08/14/2025
New FIRPTA Requirements for Foreign Sellers. Please be aware as collecting the correct IRS paperwork from foreign Sellers and submitting to the IRS may delay Escrow closing dates.
As you're aware, the new IRS mandate requiring all FIRPTA withholding payments to be made electronically through the Electronic Federal Tax Payment System (EFTPS) takes effect on September 30, 2025-and the IRS is already falling behind.
This change introduces significant challenges for many foreign sellers and buyers involved in U.S. real estate transactions.
Setting up an EFTPS account is not straightforward: it requires a valid U.S. Taxpayer Identification Number (TIN), a U.S. mailing address, and up to 10+ business days to receive a PIN by postal mail. However, PIN delivery has been consistently delayed-even to U.S. addresses. Without the PIN, account activation can't be completed, and failure to pay within the IRS's 20-day FIRPTA deadline can trigger automatic penalties and interest.
Foreign sellers, often unfamiliar with U.S. tax systems, face further complications. The EFTPS platform is not designed for real estate transactions, and there is little guidance available for navigating it. Critically, buyers and sellers remain fully liable for penalties-even if a closing agent assists.
Key Challenges:
1. PIN Delays Are Already Happening
Although the IRS states 5–10 business days for delivery, PINs often don't arrive at all within that window-even at U.S. addresses. This delays EFTPS access and risks FIRPTA non-compliance.
2. U.S. Mailing Address Requirement
Foreign sellers without a U.S. address must rely on attorneys, agents, or relatives to receive the PIN-introducing risk and logistical complexity.
3. Complex Enrollment Process
The EFTPS system requires knowledge of U.S. tax forms and identity verification steps that many foreign users are unfamiliar with.
4. Tight IRS Deadline With No Flexibility
FIRPTA payments must be made electronically within 20 days of closing. Without an active EFTPS account, sellers (or buyers on their behalf) may face immediate penalties.
5. Limited IRS Support for International Users
Support for PIN issues, address changes, or delayed delivery is minimal and often not responsive for non-U.S. participants.
6. Language and Navigation Barriers
The EFTPS platform is not intuitive for international users, especially non-native English speakers or those without prior IRS experience.
