The non-resident alien, foreign LLC and foreign corporations all have one common international tax problem- the U.S. 15% real estate sale price withholding tax.
Additionally, states have a withholding tax.
For example, Hawaii is a five percent withholding tax of the sales price. As a result, a whooping 20% of the sales price is withheld.
The seller is personally responsible for this tax and so is the escrow company or law firm handling the sale. It is what we call, in America, as a “hot potato”. Every person connected with the sale proceeds is personally responsible.
I am sorry. I have more bad news about Form 8288-B FIRPTA Certificate. Congress slashed funding for the IRS. The other day, an IRS International Tax Attorney told me that the IRS has “limited resources”. This means a longer, much longer, wait for your FIRPTA Certificate (click here to learn how to get a fast refund of the tax).