Michael Karlin was recently quoted in a Thomson Reuters Tax and Accounting article on FIRPTA (Foreign Investment in Real Property Tax Act of 1980) withholding challenges, which also serves as a recap of his recent presentation at the New York University Tax Conference in Berkeley, California on taxation of inbound investment in U.S. real estate.
In exploring the hurdles that often arise in FIRPTA withholding, the article highlights potential issues with escrow agents, penalties for mismatches in payments, and the option of seeking a withholding certificate to reduce or avoid over-withholding.
On the topic of escrow, Michael explains, “Sometimes you can work with escrow to hold it in escrow funds while you try to apply for a withholding tax certificate or you apply for an ITIN for the client so that it can be tracked,” ... “But some with escrow agents are more sophisticated than others. Some just want to pay the tax and be done. And it can be very challenging, especially when after the fact you’re trying to go back and get that refund.”
Read the full article here.