作者: Michael W. Brooks (税务律师/DIRECTS董事长)和Angela Li (MBA)
大约在几年前，我们开始注意到美国国税局(IRS)给大量外国房地产售房者提交的报税发出CP5071 或 CP5071C(以下统称为“CP5071”）。这种通知是针对于出售美国房地产并申请预扣税退税的外国人士。在2025年, 我们大约有三分之一的客(30%!)收到了CP5071（身份认证通知），而这些通知严重延迟了客户的退税时间。请注意，出售美国房地产的外国人士通常在等待到数万, 数十万美元(有时甚至高达数百万美元)的退税。因此, 如果退税过程因为身份认证而被延迟数月,甚至超过一年(在现在的情况下很常见)，这对急切等待退税的非外国人士来说无疑是非常令人困扰的。那么我们再来详细分析一下: 这些频繁发出的身份认证通知到底是怎么回事？为什么外国人要完成这项身份认证如此困难？
在完成身份认证前, IRS不会审查外国人的报税
Executive Order 14247
President Trump’s Executive Order 14247 (“EO 14247”) was issued on March 25, 2025. EO 14247 provides that, starting September 30, 2025, “the Secretary of the Treasury shall cease issuing paper checks for all Federal disbursements inclusive of intragovernmental payments, benefits payments, vendor payments, and tax refunds,” So as of October 1, 2025, the IRS will no longer issue tax refunds in the form of paper checks (for the most part taxpayers will receive refunds going forward via electronic payments transferred to the US bank accounts of each taxpayer). This may present a real challenge for some foreign individuals seeking IRS refunds however, as it is not always so simple for a non-US person to open a US bank account. This issue will be of great concern to foreign sellers going forward, but not necessarily will it be of great concern to escrow companies.
What should be of great concern to escrow companies is that EO 14247 also states “as soon as practicable, and to the extent permitted by law, all payments made to the Federal Government shall be processed electronically.” So just as the IRS will no longer issue tax refunds via paper checks, it also will no longer accept tax payments in the form of paper checks. It’s not entirely clear by the text of the EO 14247 when the requirement that all payments made to the federal government be made electronically becomes effective, but many commentators following EO 14247 assume this requirement also takes effect on September 30, 2025. EO 14247 further directs compliance plans be issued by the various federal government agencies to assist the government and the public in transitioning off of paper checks (going out and coming in), but no compliance plans has been made public by the Treasury Department or the IRS (or any other federal government agency/ department) thus far (leaving critical implementation questions somewhat unanswered).
About a couple years ago we started seeing the IRS issue (in volume) IRS Notice CP5071 (“CP5071”) or IRS Notice 5071C to non-US persons who sold US real estate who were seeking their withholding tax refunds. In 2025, around three out of every ten of our (DIRECTS) clients (30%!!!) are receiving the CP5071 (identify verification notice), and these notices are really delaying our clients’ refunds. Remember, non-US persons who sold US real estate are typically expecting IRS refunds of tens or hundreds of thousands of dollars (occasionally they’re entitled to refunds in the millions of dollars), so the prospect of delaying these refunds by months or even longer (delays of over a year are easily within the realm of possible outcomes) can be very troublesome for the non-US person(s) eagerly awaiting for their large refunds. Let’s examine again: what’s going on with these (very frequently issued) identity verification notices, and why are they so difficult for the non-US individual person to satisfy?
The IRS Will Not Even Look at the Tax Return Until the Identity Verification Requirement is Satisfied
If the IRS determines it requires the taxpayer to verify his or her identity, it will not even look at the tax return until the taxpayer first verifies the identity. So the identification verification element starts a delay which could last months. The tax return basically sits at the IRS, unreviewed, until the taxpayer’s verifies their identity. And it could be months before the non-us person/ taxpayer even realizes the IRS is waiting for their identity verification. Between the time it takes for the IRS to generate a letter to the taxpayer to the time the taxpayer actually receives the CP5071 letter (non-US persons receiving mail from the IRS is a whole other non-certain topic which can delay the refund process further) it could easily be a period of several months. Plus as we review again below, verifying one’s identity is often not a simple process, and only after finally satisfying the verification requirement will the IRS actually commence its review of the substantive return (and as we’ve mentioned in many other blog posts, the IRS withholding tax refund process itself is full of pitfalls and potential delays; this is process itself which could take months). Simply being unlucky enough to receive an identity verification notice means the non-US person waiting for the large IRS refund probably added months to a refund process which was already likely to take several months.
作者: Michael W. Brooks (税务律师/DIRECTS董事长) 和Angela Li (MBA)
2025年2月，美国国税局（IRS）裁撤了大约7,000名员工（主要为近期新聘人员），裁员后IRS现有约90,000名员工。然而，根据2025年5月的多家新闻报道，IRS即将启动规模更大的裁员。据美联社（Associated Press）报道，IRS正在起草计划，通过裁员、自然流失和激励性买断相结合的方式，将其员工人数削减至一半。裁员幅度若真达到50%，即从90,000人缩减至45,000人，将对现行依赖人工操作的预扣税退税流程造成严重影响并显著放缓退税时间。我们对此来展开分析。
当前系统严重依赖人工操作
IRS目前采用的退税流程极其陈旧，依赖人工将非美国纳税人提交的预扣税支票(通常是大额的)与相应预扣税文件进行核对。这些文件和预扣税支票通常是在报税年度之前提交的，有时甚至在报税人提交税表的两年前就已提交至IRS。当前房地产预扣税的退税流程完全依赖于国税局工作人员的实效性。工作人员的减少给本来已经缓慢的退税过程带来更大的挑战。更关键的是，外国房地产交易的退税金额非常巨大— 并非类似一般美国1040退税中常见的类似1,500美元退税金额，外国售房者在出售美国房地产后通常可退回数万甚至数十万美元的预扣税款（有时可高达数百万美元）。当IRS员工人数骤减至一半时，这些大额退税怎么办呢？
In February 2025 the IRS terminated approximately 7,000 (mostly recently hired) employees (leaving the IRS with approximately 90,000 employees). But now in March 2025 news reports suggest the IRS will commence terminating an even larger number of employees. As recently reported by the Associated Press, “the IRS is drafting plans to cut its workforce by as much as half through a mix of layoffs, attrition and incentivized buyouts.” Cut its workforce by half? From 90,000 to 45,000 employees? Wow. This sounds drastic, and from my perspective, given the antiquated system the IRS currently uses to provide withholding tax refunds, this could dramatically slow the refund process down. Let’s see why below.
The Amount of the Average Real Estate Withholding Tax Refund Is So Much Greater than the Typical Generic Tax Refund
If you’re a reader of this blog, you’ll note in prior blog posts I’ve walked through in varying degrees of detail how the IRS processes withholding tax refunds for non-US sellers of US real estate. It’s a highly outdated process (in my opinion) requiring IRS employees to match a non-US person to a (often very large) withholding tax check and IRS forms submitted to the IRS (usually in the calendar year before the tax return as filed…although sometimes the withholding tax check was submitted to the IRS two or more years before the tax return is filed). I summarize the non-US person real estate withholding tax process again below. Keep in mind as I walk through this again- the IRS process (as it exists today) of providing real estate withholding tax refunds requires the availability and attentiveness of human beings. The notion of cutting the number of IRS employees in half seems to me like a big threat to the refund process (a process which is already slow and fragile). And in this area the size of the refunds is typically huge. We are not talking about a $1,500 tax refund for a typical US IRS Form 1040. Foreign sellers of US real estate are often entitled to tens or hundreds of thousands of dollars in IRS refunds (we sometimes see refunds in the millions). What will happen when the IRS has only half the number of employees to process refunds in the amount of hundreds of thousands of dollars owed to foreign sellers of US real estate?
作者: Michael W. Brooks (税务律师/DIRECTS董事长) 和Angela Li (MBA)
我们/DIRECTS 每天都在致力于帮助外国投资者获得从美国房地产出售时被国税局扣走的大额预扣税退税。这(通常)不是一个简单的过程, 也不是一件容易的工作, 因为申请大额退税, 经常会面临风险, 一步走错, 满盘皆输。我们所做的努力, 包括需要经常致电美国国税局(也包括加州政府) 以跟进滞留退税申请。国税局经常会要求我们重新提交特定的文件 (甚至重新提交整个纳税申报表) 以便他们审阅, 这种情况可能会使退款过程延迟数月。有时他们会告诉我们，外国售房者的 ITIN/美国税号最近过期了, 这也会导致退税延迟数月,甚至更久。因此, 在这种背景下, 我们对于 2024 年国税局向我们的一些外国投资者客户发出的国税局 5071C通知 (针对于他们提交的2023 年的 IRS 税表 1040-NR)并不惊讶。这种通知叫做“身份安全任证”通知，处理起来并不容易，因为在外国售房者按照国税局的规定成功完成验证其身份之前，国税局不会退还一分钱。美国国税局刚刚为试图获得大额预扣税退税的外国售房者增加了另一个(重大)障碍。
什么是 IRS 5071C身份安全认证通知？
We at DIRECTS spend each day working to help non-US persons obtain refunds of IRS mandated withholding taxes from US real estate sales. It is (often) not a simple process, not easy work, and there are frequently large refunds at stake. In our efforts, we are frequently required to call the IRS (and often the state of California as well) to check on the status on languishing refunds. Often the IRS will require us to resubmit certain paperwork (maybe resubmit the entire tax return) in order for them to process the refund, and this can the delay the refund for months. Or they might tell us the foreign seller’s ITIN recently expired, and this too will cause us a delay of months (maybe several months). So with this background we were not thrilled to see the IRS issue of several IRS Notices 5071C to our clients in 2024 (with respect to their 2023 IRS Form 1040-NR). These are “identify verification” notices, and they are not easily handled, and the IRS will not issue one penny in refund until the non-US person successfully verifies their identity to the IRS’s satisfaction. The IRS just added another (substantial) hurdle to foreign sellers attempting to obtain withholding tax refunds.
What is the IRS Notice 5071C?
So we at DIRECTS submit a tax return to the IRS (requesting a refund of (all or some…depending on the foreign seller’s net profit on the real estate sale) of a non-US seller’s withholding tax), and instead of sending our client the refund, the IRS sends a notice which states that the IRS needs our client/ taxpayer to “verify your identity and your tax return.” Uh ok, how do we do that? The Notice 5071C directs the taxpayer to “sign in or create a new online account at IRS.gov”. Wait, I’m a non-US person who’s owed a $250,000 refund from the IRS and I’m first required to sign in an create a new online account at IRS.gov? What if I don’t speak English? What if I’m not comfortable with computers and creating “online accounts”? What if I live in a country where I cannot connect to the IRS website because the internet is restricted by my home country (a real issue for many of our clients)? If I can’t do this, do I lose my $250,000 (yes, the foreign taxpayer must verify their identity to obtain any refund)? Further, the Notice 5071C directs us that the IRS requires the taxpayer to provide a government issued photo identification (which means our non-US taxpayer will have to be ready to scan into the computer government issued identification). Again, what if our non-US individual/client is not used to computers and has no idea how to “scan” anything into the computer? And basic scanning into the computer is hardly the end, the foreign seller of real estate will have several more hurdles to overcome to verify their identity and obtain the refund (assuming they can read the notice in English and properly access and use the IRS website). What else must non-US persons do to prove their identity:
By: Michael W. Brooks (President DIRECTS)
The revised IRS Forms 8288 and 8288-A became effective January 1, 2023. The Form 8288 and 8288-A are extremely important forms in any non-seller (of US real estate) transaction. Proper preparation of these forms can mean the difference in a non-US seller receiving their refund a handful of months after sale (if the forms are prepared properly), to maybe years after the sale or maybe even never receiving it all (which absolutely can happen if there are big mistakes on the forms which bury the withholding tax/refund in bowels of the IRS). And with 15% of the sale price being withheld at the time of close, the refund amount held by the IRS is often in the hundreds of thousands of dollars. Finally, these forms are extremely important to avoid penalties being assigned by the IRS (to the buyer). Again, THESE FORMS ARE IMPORTANT. Let’s take a look at the ley changes to the Form 8288, most of which are in the introduction and Part I of the revised Form 8288.
How Does Part I of the New Form 8288 differ from Part I of the Old Form 8288?
作者: Michael W. Brooks (税务律师/DIRECTS董事长) 和 Angela Li, MBA
我们有很多外国投资者(或外国公司)在过去几年(例如2019年或2020年)在美国卖了房，但是一直拿不回预扣税金。外国投资者非常担忧，因为这笔预扣税的金额很高 (房屋卖价的15%对于任何人来说都是一笔巨款)。例如，一名外国投资者在2019年8月以140万美金卖了他的房产，在2019年8月21万美金的预扣税被交到国税局，这名外国投资者应该拿回绝大部分的预扣税(扣除盈利部分的税后)，可是直到2022年 8月这名外国投资者一分钱的退税都没有拿到。卖房后缴纳到国税局的预扣税21万美金已经等了3年还没有退回来，这是一个相当长的时间。我们把这种卖房几年后都拿不回预扣税金的案例称做 “SOS 退税”(紧急救援退税)。这种SOS退税的案例经常发生，为什么会发生呢，我们现在可以采取什么补救措施呢？
外国售房者在卖房后有提交美国报税并申请退税吗？
当我们在办理这种SOS退税的案例时第一步要看的是外国售房者有提交过美国报税吗？即使提交过美国的报税，是否是正确的符合国税局要求的税表？外国投资者可以在卖房后相当长的时间内提交报税并申请退税，但是有一定的时间限制。一般来说，为了合法申请退税，外国售房者必须在卖房后报税年度的3年内提交正确的报税。外国人在美国卖房后必须在次年的6月15日前提交报税。例如在2019年8月的售房，报税期限是2020年6月15日，最晚并能够合法申请退税的期限是2023年6月15日。这个例子中我们看到售房者仍然有时间来提交报税并申请退税(但是超过这个期限后就无法申请退税了)。最后需要注意，即使提交了报税，要确认国税局是否收到了报税。我们经常在帮助外国售房者联系国税局查询退税进度时，根据国税局办事人员的回复，他们从来没有收到过报税。这种情况下，必须立即再次提交报税以确保国税局在规定的有效期限内收到报税。
We have many foreign individuals (or foreign entities) who sold their US real estate in a prior year (say 2020 or 2019), and simply can’t obtain their refund. Hugely frustrating of course. And this refund is very often a large amount (15% of the gross sales price of a US real estate transaction is going to be a lot of bucks for almost anyone). Let’s say, for example, a non-US person sold US real estate in August 2019 for $1,400,000. So $210,000 went into the IRS in August 2019, and depending on the amount of profit the foreign seller made on the sale, the foreign individual is probably entitled to a large refund, and here we are in August 2022 and the individual hasn’t received a penny. Three years since the sale and the withholding tax of $210,000 being submitted into the IRS, and still no refund. That’s a long time. We call refunds which have not been obtained years after the original date of sale “SOS refunds”. Happens so frequently, but what caused it, and what to do now about the SOS refund?
Did the Foreign Seller File a US Tax Return to Claim the Refund?
The obvious first question in reviewing the SOS refund scenario is, has the foreign seller even filed a US tax return yet? Although it’s a really long timeframe, there is a limit on when the tax return must be filed in order for the person to be eligible to receive the refund. Generally, in order to be eligible for the tax refund, a tax return must be filed not later than three years from the date of the original deadline for the tax return. In the case of a non-US person selling US real estate, the tax return is due on June 15 of the year after the real estate transaction. So, in the case of our August 2019 sale, the original deadline was June 15, 2020, and the latest the non-US person can file a tax return and still be eligible for a tax refund is June 15, 2023. Even now in this hypothetical sale, the individual still has the better part of year to file the tax return to be eligible to obtain a refund (but after that, the refund will be time-barred). Final note here, be careful that if a tax return has been filed that the IRS actually acknowledges their receipt of such tax return. So often we call the IRS to check on the status of a refund and (according to the IRS agent) the IRS has simply never received the tax return. Yikes, better mail it right back in there to ensure no question that the tax return filed was timely.
FIRPTA Tax Blog
