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 ensure that tax examiners are aware of the processes and procedures to determine and assess the proper amount of FIRPTA withholding tax a buyer should report and pay when the buyer reports reduced withholding and no Withholding Certificate is attached to the Form 8288.

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 an approved Withholding Certificate is attached to the Form 8288.

The Commissioner, Wage and Investment Division, should ensure that the correct amount of FIRPTA withholding tax is assessed for the buyers that filed the 2,268 Forms 8288 TIGTA identified for which the Withholding Certificate was not submitted timely and the 916 Forms 8288 TIGTA identified for which the assessed withholding is not supported by an approved Withholding Certificate.

The Commissioner, Wage and Investment Division, should review the 1,835 taxpayers TIGTA identified that potentially received erroneous FIRPTA withholding credits and take the appropriate steps to recover credits paid in error.

The Commissioner, Wage and Investment Division, should ensure that tax examiners document the steps taken to verify the claim in the Credit Verification section of the FIRPTA database as required.