FIRPTA- Foreign Investment Real Property Tax Act.
When a foreign person sells real property in the U.S., the buyer is generally obligated to deduct and withhold 10 percent of the sales price to remit to the IRS. However, no federal withholding is required if, among other things, the seller furnishes the buyer with a Seller's Affidavit of Nonforeign Status (C.A.R. Form AS or equivalent) containing the seller's social security number or taxpayer ID number.
Some sellers, however, do not want to disclose their social security numbers to their buyers. Responding to REALTORS®'s concerns, C.A.R. sponsored federal legislation for a FIRPTA fix which took effect in July 2008. As a new alternative, no federal withholding is required if the seller furnishes Form AS to a "qualified substitute," who in turn, furnishes to the buyer a Qualified Substitute Declaration of Possession of Transferor's Affidavit of Nonforeign Status (C.A.R. Form QS or equivalent). A "qualified substitute" is a person responsible for closing the transaction, such as an escrow company, title insurance company, or the buyer’s agent (but not the seller's agent).
There are title companies out there that are refusing to act as a "Qualified Substitue". It is imperative that you ensure your title company will act as a subtitute. I can provide you with a list of title and escrow companies which WILL provide this important service. Just go to www.ArmstrongEstates.com and email me about the Title and Escrow company FIRPTA list.