September 10, 2021

FIRPTA Withholding When Investing in U.S. Corporations

Tax partner Thomas Gray authored an article for Corporate Taxation Journal titled, “FIRPTA Withholding When Investing in U.S. Corporations,” that addresses how investing in the equity of a U.S. corporation can have unexpected consequences for a non-U.S. person where that corporation owns significant U.S. real property interests.

The article walks through the application of the Foreign Investment in Real Property Tax Act of 1980 (FIRPTA) to non-U.S. persons investing in U.S. corporations that have significant U.S. real property holdings and details certain circumstances where the applicable withholding tax may be reduced or eliminated.

Gray highlights that certain steps can be taken to minimize the withholding requirements, but certain procedures can be administratively burdensome, and that if no attempt is made to reduce the withholding, then the non-U.S. person should be prepared to file a U.S. federal income tax return to claim a refund of the over-withheld amount.

The full article is available for Checkpoint subscribers.

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