International Sale Issue?

[EricLaurie]

Last November, we purchased a resale CCV contract from international sellers. Closing was with Mason Title. Yesterday, we got a letter from the IRS. They received our form 8288-B (Application for Withholding Certificate of Dispositions by Foreign Persons of US Real Property Interest). They rejected the application because the transferor didn't follow the procedures. It goes on to say I was required to submit form 8288-B and 8288-A.

Transferor is also required to file a US income tax return to report the disposition.

IRS gives us 20 days from date of letter to respond before accruing penalties.

We did purchase a resale contract several years ago from an international seller - no problem. Is this an issue with the title company? How it takes them a year to figure this out and send me this letter I'll never know. Frustrating - I'm sure if I try to call the IRS number tomorrow I'll hold forever (if I get through at all).

 

[CarolynFH]

Call the title company first thing tomorrow morning. That's their job, to make sure the FIRPTA tax is paid from the seller's proceeds. Don't call the IRS. Good luck, and I hope this is resolved quickly!

 

[john7994]

Call the title company first thing tomorrow morning. That's their job, to make sure the FIRPTA tax is paid from the seller's proceeds. Don't call the IRS. Good luck, and I hope this is resolved quickly!

Would agree - same exact thing happened to me and I called the Title company and they resolved the issue.

 

[EricLaurie]

Would agree - same exact thing happened to me and I called the Title company and they resolved the issue.

Thank you! That makes me feel a whole lot better!

 

[john7994]

Thank you! That makes me feel a whole lot better!

It was actually in the last couple of months - so pretty recent. Keep an eye on it - and all the paperwork. The IRS doesn't move very quickly - so things take time to catch-up, but I am not worried about it.

 

[sndral]

If you search DIS using the term FIRPTA you’ll find that the issue crops up occasionally. The IRS seems to take a long time to process FIRPTA paperwork.
Many years ago Mason was the title/escrow co. when I bought from an International seller, they handled everything. Fortunately I had no problems, but did a little research ‘just in case.’
When real estate is sold the IRS taxes you on your capital gains. Non U.S. citizen/resident sellers don’t have social security numbers or TINs, so the IRS requires the US citizen/resident to see that the tax is paid. It is deducted from the seller’s proceeds.
The IRS assumes the amount owed to be 15% of the sales price, but usually the seller owes less. Escrow companies can either send the 15% to the IRS & the seller then files the forms to get a refund from the IRS, or the escrow company can hold 15% of the sale price in an escrow account while the seller files forms showing the IRS that they owe less, once the IRS determines the amount owed the escrow company sends the IRS the tax owed & the rest goes to the seller.
It sounds like your sellers are going to have to pay more than they hoped, or to jump through more hoops.
Verify w/ your title company that they received the IRS documents & are forwarding the amount owed to the IRS.

 

[WxKristin]

I almost about a year into this process with the IRS. Mason Title handled the paperwork and payed the FIRPTA tax after receiving the IRS paperwork (as they were supposed to). IRS said they didn't. Mason forwarded me the paperwork and I had to spend hours on the phone with the IRS. After finally talking to the right person, he filled out the necessary forms and provided notation that it was paid on time and all penalties should be waived. That IRS agent told me to expect 60-90 additional days for it clear up. I have since received two letters in the last 6 mo that says it's still in review.

Knowing what I know now, I would not purchase from an international seller again.

 

[intamin]

Seeing these is kind of making me worry about my resale AKV from earlier this year *knocks on wood* I hope Mason did it correctly

 

[AstroBlasters]

I can see why Disney avoids ROFRing these….

 

[mbroc]

@EricLaurie, did your issue get resolved? I just got the same notice. Mine is also with Mason Title.

 

[EricLaurie]

Maybe.

I called Mason Title right away after getting my notice in October. They were very responsive. They said that they had the FIRPTA money in escrow and don't send it to the IRS until they get a bill from the IRS. According to them, prior to COVID the IRS would send those bills in 3-4 months. Post COVID, it was taking 9 months plus. They submitted the payment right away and send me proof of payment. It was over - or so I thought.

On 1/8/2024, I get another letter from the IRS. Notice CP161 billing me nearly $1,500 in failure to file penalties, failure to pay penalties and interest charges. They listed the amount of tax owed and payments made (so they did receive the payment.

I again called Mason - again very responsive in calling me back. They said they were getting quite a lot of these calls from their clients and blamed the IRS. They can't call the IRS on my behalf, so offered me the dates they received the bills and dates paid (which I already had).

I spent a lot of time on the phone with IRS over this - many agents over the course of 2 weeks. In the end, it appears that form CP161 is normally only sent to businesses. No agents at the IRS can find a record of that letter having been sent to us, no bill being owed, etc. We had full compliance checks run, looked at our accounts at IRS.GOV and nothing. No amount due, yet I have a letter saying otherwise. It is so odd.

I have a full record of all of this interaction. It's been a very frustrating experience after having the purchase go well and a past international purchase go well.

FIRPTA process with the IRS is a mess. I can't help but wonder if Mason had anything to do with this. I will say they have been responsive in calling back, but dealing with the IRS has been all my problem. They can't do that part.

If this is the IRS right now, I wouldn't recommend international sales until this gets figured out.

 

[lilsonicfan]

It seems really insane that both you and the IRS had confirmation that the amount had been paid, yet they were still issuing a notice of non-payment, which they then couldn't find. That does seem nuts.

 

[mbroc]

Maybe.

I called Mason Title right away after getting my notice in October. They were very responsive. They said that they had the FIRPTA money in escrow and don't send it to the IRS until they get a bill from the IRS. According to them, prior to COVID the IRS would send those bills in 3-4 months. Post COVID, it was taking 9 months plus. They submitted the payment right away and send me proof of payment. It was over - or so I thought.

On 1/8/2024, I get another letter from the IRS. Notice CP161 billing me nearly $1,500 in failure to file penalties, failure to pay penalties and interest charges. They listed the amount of tax owed and payments made (so they did receive the payment.

I again called Mason - again very responsive in calling me back. They said they were getting quite a lot of these calls from their clients and blamed the IRS. They can't call the IRS on my behalf, so offered me the dates they received the bills and dates paid (which I already had).

I spent a lot of time on the phone with IRS over this - many agents over the course of 2 weeks. In the end, it appears that form CP161 is normally only sent to businesses. No agents at the IRS can find a record of that letter having been sent to us, no bill being owed, etc. We had full compliance checks run, looked at our accounts at IRS.GOV and nothing. No amount due, yet I have a letter saying otherwise. It is so odd.

I have a full record of all of this interaction. It's been a very frustrating experience after having the purchase go well and a past international purchase go well.

FIRPTA process with the IRS is a mess. I can't help but wonder if Mason had anything to do with this. I will say they have been responsive in calling back, but dealing with the IRS has been all my problem. They can't do that part.

If this is the IRS right now, I wouldn't recommend international sales until this gets figured out.

Thank you for this and sorry not acknowledging sooner (I was actually at Disney hahaha). I agree with your POV. From other experiences with the government (and gov'ts in general), parts of processes are often handled by different departments and more often than not, they are not fully coordinated. To make matters worse, many notices are also automatic and the systems that create them are not programmed in such a way so as to do the proper checks for relevancy before sending notices out. For my particular circumstance, Mason was quick to reply as well. Hopefully, it will be the end. Fingers crossed.

 

[DVC Doctor]

Please keep up informed on Mason title and FIRPTA as several other members have bought DVC resales from International owners and used Mason title. I have only heard good things about them and would not be overly concerned about buying from an international seller, but there is a slight additional hassle, that usually results in a lower selling price.

 

[geargrinder]

I had the same issue. It's nothing. Just let Mason know and they will handle everything with the IRS. Each time I got correspondence from the IRS I would contact Marcello. He told me that there was no action for me to take and that they would handle the IRS.

 

[heynowirv]

We bought a contract in July 2020 from someone in Canada and likewise heard from the IRS last summer. same conclusion and it was also wit Mason Title co. I called them and was told it will be taken care of and it was.

 

[EricLaurie]

Sigh. Looks like this isn’t over. I have a registered letter to pick up from the post office.

 

[EricLaurie]

Received notice CP504 today from the IRS. Final Balance Due Reminder - Notice of Intent to Seize (Levy) Your Property or Rights to Your Property.

This has been a nightmare. All over what should have been a simple transaction. Has anyone else ever seen it to this far with the IRS over an international DVC purchase? If so, curious what you did? On hold for IRS right now (again) - 60 minute wait.

 

[lexxus379]

Received notice CP504 today from the IRS. Final Balance Due Reminder - Notice of Intent to Seize (Levy) Your Property or Rights to Your Property.

This has been a nightmare. All over what should have been a simple transaction. Has anyone else ever seen it to this far with the IRS over an international DVC purchase? If so, curious what you did? On hold for IRS right now (again) - 60 minute wait.

I'm hoping this isn't my end result. When I first got my 'you owe IRS letter', I disputed the debt with them because I couldn't figure out what it might be from. I eventually called them when I figured out it might be from buying international and they couldn't find the debt. Eventually after speaking with them for an hour, they agreed it was soley based on the type of letter I received. I then called Mason and they sent check in for late payment. I now get a letter from IRS every 60 days or so that they are still researching my issue. This has been ongoing for over a year. Please keep us posted.

 

[WxKristin]

I posted above and finally received a letter from the IRS in Jan that it was resolved (this goes back to a sale in Dec 2021). I also used Mason and the initial letter said the Form 8288-B was rejected because the transferor didn't follow procedures outlined in the Code of Fed. Reg. 1.1445.

Along the way, I had a few conversations with IRS agents over the phone (with multiple transfers and 1hr+ waits) and it wasn't until I talked to someone in foreign accounts that I made progress. By the way, this agent was used to dealing with multi-million dollar international account and estate transfers and said this was filed wrong by someone on the IRS side (although it's a tad strange to me we all used Mason ¯\_(ツ)_/¯ ). This conversation was last ~May. He provided me with a new reference number and told me to ignore any warning letters I received later as it would take some time to receive final approval. That was quite difficult, tbh. I never received a seizure of assets notice, however.

Received that final* IRS letter in Jan 2024 (about 2 years after the purchase). It just said that my issue had been resolved. It didn't say what issue, I just assume (*hope*) it's referring to this one as I've had no other "issues" with the IRS.