Financial Glossary
Form 8288 (FIRPTA Withholding)
Form 8288 is the IRS return used to report and remit tax withheld when a foreign person disposes of a U.S. real property interest, as required under the Foreign Investment in Real Property Tax Act (FIRPTA). The buyer or transferee acts as the withholding agent, files Form 8288 along with Form 8288-A, and forwards the withheld amount to the IRS. The withholding is a prepayment against the foreign seller's eventual U.S. tax liability on the gain.
Problem & Application
If you are buying a campground, short-term rental, or other investment property from a foreign owner, FIRPTA can make you legally responsible for withholding and remitting tax at closing. Missing the filing or under-withholding exposes the buyer, not the seller, to penalties and the unpaid tax. Real estate investors and hospitality operators acquiring property from non-U.S. sellers need to confirm the seller's status and handle Form 8288 correctly within the required window.
In Short
Form 8288 puts the withholding burden on the U.S. buyer, so getting it right protects you from inheriting a foreign seller's tax bill.