

The Commissioner, Wage and Investment Division, should ensure that tax examiners are aware of the procedures to properly allocate FIRPTA withholding among multiple sellers when the buyer does not correctly submit a Form 8288-A for each seller.

The Commissioner, Wage and Investment Division, should review the 2,988 buyers TIGTA identified with a discrepancy between the withholding reported on Form 8288 and the withholding reported on the associated Form 8288-A and correct the withholding recorded in the FIRPTA database or the buyer's tax account as appropriate.

The Commissioner, Wage and Investment Division, should implement processes and procedures to ensure that tax examiners accurately determine and assess the proper amount of FIRPTA withholding tax a buyer should report and pay when the application for the Withholding Certificate attached to the Form 8288 was not filed on or before the date of transfer of the property.