U. S. Business Income Tax Return

Userid: CPM

AH XSL/XML

Page 1 of 7

Schema:
Leadpct: 100%
instrx
Fileid: … ns/I8288/201602/A/XML/Cycle03/source

Pt. size: 9.5

Draft

Ok to Print

(Init. & Date) _______

15:17 - 11-Feb-2016

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

Instructions for Form 8288
(Rev. February 2016)

Department of the Treasury
Internal Revenue Service

U.S. Withholding Tax Return for Dispositions by Foreign Persons of U.S. Real
Property Interests
Section references are to the Internal Revenue
Code unless otherwise noted.

What's New
The Protecting Americans from
Tax Hikes (PATH) Act of 2015,
Public Law 114-113, Division Q

The PATH Act sections listed below
amend or repeal provisions of the
Internal Revenue Code of 1986, except
as otherwise expressly provided.
Section 133, extension of RIC
qualified investment entity treatment
under FIRPTA. The provision
permanently extends the treatment of
regulated investment companies (RICs)
as qualified investment entities for
purposes of the Foreign Investment in
Real Property Tax Act (FIRPTA). See
Qualified investment entity under
Definitions, later.
Section 322, exception from
FIRPTA for certain stock of REITs.
This section amends section 897
adding new subsection (k) which
contains special rules related to real
estate investment trusts (REITs), and
amends section 897(h)(4).
Section 323, exception for
interests held by foreign retirement
or pension funds. This section
amends section 897 by adding new
subsection (l). See Transferor is a
qualified foreign pension fund or any
entity held in its entirety by a qualified
foreign pension fund, later, for more
information.
Section 324, increase in rate of
withholding of tax on dispositions of
United States real property
interests.The provision provides that
the rate of withholding on dispositions of
United States real property interests is
increased to 15%. The increased rate of
withholding, however, does not apply to
the sale of a personal residence where
the amount realized is $1 million or less.
The provision is effective for
dispositions after February 16, 2016.
Section 325, interests in RICs and
REITs not excluded from definition
of United States real property
interests. The provision amends
section 897(c)(1)(B) by adding a new
requirement for stock of a corporation to
qualify for the exclusion. The new
requirement provides that in order for
Feb 11, 2016

the exclusion to apply, if neither the
corporation nor any predecessor of
such corporation was a RIC or REIT at
any time during the shorter of (a) the
period after June 18, 1980, during which
the taxpayer held such stock, or (b) the
5 year period ending on the date of the
disposition of the stock. The provision
applies to dispositions on or after the
date of enactment.
Future developments. The IRS has
created a page on IRS.gov for
information about Form 8288 and its
instructions at www.irs.gov/form8288.
Information about any future
developments affecting Form 8288
(such as legislation enacted after we
release it) will be posted on that page.

General Instructions
Purpose of Form

A withholding obligation under section
1445 is generally imposed on the buyer
or other transferee (withholding agent)
when a U.S. real property interest is
acquired from a foreign person. The
withholding obligation also applies to
foreign and domestic corporations,
qualified investment entities, and the
fiduciary of certain trusts and estates.
This withholding serves to collect U.S.
tax that may be owed by the foreign
person. Use Form 8288, U.S.
Withholding Tax Return for Dispositions
by Foreign Persons of U.S. Real
Property Interests, to report and
transmit the amount withheld.
You are not required to
TIP withhold if any of the
exceptions apply. See
Exceptions, later.

Who Must File

A buyer or other transferee of a U.S.
real property interest, and a corporation,
qualified investment entity, or fiduciary
that is required to withhold tax, must file
Form 8288 to report and transmit the
amount withheld. If two or more persons
are joint transferees, each is obligated
to withhold. However, the obligation of
each will be met if one of the joint
transferees withholds and transmits the
required amount to the IRS.

Cat. No. 57528F

Do not use Forms 8288 and 8288-A
for the following distributions.
1. A distribution of effectively
connected income by a publicly traded
partnership is subject to the withholding
requirements of section 1446.
2. A distribution with respect to
gains from the disposition of a U.S. real
property interest from a trust that is
regularly traded on an established
securities market is subject to section
1445, but is not reported on Forms 8288
and 8288-A, Statement of Withholding
on Dispositions by Foreign Persons of
U.S. Real Property Interests.
3. A dividend distribution by a
qualified investment entity to a
nonresident alien or a foreign
corporation that is attributable to gains
from sales or exchanges by the qualified
investment entity of U.S. real property
interests is not subject to withholding
under section 1445 as a gain from the
sale or exchange of a U.S. real property
interest if:
a. The distribution is on stock
regularly traded on a securities market
in the United States, and
b. The alien or corporation did not
own more than 10% (for dispositions
and distributions before December 17,
2015, did not own more than 5% of such
stock in case of a real restate
investment trust (REIT)) of that stock at
any time during the 1-year period
ending on the date of the distribution.
Use Form 1042, Annual Withholding
Tax Return for U.S. Source Income of
Foreign Persons, and Form 1042-S,
Foreign Person’s U.S. Source Income
Subject to Withholding, to report and
pay over the withheld amounts.

Amount To Withhold

Generally, you must withhold 15% of the
amount realized on the disposition by
the transferor (see Definitions, later).
However, for dispositions prior to
February 17, 2016, withhold 10% of the
amount realized on the disposition by
the transferor.
For information about:
Withholding at 35%, see Entities
Subject to Section 1445(e), later.

Page 2 of 7

Fileid: … ns/I8288/201602/A/XML/Cycle03/source

15:17 - 11-Feb-2016

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

Also see withholding at a reduced
rate, Purchase of residence for
$1,000,000 or less.
For information about applying for
reduction or elimination of withholding
see Withholding certificate issued by the
IRS, later.
Joint transferors. If one or more
foreign persons and one or more U.S.
persons jointly transfer a U.S. real
property interest, you must determine
the amount subject to withholding in the
following manner.
1. Allocate the amount realized from
the transfer among the transferors
based on their capital contribution to the
property. For this purpose, a husband
and wife are treated as having
contributed 50% each.
2. Withhold on the total amount
allocated to foreign transferors.
3. Credit the amount withheld
among the foreign transferors as they
mutually agree. The transferors must
request that the withholding be credited
as agreed upon by the 10th day after
the date of transfer. If no agreement is
reached, credit the withholding by
evenly dividing it among the foreign
transferors.

When To File

A transferee must file Form 8288 and
transmit the tax withheld to the IRS by
the 20th day after the date of transfer.
You must withhold even if an
application for a withholding certificate
is or has been submitted to the IRS on
the date of transfer. However, you do
not have to file Form 8288 and transmit
the withholding until the 20th day after
the day the IRS mails you a copy of the
withholding certificate or notice of
denial. But if the principal purpose for
filing the application for a withholding
certificate was to delay paying the IRS
the amount withheld, interest and
penalties will apply to the period
beginning on the 21st day after the date
of transfer and ending on the day full
payment is made.
Installment payments. You must
withhold the full amount at the time of
the first installment payment. If you
cannot because the payment does not
involve sufficient cash or other liquid
assets, you may obtain a withholding
certificate from the IRS. See the
instructions for Form 8288-B,
Application for Withholding Certificate
for Dispositions by Foreign Persons of
U.S. Real Property Interests, for more
information.

Where To File

Send Form 8288 with the amount
withheld, and copies A and B of Form(s)
8288-A to:
Ogden Service Center
P.O. Box 409101
Ogden, UT 84409.

Forms 8288-A Must Be
Attached

Anyone who completes Form 8288
must also complete a Form 8288-A for
each person subject to withholding.
Copies A and B of Form 8288-A must
be attached to Form 8288. Copy C is for
your records. Multiple Forms 8288-A
related to a transaction can be filed with
one Form 8288. You are not required to
furnish a copy of Form 8288 or 8288-A
directly to the transferor.
The IRS will stamp Copy B of each
Form 8288-A and will forward the
stamped copy to the foreign person
subject to withholding at the address
shown on Form 8288-A. To receive
credit for the withheld amount, the
transferor generally must attach the
stamped Copy B of Form 8288-A to a
U.S. income tax return (for example,
Form 1040NR, U.S. Nonresident Alien
Income Tax Return, or 1120-F, U.S.
Income Tax Return of a Foreign
Corporation) or application for early
refund filed with the IRS.
Transferor's TIN missing. If you do
not have the transferor's taxpayer
identification number (TIN), you still
must file Forms 8288 and 8288-A. A
stamped copy of Form 8288-A will not
be provided to the transferor if the
transferor’s TIN is not included on that
form. The IRS will send a letter to the
transferor requesting the TIN and
providing instructions for how to get a
TIN. When the transferor provides the
IRS with a TIN, the IRS will provide the
transferor with a stamped Copy B of
Form 8288-A.

Penalties

Under section 6651, penalties apply for
failure to file Form 8288 when due and
for failure to pay the withholding when
due. In addition, if you are required to
but do not withhold tax under section
1445, the tax, including interest, may be
collected from you. Under section 7202,
you may be subject to a penalty of up to
$10,000 for willful failure to collect and
pay over the tax. Corporate officers or
other responsible persons may be
subject to a penalty under section 6672
equal to the amount that should have
been withheld and paid over to the IRS.
-2-

Definitions
Transferee. Any person, foreign or
domestic, that acquires a U.S. real
property interest by purchase,
exchange, gift, or any other transfer.
Transferor. For purposes of this
withholding, this means any foreign
person that disposes of a U.S. real
property interest by sale, exchange, gift,
or any other disposition. A disregarded
entity cannot be the transferor for
purposes of section 1445. Instead, the
person considered as owning the assets
of the disregarded entity for federal tax
purposes is regarded as the transferor.
A disregarded entity for these
purposes means an entity that is
disregarded as an entity separate from
its owner under Regulations section
301.7701-3, a qualified real estate
investment trust subsidiary as defined in
section 856(i), or a qualified subchapter
S subsidiary under section 1361(b)(3)
(B).
Qualified substitute. For this purpose,
a qualified substitute is (a) the person
(including any attorney or title company)
responsible for closing the transaction,
other than the transferor’s agent, and (b)
the transferee’s agent.
Withholding agent. For purposes of
this return, this means the buyer or other
transferee who acquires a U.S. real
property interest from a foreign person.
Foreign person. A nonresident alien
individual, a foreign corporation that
does not have a valid election under
section 897(i) to be treated as a
domestic corporation, a foreign
partnership, a foreign trust, or a foreign
estate. A resident alien individual is not
a foreign person.
A qualified foreign pension fund or
any entity wholly owned by such fund
that disposes U.S. real property interest
or receives a distribution from a REIT is
not a foreign person. See sections
897(l) and 1445(f)(3) for more
information.
U.S. real property interest. Any
interest, other than an interest solely as
a creditor, in:
1. Real property located in the
United States or the U.S. Virgin Islands.
2. Certain personal property
associated with the use of real property.
3. A domestic corporation, unless it
is shown that the corporation was not a
U.S. real property holding corporation
during the previous 5 years (or during
the period in which the transferor held
the interest, if shorter).
Instructions for Form 8288 (Rev. 2-2016)

Page 3 of 7

Fileid: … ns/I8288/201602/A/XML/Cycle03/source

15:17 - 11-Feb-2016

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

A U.S. real property interest does not
include:
1. An interest in a domestically
controlled qualified investment entity.
2. An interest in a REIT that is held
by a qualified shareholder. For the
definition of a quaified shareholder see
section 897(k)(3). But see section
897(k)(2)(B) for the cut-back rule if the
qualified shareholder has one or more
applicable investors.
3. An interest in a corporation that:
Did not hold any U.S. real property
interest as of the date the interest in
such corporation is disposed,
Has disposed of all its U.S. real
property interests in transactions in
which the full amount of any gain was
recognized as provided in section
897(c)(1)(B), and
Neither such corporation nor any
predecessor of such corporation was a
REIT or a RIC at any time during the
shorter of the previous 5 years or the
period in which the transferor held the
interest.
4. An interest in certain publicly
traded corporations, partnerships, and
trusts.
See Regulations sections 1.897-1
and -2 for more information. Also see
Transferred property that is not a U.S.
real property interest, later.
Qualified investment entity (QIE). A
QIE is:
Any REIT, and
Any RIC which is a United States real
property holding corporation or which
would be a United States real property
holding corporation.
In determining if a RIC is a U.S. real
property holding corporation, the RIC is
required to include as U.S. real property
interests its holdings of stock in a RIC or
REIT that is a U.S. real property holding
company, even if such stock is regularly
traded and the RIC did not own more
than 10% of such stock in the case of a
REIT (5% for dispositions before
December 17, 2015) or 5% of such
stock in case of a RIC, and even if such
stock is domestically controlled.
For more information, see Pub. 515,
Withholding of Tax on Nonresident
Aliens and Foreign Entities.
Domestically controlled qualified investment entity. A QIE is domestically
controlled if at all times during the
testing period less than 50% in value of
its stock was held, directly or indirectly,
by foreign persons. The testing period is
the shorter of:
Instructions for Form 8288 (Rev. 2-2016)

The 5-year period ending on the date
of the disposition (or distribution), or
The period during which the entity
was in existence.
For purpose of determining whether
a QIE is domestically controlled, the
following rules will apply beginning on
December 18, 2015.
1. A person holding less than 5% of
any class of stock of a QIE which is
regularly traded on an established
securities market in the United States at
all times during the testing period will be
treated as a U.S. person unless the QIE
has actual knowledge that such person
is not a U.S. person.
2. Any stock in a QIE that is held by
another QIE will be treated as held by a
foreign person if:
Any class of stock of such other QIE
is regularly traded on an established
securities market, or
Such other QIE is a RIC that issues
certain redeemable securities.
Notwithstanding the above, the stock
of the QIE will be treated as held by a
U.S. person if such other QIE is
domestically controlled.
3. Stock in a QIE that is held by any
other QIE not described above will be
treated as held by a U.S. person in
proportion to the stock ownership of
such other QIE which is (or is treated
as) held by a U.S. person.
Amount realized. The sum of the cash
paid or to be paid (not including interest
or original issue discount), the fair
market value of other property
transferred or to be transferred, and the
amount of any liability assumed by the
transferee or to which the U.S. real
property interest is subject immediately
before and after the transfer. Generally,
the amount realized for purposes of this
withholding is the sales or contract
price.
Date of transfer. The first date on
which consideration is paid or a liability
is assumed by the transferee. However,
for purposes of sections 1445(e)(2), (3),
and (4), and Regulations sections
1.1445-5(c)(1)(iii) and 1.1445-5(c)(3),
the date of transfer is the date of
distribution that creates the obligation to
withhold. Payment of consideration
does not include the payment before
passage of legal or equitable title of
earnest money (other than pursuant to
an initial purchase contract), a
good-faith deposit, or any similar
amount primarily intended to bind the
parties to the contract and subject to
forfeiture. A payment that is not
-3-

forfeitable may also be considered
earnest money, a good-faith deposit, or
a similar sum.

Exceptions
Purchase of residence for
$1,000,000 or less. Withholding is
required at a reduced rate of 10% in the
case of a disposition of:
A property which is acquired by the
transferee for use by the transferee as a
residence, and
The amount realized for such
property does not exceed $1,000,000.
But see Purchase of residence for
$300,000 or less immediately following.
You are not required to withhold If any
of the following applies.
Purchase of residence for $300,000
or less. One or more individuals
acquire U.S. real property for use as a
residence and the amount realized (in
most cases the sales price) is not more
than $300,000. A U.S. real property
interest is acquired for use as a
residence if you or a member of your
family has definite plans to reside in the
property for at least 50% of the number
of days the property is used by any
person during each of the first two
12-month periods following the date of
transfer. Do not take into account the
number of days the property will be
vacant in making this determination. No
form or other document is required to be
filed with the IRS for this exception;
however, if you do not in fact use the
property as a residence, the withholding
tax may be collected from you.
This exception applies whether or not
the transferor (seller) is an individual,
partnership, trust, corporation, or other
transferor. However, this exception
does not apply if the actual transferee
(buyer) is not an individual, even if the
property is acquired for an individual.
Transferor not a foreign person. You
receive a certification of nonforeign
status from the transferor, signed under
penalties of perjury, stating that the
transferor is not a foreign person and
containing the transferor’s name,
address, and identification number
(social security number (SSN) or
employer identification number (EIN)).
The transferor can give the certification
to a qualified substitute (defined on this
page). The qualified substitute gives
you a statement, under penalties of
perjury, that the certification is in the
qualified substitute’s possession. If you
receive a certification (or statement), the
withholding tax cannot be collected from
you unless you knew that the
certification (or statement) was false or

Page 4 of 7

Fileid: … ns/I8288/201602/A/XML/Cycle03/source

15:17 - 11-Feb-2016

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

you received a notice from your agent,
the transferor’s agent, or the qualified
substitute that it was false. The
certification must be signed by the
individual, a responsible officer of a
corporation, a general partner of a
partnership, or the trustee, executor, or
fiduciary of a trust or estate.
A disregarded entity may not certify
that it is the transferor for U.S. tax
purposes. Rather, the owner of the
disregarded entity is treated as the
transferor of the property and must
provide the certificate of nonforeign
status to avoid withholding under
section 1445.
A foreign corporation electing to be
treated as a domestic corporation under
section 897(i) must attach to the
certification a copy of the
acknowledgment of the election
received from the IRS. The
acknowledgment must state that the
information required by Regulations
section 1.897-3 has been determined to
be complete. If the acknowledgment is
not attached, you may not rely on the
certification. Keep any certification of
nonforeign status you receive in your
records for 5 years after the year of
transfer.
You may also use other means to
determine that the transferor is not a
foreign person. But if you do, and it is
later determined that the transferor is a
foreign person, the withholding tax may
be collected from you.
Late notice of false certification.
If, after the date of transfer, you receive
a notice from your agent, the
transferor’s agent, or the qualified
substitute that the certification of
nonforeign status is false, you do not
have to withhold on consideration paid
before you received the notice.
However, you must withhold the full
15% of the amount realized from any
consideration that remains to be paid, if
possible. You must do this by
withholding and paying over the entire
amount of each successive payment of
consideration until the full 15% has
been withheld and paid to the IRS.
These amounts must be reported and
transmitted to the IRS by the 20th day
following the date of each payment.
Transferred property that is not a
U.S. real property interest. You
acquire an interest in property that is not
a U.S. real property interest (defined
under U.S. real property interest,
earlier). A U.S. real property interest
includes certain interests in U.S.
corporations, as well as direct interests

in real property and certain associated
personal property.
No withholding is required on the
acquisition of an interest in a domestic
corporation if (a) any class of stock of
the corporation is regularly traded on an
established securities market, or (b) the
transferee receives a statement issued
by the corporation that the interest is not
a U.S. real property interest, unless you
know that the statement is false or you
receive a notice from your agent or the
transferor’s agent that the statement is
false. A corporation’s statement may be
relied on only if it is dated not more than
30 days before the date of transfer.
Late notice of false statement. If,
after the date of transfer, you receive a
notice that the statement is false, see
Late notice of false statement, earlier.
Generally, no withholding is required
on the acquisition of an interest in a
foreign corporation. However,
withholding may be required if the
foreign corporation has made the
election under section 897(i) to be
treated as a domestic corporation.
Transferor’s nonrecognition of gain
or loss. You may receive a notice from
the transferor signed under penalties of
perjury stating that the transferor is not
required to recognize gain or loss on the
transfer because of a nonrecognition
provision of the Internal Revenue Code
(see Temporary Regulations section
1.897-6T(a)(2)) or a provision in a U.S.
tax treaty. You may rely on the
transferor’s notice unless (a) only part of
the gain qualifies for nonrecognition or
(b) you know or have reason to know
that the transferor is not entitled to the
claimed nonrecognition treatment.
No particular form is required for this
notice. By the 20th day after the date of
transfer, you must send a copy of the
notice of nonrecognition (with a cover
letter giving your name, address, and
identification number) to:
Ogden Service Center
P.O. Box 409101
Ogden, UT 84409.
See Regulations section 1.1445-2(d)(2)
for more information on the transferor’s
notice of nonrecognition.
Note. A notice of nonrecognition
cannot be used for the exclusion from
income under section 121, like-kind
exchanges that do not qualify for
nonrecognition treatment in their
entirety, and deferred like-kind
exchanges that have not been
completed when it is time to file Form
-4-

8288. In these cases, a withholding
certificate issued by the IRS, as
described next, must be obtained.
Withholding certificate issued by the
IRS. A withholding certificate may be
issued by the IRS to reduce or eliminate
withholding on dispositions of U.S. real
property interests by foreign persons.
Either a transferee or transferor may
apply for the certificate. The certificate
may be issued if:
Reduced withholding is appropriate
because the 10%, 15%, or 35% amount
exceeds the transferor’s maximum tax
liability,
The transferor is exempt from U.S.
tax or nonrecognition provisions apply,
or
The transferee or transferor enters
into an agreement with the IRS for the
payment of the tax.
An application for a withholding
certificate must comply with the
provisions of Regulations sections
1.1445-3 and 1.1445-6 and Rev. Proc.
2000-35, 2000-35 I.R.B. 211. You can
find Rev. Proc. 2000-35 on page 211 of
Internal Revenue Bulletin 2000-35 at
http://www.irs.gov/pub/irs-irbs/
irb00-35.pdf. In certain cases, you may
use Form 8288-B to apply for a
withholding certificate. The IRS will
normally act on an application by the
90th day after a complete application is
received.
If you receive a withholding certificate
from the IRS that excuses withholding,
you are not required to file Form 8288.
However, if you receive a withholding
certificate that reduces (rather than
eliminates) withholding, there is no
exception to withholding, and you are
required to file Form 8288. Attach a
copy of the withholding certificate to
Form 8288. See When To File, earlier,
for more information.
No consideration paid. The amount
realized by the transferor is zero (for
example, the property is transferred as
a gift and the recipient does not assume
any liabilities or furnish any other
consideration to the transferor).
Options to acquire U.S. real property
interests. No withholding is required
with respect to any amount realized by
the grantor on the grant or lapse of an
option to acquire a U.S. real property
interest. However, withholding is
required on the sale, exchange, or
exercise of an option.
Property acquired by a governmental unit. The property is acquired by the
United States, a U.S. state or
Instructions for Form 8288 (Rev. 2-2016)

Page 5 of 7

Fileid: … ns/I8288/201602/A/XML/Cycle03/source

15:17 - 11-Feb-2016

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

possession or political subdivision, or
the District of Columbia.
For rules that apply to foreclosures,
see Regulations section 1.1445-2(d)(3).
Applicable wash sale transaction. A
distribution from a domestically
controlled qualified investment entity is
treated as a distribution of a U.S. real
property interest only because an
interest in the entity was disposed of in
an applicable wash sale transaction.
See section 897(h)(5).

Late Filing of Certification or
Notices
You may be eligible for relief for a late
filing if a statement or notice was not
provided to the relevant person or the
IRS by the specified deadline and if you
have reasonable cause for the failure to
make a timely filing. Once you become
aware that you have failed to timely file
certain certificates or notices, you must
file the required certification or notice
with the appropriate person or the IRS.
Also include the following.
A statement at the top of the
document(s) that it is “FILED
PURSUANT TO REV. PROC. 2008-27.”
An explanation describing why the
failure was due to reasonable cause.
Within the explanation, provide that you
filed with, or obtained from, an
appropriate person the required
certification or notice.
The completed certification or notice
attached to the explanation must be
sent to:
Ogden Service Center
P.O. Box 409101
Ogden, UT 84409.
For more information, see Rev. Proc.
2008-27, 2008-21 I.R.B. 1014, available
at http://www.irs.gov/irb/2008-21_IRB/
ar14.html.

Liability of Agents

If you (or the qualified substitute)
received: (a) a transferor’s certification
of nonforeign status or (b) a
corporation’s statement that an interest
is not a U.S. real property interest, and
the transferee’s or transferor’s agent, or
the substitute, knows the document is
false, the agent (or substitute) must
notify you. If notification is not provided,
the agent (or substitute) will be liable for
the tax that should have been withheld,
but only to the extent of the agent’s (or
substitute’s) compensation from the
transaction.

Instructions for Form 8288 (Rev. 2-2016)

If you (or the substitute) receive a
notice of false certification or statement
from your agent, the transferor’s agent,
or qualified substitute, you must
withhold tax as if you had not received a
certification or statement. See Late
notice of false certification, earlier.
An “agent” is any person who
represents the transferor or transferee in
any negotiation with another person (or
another person’s agent) relating to the
transaction or in settling the transaction.
For purposes of section 1445(e), a
transferor’s or transferee’s agent is any
person who represents or advises an
entity, a holder of an interest in an entity,
or a fiduciary with respect to the
planning, arrangement, or completion of
a transaction described in sections
1445(e)(1) through (4).
A person is not treated as an agent if
the person only performs one or more of
the following acts in connection with the
transaction:
1. Receiving and disbursing any
part of the consideration.
2. Recording any document.
3. Typing, copying, and other
clerical tasks.
4. Obtaining title insurance reports
and reports concerning the condition of
the property.
5. Transmitting documents between
the parties.
6. Functioning exclusively in his or
her capacity as a representative of a
condominium association or
cooperative housing corporation. This
exemption includes the board of
directors, the committee, or other
governing body.

Entities Subject to Section
1445(e)

Withholding is required on certain
distributions and other transactions by
domestic or foreign corporations,
qualified investment entities, trusts, and
estates. A domestic trust or estate must
withhold 35% of the amount distributed
to a foreign beneficiary from a “U.S. real
property interest account” that it is
required to establish under Regulations
section 1.1445-5(c)(1)(iii). A foreign
corporation that has not made the
election under section 897(i) must
withhold 35% of the gain it recognizes
on the distribution of a U.S. real property
interest to its shareholders. Certain
domestic corporations are required to
withhold tax on distributions to foreign
shareholders.
No withholding is required on the
transfer of an interest in a domestic
-5-

corporation if any class of stock of the
corporation is regularly traded on an
established securities market. Also, no
withholding is required on the transfer of
an interest in a publicly traded
partnership or trust.
No withholding will be required with
respect to an interest holder if the entity
or fiduciary receives a certification of
nonforeign status from the interest
holder. An entity or fiduciary may also
use other means to determine that an
interest holder is not a foreign person,
but if it does so and it is later determined
that the interest holder is a foreign
person, the withholding may be
collected from the entity or fiduciary.

Section 1445(e)(1)
Transactions
Partnerships. A domestic partnership
that is not publicly traded must withhold
tax under section 1446 on effectively
connected income allocated to its
foreign partners and must file Form
8804, Annual Return for Partnership
Withholding Tax (Section 1446), and
Form 8805, Foreign Partner’s
Information Statement of Section 1446
Withholding Tax. A publicly traded
partnership or nominee generally must
withhold tax under section 1446 on
distributions to its foreign partners and
must file Forms 1042 and 1042-S.
Because a domestic partnership that
disposes of a U.S. real property interest
is required to withhold under section
1446, it is not required to withhold under
section 1445(e)(1).
Trusts and estates. If a domestic trust
or estate disposes of a U.S. real
property interest, the amount of gain
realized must be paid into a separate
“U.S. real property interest account.” For
these purposes, a domestic trust is one
that does not make the “large trust
election” (explained below), is not a
qualified investment entity, and is not
publicly traded. The fiduciary must
withhold 35% of the amount distributed
to a foreign person from the account
during the tax year of the trust or estate
in which the disposition occurred. The
withholding must be paid over to the IRS
within 20 days of the date of distribution.
Special rules apply to grantor trusts.
See Regulations section 1.1445-5 for
more information and how to compute
the amount subject to withholding.
Large trust election. Trusts with
more than 100 beneficiaries may make
an election to withhold upon distribution
rather than at the time of transfer. The
amount to be withheld from each
distribution is 35% of the amount

Page 6 of 7

15:17 - 11-Feb-2016

Fileid: … ns/I8288/201602/A/XML/Cycle03/source

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

attributable to the foreign beneficiary’s
proportionate share of the current
balance of the trust’s section 1445(e)(1)
account. This election does not apply to
any qualified investment entity or to any
publicly traded trust. Special rules apply
to large trusts that make recurring sales
of growing crops and timber.
A trust’s section 1445(e)(1) account
is the total net gain realized by the trust
on all section 1445(e)(1) transactions
after the date of the election, minus the
total of all distributions made by the trust
after the date of the election from such
total net gain. See Regulations section
1.1445-5(c)(3) for more information.

Section 1445(e)(2)
Transactions

A foreign corporation that distributes a
U.S. real property interest must
generally withhold 35% of the gain
recognized by the corporation. No
withholding or reduced withholding is
required if the corporation receives a
withholding certificate from the IRS.

Section 1445(e)(3)
Transactions

Generally, a domestic corporation that
distributes any property to a foreign
person that holds an interest in the
corporation must withhold 15% (10% for
distributions before February 17, 2016)
of the fair market value of the property
distributed if:
The foreign person’s interest in the
corporation is a U.S. real property
interest under section 897, and
The property is distributed in
redemption of stock under section 302,
in liquidation of the corporation under
sections 331 through 341, or with
respect to stock under section 301 that
is not made out of the earnings and
profits of the corporation.
No withholding or reduced
withholding is required if the corporation
receives a withholding certificate from
the IRS.

Section 1445(e)(4)
Transactions

No withholding is required under section
1445(e)(4), relating to certain taxable
distributions by domestic or foreign
partnerships, trusts, and estates, until
the effective date of a Treasury Decision
under section 897(e)(2)(B)(ii) and (g).

Section 1445(e)(5)
Transactions

The transferee of a partnership interest
must withhold 15% (10% for
dispositions before February 17, 2016)

of the amount realized on the
disposition by a foreign partner of an
interest in a domestic or foreign
partnership in which at least 50% of the
value of the gross assets consists of
U.S. real property interests and at least
90% of the value of the gross assets
consists of U.S. real property interests
plus any cash or cash equivalents.
However, no withholding is required
under section 1445(e)(5) for
dispositions of interests in other
partnerships, trusts, or estates until the
effective date of a Treasury Decision
under section 897(g). No withholding is
required if, no earlier than 30 days
before the transfer, the transferee
receives a statement signed by a
general partner under penalties of
perjury that at least 50% of the value of
the gross assets of the partnership does
not consist of U.S. real property
interests or that at least 90% of the
value of the gross assets does not
consist of U.S. real property interests
plus cash or cash equivalents. The
transferee may rely on the statement
unless the transferee knows it is false or
the transferee receives a false
statement notice pursuant to
Regulations section 1.1445-4.

Section 1445(e)(6)
Transactions

A qualified investment entity must
withhold 35% of a distribution to a
nonresident alien or a foreign
corporation that is treated as gain
realized from the sale or exchange of a
U.S. real property interest. No
withholding under section 1445 is
required on a distribution to a
nonresident alien or foreign corporation
if the distribution is on stock regularly
traded on a securities market in the
United States and the alien or
corporation did not own more than 10%
(for distributions before December 17,
2015, did not own more than 5% of such
stock in case of a REIT) of that stock at
any time during the 1-year period
ending on the date of distribution.
A distribution made after December
17, 2015, by a REIT generally is not
treated as gain from the sale or
exchange of a U.S. real property
interest if the shareholder is a qualified
shareholder (as described in section
897(k)(3)).

Specific Instructions

!

Complete only Part I or Part II.

CAUTION

-6-

Example 1. B, a corporation,
purchases a U.S. real property interest
from F, a foreign person. On settlement
day, the settlement agent pays off
existing loans, withholds 15% of the
amount realized on the sale (after
February 16, 2016), and disburses the
remaining amount to F. B, not the agent,
must complete Part I of Form 8288 and
Form 8288-A.
Example 2. C, a domestic
corporation, distributes property (after
February 16, 2016) to F, a foreign
shareholder whose interest in C is a
U.S. real property interest. The
distribution is in redemption of C’s stock
(section 1445(e)(3) transaction). C must
withhold 15% of the fair market value of
the property distributed to F. C must
complete Part II of Form 8288, and
Form 8288-A.
Lines 1. In Part I, enter the name,
address, and identifying number of the
buyer or other transferee responsible for
withholding under section 1445(a). Do
not enter the name, address, and
identifying number of a title company,
mortgage company, etc. unless it
happens to be the actual buyer or
transferee.
In Part II, enter the name, address,
and identifying number of the entity or
fiduciary responsible for withholding
under section 1445(e). Do not enter the
name, address, and identifying number
of a title company, mortgage company,
etc. unless it happens to be the actual
entity responsible for withholding under
section 1445(e).
The IRS will contact the person
or entity listed on line 1 to
CAUTION
resolve any problems that may
arise concerning underwithholding
and/or penalties.

!

Name and address. If you are a
fiduciary, list your name and the name
of the trust or estate. Enter the home
address of an individual or the office
address of an entity.
Identifying number. For a U.S.
individual, the identifying number is a
social security number (SSN). For any
entity other than an individual (for
example, corporation, qualified
investment entity, estate, or trust), the
identifying number is an employer
identification number (EIN). If you do not
have an EIN, you can apply for one
online at www.irs.gov/smallbiz or by
telephone at 1-800-829-4933. Also, you
can file Form SS-4, Application for
Employer Identification Number, by fax
or mail.
Instructions for Form 8288 (Rev. 2-2016)

Page 7 of 7

Fileid: … ns/I8288/201602/A/XML/Cycle03/source

15:17 - 11-Feb-2016

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

For a nonresident alien individual
who is not eligible for an SSN, the
identifying number is an IRS individual
taxpayer identification number (ITIN). If
the individual does not already have an
ITIN, he or she should complete Forms
8288 and 8288-A and mail the forms
along with any payment to the address
shown under Where To File, earlier. In a
separate package mail a completed
Form W-7, Application for IRS Individual
Taxpayer Identification Number, with
supporting documentation and a copy of
Forms 8288 and 8288-A to the IRS at
the address given in the Form W-7
instructions.
Lines 2. Enter the location and a
description of the property, including
any substantial improvements (for
example, “12-unit apartment building”).
In the case of interests in a corporation
that constitute a U.S. real property
interest, enter the class or type and
amount of the interest (for example,
“10,000 shares Class A Preferred Stock
XYZ Corporation”).
Line 4. Enter the number of Forms
8288-A attached to Form 8288. Copies
A and B of each Form 8288-A should be
counted as one form.
Line 6b. Reduced rate on purchase of
residence after February 16, 2016, for
$1,000,000 or less. When a property is
acquired by the transferee for use by the
transferee as a residence and the
amount realized by the foreign
transferor is more than $300,000, but
does not exceed $1,000,000, the
transferee generally must withhold 10%
of the amount realized by a foreign
person.
Part II, line 3. If you are a qualified
investment entity, domestic trust or
estate, or you make the large trust

Instructions for Form 8288 (Rev. 2-2016)

election, enter the date of distribution for
the date of transfer.

enforcement and intelligence agencies
to combat terrorism.

Paid Preparer

You are not required to provide the
information requested on a form that is
subject to the Paperwork Reduction Act
unless the form displays a valid OMB
control number. Books or records
relating to a form or its instructions must
be retained as long as their contents
may become material in the
administration of any Internal Revenue
law. Generally, tax returns and return
information are confidential, as required
by section 6103.

Generally, anyone you pay to prepare
Form 8288 must sign it and include their
Preparer Tax Identification Number
(PTIN) in the space provided.
Privacy Act and Paperwork Reduction Act Notice. We ask for the
information on this form to carry out the
Internal Revenue laws of the United
States. Section 1445 generally imposes
a withholding obligation on the buyer or
other transferee (withholding agent)
when a U.S. real property interest is
acquired from a foreign person. Section
1445 also imposes a withholding
obligation on certain foreign and
domestic corporations, qualified
investment entities, and the fiduciary of
certain trusts and estates. This form is
used to report and transmit the amount
withheld.
You are required to provide this
information. Section 6109 requires you
to provide your identification number.
We need this information to ensure that
you are complying with the Internal
Revenue laws and to allow us to figure
and collect the right amount of tax.
Failure to provide this information in a
timely manner, or providing false
information, may subject you to
penalties. Routine uses of this
information include giving it to the
Department of Justice for civil and
criminal litigation, and to cities, states,
the District of Columbia, and U.S.
commonwealths and possessions for
administration of their tax laws. We may
also disclose this information to other
countries under a tax treaty, to federal
and state agencies to enforce federal
nontax criminal laws, or to federal law

-7-

The time needed to complete and file
these forms will vary depending on
individual circumstances. The estimated
average times are:
Form 8288

Form 8288-A

Recordkeeping

6 hr., 13 min.

2 hr., 52 min.

Learning
about the law
or the
form . . . . .

5 hr., 13 min.

30 min.

Preparing and
sending the
form to the
IRS . . . . .

6 hr., 46 min.

34 min.

If you have comments concerning the
accuracy of these time estimates or
suggestions for making these forms
simpler, we would be happy to hear
from you. You can write to the Internal
Revenue Service, Tax Forms and
Publications, SE:W:CAR:MP:TFP, 1111
Constitution Ave. NW, IR-6526,
Washington, DC 20224. Do not send
the forms to this address. Instead, see
Where To File, earlier.