3.22.261  Foreign Investment in Real Property Tax Act (FIRPTA)

Manual Transmittal

November 14, 2013

Purpose

(1) This transmits revised Internal Revenue Manual (IRM) 3.22.261, International Error Resolution - Foreign Investment in Real Property Tax Act (FIRPTA).

Material Changes

(1) Various editorial corrections were made throughout the IRM.

(2) IRM 3.22.261.1.1 (4) -- Added the word "Transferor" to mean the same as Seller.

(3) IRM 3.22.261.8 (5) -- Deleted Letter 3497 and Letter 3793 from the table for Withholding Certificate Letter Number for Transferee/Buyer.

(4) IRM 3.22.261.20.2 (6) -- Deleted Letter 3497 from the table for Withholding Certificate Letter Number.

(5) IRM 3.22.261.20.10 (3) -- Deleted Letter 3497 from the table for Withholding Certificate Letter Number.

(6) Exhibit 3.22.261-6 -- Updated City names and Zip code information for Puerto Rico.

Effect on Other Documents

This IRM supersedes IRM 3.22.261 dated October 26, 2013 (effective January 1, 2013).

Audience

Wage and Investment, Error Resolution employees (Ogden Submission Processing Campus -- OSPC Only)

Effective Date

(01-01-2014)

Paul J. Mamo
Director, Submission Processing
Wage and Investment Division

3.22.261.1  (01-01-2014)
Overview

  1. This Internal Revenue Manual (IRM) provides Error Resolution instructions for processing Form 8288, "U.S. Withholding Tax Return for Dispositions by Foreign Persons of U.S. Real Property Interests" to the Business Master File (BMF), with a Date of Transfer of 12/13/2005 or subsequent . Form 8288 was previously processed at the Philadelphia Submission Processing Campus (PSPC). It is now being processed at the Ogden Submission Processing Campus (OSPC). The Non Master File (NMF) Form 8288 returns are processed at the Cincinnati Submission Processing Campus (CSPC).

  2. Also, IRM 3.21.25 is used in conjunction with this IRM for processing Form 8288-A, which is attached to Form 8288.

  3. Form 8288 is processed to the BMF under:

    • File Location Code 60 (OSPC), 98 (PSPC) or 17 (CSPC - for NMF)

    • Tax Class 1

    • Doc Code 40

    • Julian Date 001-366

    • Blocking Series 000-999

    • Sequence Number 00-99

    • List Year 0-9

    • Master File Tax (MFT) 17

    • Program Code 11330

    • Function 270

  4. If the Date of Transfer (DOT) is 12/12/2005 or prior, then Form 8288 is to be processed to the Non-Master File (NMF) at the Cincinnati Submission Processing Campus (CSPC). Transship these returns to the CSPC, NMF Accounting section. A "17641" Document Locator Number (DLN) will be used by CSPC.

  5. There is no official extension form for Form 8288.

  6. The Return Due Date (RDD) for Form 8288 is 20 days after the DOT, or, 20 days from the Withholding Certificate (W/H Cert) date, when applicable.

3.22.261.1.1  (01-01-2014)
Form 8288 Background

  1. The Foreign Investment in Real Property Tax Act (FIRPTA) of 1980 was amended by the Deficit Reduction Act of 1984. This amendment added Section 1445 to Chapter 3, Subchapter A, of the Internal Revenue Code (IRC) of 1954. Section 1445 requires the withholding (W/H) of tax on dispositions of certain U.S. Real Property Interest (USRPI) by a foreign person or entity such as a Regulated Investment Company (RIC) or Real Estate Investment Trust (REIT).

  2. IRC § 897 of the Code (enacted under the 1980 FIRPTA legislation) provides rules for the taxation of Nonresident Alien (NRA) individuals and foreign corporations on sales or other dispositions of U.S. real property interests (including installment sales, exchanges, foreclosures, and deeds in lieu of foreclosure of U.S. real property interests). In addition, RIC and REIT with foreign investors are also subject to the FIRPTA rules under IRC § 1445 and IRC § 897.

  3. FIRPTA applies to what it defines as a U.S. real property interest under IRC § 897(c), which includes

    • Any interest in real property located in the United States (US) or the Virgin Islands (VI) (including an interest in land or improvements thereon, a mine, well, or other natural deposit).

    • Certain personal property associated with the use of real property.

    • Any interest, other than solely as a creditor, in any domestic corporation, unless the taxpayer can show 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).

  4. Duty to withhold - Under IRC § 1445(a) A transferee (buyer) of a USRPI from a foreign transferor (seller) is required to deduct and withhold tax. The transferee can be a Domestic or Foreign person or entity. If the transferee fails to withhold, then the transferee may be held liable for:

    • The payment of the tax, and

    • The payment of any applicable penalties and interest.
      However, the transferee will not be held liable if the transferor's tax liability with respect to the transfer was satisfied (or was established to be zero) by —
      The transferor's filing of an income tax return (and payment of any tax due) with respect to the transfer, or
      he issuance of a withholding certificate establishing that the transferor's maximum tax liability is zero,

      Note:

      In such cases, the transferee is not liable for interest from the date of transfer (DOT) to the date the withholding certificate is issued since the payment is not due until the 20th day following the Service's final determination with respect to the application for a withholding certificate. See Treasury Regulation sections 1.1445-1(c)(2) and. 1.1445-1 (e)(2)(ii)(B).

  5. Agents have a duty to provide notice of false certifications under IRC § 1445(d).They are not liable for the withholding tax under IRC § 1445(a) due to false certifications made by the seller.

  6. The withholding agent must withhold and remit to the Internal Revenue Service (IRS) either the amount indicated in Box 7, Part I of Form 8288 (10 percent of the amount indicated in Line 5, Part I of Form 8288), or 10 percent of the amount on Line 5b, Part II or 35 percent of the amount on Line 5a, Part II . The tax for Part II is reported on Line 6 of Form 8288. This represents either:

    • 10 percent of the gross sales price

    • 35 percent of the gain recognized

    • A lesser amount established by the IRS and shown on the copy of the approved W/H Cert attached to the return.

  7. Duty to Withhold under an IRC § 1445(e) distribution may lie with either the:

    • Foreign Corporation

    • Domestic Corporation

    • Domestic or Foreign Partnership

    • Trustee of Domestic or Foreign Trust

    • Executor of Domestic or Foreign Estate

  8. The Internal Revenue Service issued Treasury Decision (TD) 9082 on August 5, 2003, revising the Income Tax Regulations under IRC § 897,IRC § 1445, and IRC § 6109to require the use of a Taxpayer Identifying Number (TIN) on the submission of FIRPTA documents under IRC § 897 and IRC § 1445. This TD 9082 became effective August 5, 2003.

  9. Form 8288, U.S. Withholding Tax Return for Dispositions by Foreign Persons of U.S. Real Property Interests is due on or before the 20th day from the DOT. There is no official extension form for the Form 8288. However, if a Withholding (W/H) Certificate is issued to the transferee (buyer) or transferor (seller) then the Form 8288 is due on or before the 20th day from the date on the W/H Cert. If the principal purpose for filing the application for a W/H Cert was to delay paying the IRS the amount withheld, interest and penalties will apply to the period after the 20th day after the DOT.

    Figure 3.22.261-1

    This image is too large to be displayed in the current screen. Please click the link to view the image.

    Number of 8288-As attached

3.22.261.1.1.1  (01-01-2014)
Form 8288-A Background

  1. Each person who completes a Form 8288, must also complete Form 8288-A, Statement of Withholding on Disposition by Foreign Persons of U.S. Real Property Interests, for each person subject to withholding.

    Note:

    In general, a foreign person is a Non Resident Alien (NRA) , or a foreign entity, but not a Resident Alien (RA) individual.

  2. Prior to the Integrated Submission and Remittance Processing (ISRP), Numbering will forward the Batch work to the Code and Edit FIRPTA unit. The FIRPTA unit will:

    1. Stamp the incoming Batch work (Form 2345, Batch Transmittal) with their "FIRPTA" stamp.

    2. Assign the Batch work to a FIRPTA Tax Examiner (TE) who will populate the Form 8288-A FIRPTA database with each foreign transferor(s) Copy A information, which will be used at a later date to perform the credit verification using Form 13698,International Credit(s) Verification Slip.

      Example:

      Form 1120-F, Form 8804, or Form 1040-NR Fiduciary with a Form 8288-A needs to be credit verified.

    3. Stamp and mail "Copy B of Form 8288-A" to the foreign transferor, and

    4. Stamp Form 8288 with the FIRPTA date stamp to show that they have processed Copy A of Form 8288 to the FIRPTA database.

    5. Release the Batch work (Form 8288 and Copy A of Form 8288-A) to the ISRP clerical function for pipeline processing.

  3. It is very important that the Service Center Replacement System (SCRS) and Rejects tax examiners never remove Forms 8288-A (Copy A) from the Form 8288 . However, if Form 8288-A Copy B is still attached to Form 8288, and it hasn't been stamped by the FIRPTA unit, then:

    1. Photocopy Form 8288

    2. Detach Form 8288-A Copy B, and

    3. Forward these two (or more) items to the OSPC Code and Edit FIRPTA unit.

    Note:

    This action is required so the FIRPTA unit can transcribe the Form 8288-A information to the International Web Applications (INTL WebApps) Database for use in credit verifications.

  4. In general, copy B of Form 8288-A stamped by the IRS must be attached to the transferor's (seller's) return to establish the amount withheld under IRC § 1445(a) which is available as a credit. In situations where the tax has been withheld but the transferee (purchaser) does not pay over the amount withheld to the IRS, the transferor (seller) will not receive a stamped copy of Form 8288-A from the IRS. Nonetheless, the transferor (seller) can establish the amount of tax withheld by the transferee (purchaser) by attaching to its tax return substantial evidence (e.g., closing documents) of the amount of tax withheld.

3.22.261.2  (01-01-2014)
♦BMF Consistency♦

  1. The purpose of this initiative is to achieve consistency in the Business Master File (BMF) Error Resolution System (ERS) processing IRMs.

  2. Topics for the Business Master File (BMF) Consistency have been identified and developed as a coordinated effort between Cincinnati, Ogden and Paper Processing Branch BMF Code and Edit/ERS Section.

  3. BMF Consistency Subsections are identified by a ♦ (diamond) before and after the title.

  4. Text in normal print is the common processes for BMF returns. The text in BOLD print is form specific and applies to this IRM only.

3.22.261.2.1  (01-01-2014)
♦CADE 2♦

  1. The Customer Account Data Engine (CADE) 2 Program Office in headquarters is charged with the primary goal to implement a single, modernized programming solution which provides daily processing of taxpayer accounts.

  2. The CADE 2 solution is comprised of several components, to modernize the IRS to a daily processing environment with several Transition States.

  3. The new BMF campus cycles are:

    1. Campus Cycle: Thursday – Wednesday

    2. Master File Processing: Friday – Thursday

    3. Notice Review Saturday: Monday (8+ days)

    4. Unpostables: New available Tuesday; Closing Tuesday

  4. Transaction posting dates will reflect a format of YYYYCCDD. YYYY will indicate the year. CC will indicate the posting cycle. For IMF transactions, the following values for DD are defined:

    • 01 Friday

    • 02 Monday

    • 03 Tuesday

    • 04 Wednesday

    • 05 Thursday

    Note:

    BMF cycle posting dates on BMFOL will continue to reflect YYYYCC. YYYY will indicate the year. CC will indicate the posting cycle. BMF posting cycles in TXMOD will reflect a format YYYYCCDD. The DD value will be 08.

  5. BMF transaction posting time-frames are outlined as follows:

    1. Transactions will be viewable using CFOL command codes on Saturday following the weekly Master File processing run on Thursday.

    2. Transactions will be viewable as posted transactions using Integrated Data Retrieval System (IDRS) command codes on Monday following the weekly Master File processing run on Thursday.

    Note:

    With the acceleration of the IDRS weekly analysis being performed the weekend directly after the Master File processing on Thursday, transactions will be posted instead of in pending status on Monday.

3.22.261.3  (01-01-2014)
♦Restructuring and Reform Act of 1998, Section 3705(a) - IRS Employee Contacts♦

  1. Background: The Restructuring and Reform Act of 1998, Section 3705 provides identification requirements for all IRS employees working tax related matters.

  2. IRS employees are required to give their name and unique identification number during taxpayer telephone, face to face, and written contact.

    Note:

    "As a general rule, do not give out another employee's name or telephone number. If the taxpayer or representative needs to speak to another employee or manager, offer to take the taxpayer's/representative's number and have the requested employee call them back."

  3. Contact Procedures are contained in the following eight paragraphs.

  4. All IRS employees, in the field, and national office, who communicate, by telephone, correspondence or face to face, with taxpayers, or their personal representatives, on tax-related matters are required to provide (at a minimum) the following information:

    • Your title (e.g., Mr., Mrs., Ms., Miss)

    • Your last name

    • Your Identification Card (badge) Number

  5. All correspondence must include a telephone number where the taxpayer’s question can be answered. In addition, manually generated and handwritten correspondence must include:

    • Your title (e.g., Mr., Mrs., Ms., Miss)

    • Your last name

    • IDRS, letter system, or ID card (badge) number

  6. The IDRS number and numbers for some other letter systems are automatically generated. If it is not generated, or a handwritten note is prepared, the ID card (badge) number must be used.

  7. When a taxpayer requests to speak with a specific employee who previously handled the inquiry or request, or complains about the level of service previously provided, every attempt should be made to resolve the taxpayer’s inquiry. If the issue cannot be resolved, the employee should refer the inquiry using established procedures to his or her manager.

  8. Correspondex letters will require a specific employee name and telephone number only if the employee initiating the correspondence is in the best position to respond to any questions that the taxpayer may have about the correspondence, or the employee is asking the taxpayer to provide additional case-related information.

  9. Otherwise, if the taxpayer does not need to contact a specific employee, the correspondence needs only an IRS telephone number and standard signature.

  10. It is not necessary to repeat the ID card number (badge) on a subsequent contact, when the nature of an employee’s work involves multiple contacts with the same taxpayer, and the employee has given the taxpayer (either telephone or in-person) their ID card (badge) number on the first contact.

  11. When contacting taxpayers by telephone, you must be sure you are speaking with the taxpayer or authorized representative before disclosing tax information. See IRM 21.1.3.2.3, Required Taxpayer Authentication and IRM 21.1.3.2.4, Additional Taxpayer Authentication. Also, before leaving a message on a taxpayer’s answering machine, review IRM 11.3.2.6.1, Leaving Information on Answering Machines/Voice Mail.

3.22.261.4  (01-01-2014)
♦Taxpayer Advocate Service (TAS)♦

  1. Refer taxpayers to the Taxpayer Advocate Service (TAS) (see IRM Part 13, Taxpayer Advocate Service) when the contact meets TAS criteria (see IRM 13.1.7.2, Taxpayer Advocate Service (TAS) Case Criteria ) or has Form 911 attached and you can't resolve the taxpayer's issue the same day. The definition of "same day" is within 24 hours. "Same day" cases include cases you can completely resolve in 24 hours, as well as cases in which you have taken steps within 24 hours to begin resolving the taxpayer's issue. Do not refer these cases to TAS unless the taxpayer makes the request to be transferred to TAS. Refer to IRM 13.1.7.4, Same Day Resolution by Operations. When referring cases to TAS, use Form 911, Request for Taxpayer Advocate Service Assistance (And Application for Taxpayer Assistance Order), and forward to TAS in accordance with your local procedures.

    Note:

    Before referring potential cases to TAS, the following guidelines will be applied:
    A case meeting TAS criteria may be retained in the general program area when the problem has been corrected or will be resolved immediately (within 24 hours) to the taxpayer's satisfaction.

    Exception:

    The Taxpayer Advocate Service (TAS) organization is not a point of filing and TAS employees have not been delegated the authority to accept returns for filing. Treat all TAS Received Dates as invalid by circling them and edit the received date according to instructions.

3.22.261.4.1  (01-01-2014)
♦TAS Service Level Agreements (SLA)♦

  1. The National Taxpayer Advocate has reached agreements with the Commissioners of the Wage and Investment (W&I) Division, Small Business and Self-Employed (SB/SE) Division, Tax Exempt and Government Entities (TE/GE) Division, Criminal Investigation (CI), Appeals and Large Business & International (LB&I) Division, that outline the procedures and responsibilities for the processing of Taxpayer Advocate Service (TAS) casework when either the statutory or delegated authority to complete case transactions rests outside of TAS. These agreements are known as Service Level Agreements (SLAs).

  2. The SLAs are located at http://tas.web.irs.gov under the heading "TAS favorites" under the "SLA – Service Level Agreements" hyperlink.

3.22.261.5  (01-01-2014)
♦Use of FAX for Taxpayer Submissions♦

  1. Tax return information can be received via fax as part of return perfection even if a taxpayer signature is required. In circumstances where contact with the taxpayer has been made and documented, fax signatures are acceptable.

  2. Contact with the taxpayer may be by telephone or correspondence. Follow local procedures to determine which method of contact will be used.

  3. Code and Edit examiners will indicate the fax paragraph on the approved Correspondence Action Sheet to advise taxpayers of the option to fax their response.

    Caution:

    Before disclosing any tax information, you must be sure you are speaking with the taxpayer or authorized representative. See the Taxpayer Authentication guidelines in IRM 21.1.3.2.3 , "Required Taxpayer Authentication " and IRM 21.1.3.2.4,"Additional Taxpayer Authentication." Also, before leaving any messages on a taxpayer’s answering machine, review IRM 11.3.2.6.1," Leaving Information on Answering Machines/Voice Mail." Fax procedures contained in IRM 11.3.1.11 (Introduction to Disclosure),"Facsimile Transmission of Tax Information" , must be reviewed prior to faxing confidential information to the taxpayer.

3.22.261.6  (01-01-2014)
General Disclosure Guidelines

  1. IRC § 6103 establishes the taxpayer's (T/P's) right to privacy of tax information. You must be sure that you provide correct information to the correct T/P or authorized representative (check Command Code (CC) CFINK on the Integrated Data Retrieval System (IDRS) for the Power of Attorney (POA).

  2. Taxpayer returns and return information must remain confidential as provided for in IRC § 6103,Confidentiality and disclosure of returns and return information . IRC § 7431 provides civil damages for unauthorized disclosure of returns and return information. IRC § 7213 and IRC § 7213A provide criminal penalties for unauthorized disclosure or unauthorized inspection of returns and return information and require employees be discharged from duty if charged and convicted of these offenses.

  3. For more information on General Disclosure Guidelines refer to IRM 21.1.3,Operational Guidelines Overview and for full discussions refer to IRM 11.3.1Disclosure of Official Information - Introduction to Disclosure through IRM 11.3.40,Disclosure Involving Trust Fund Recovery Penalty Assessments.

3.22.261.7  (01-01-2014)
Statute Of Limitations

  1. A period of limitation is a time period established by law to review, analyze and resolve taxpayer and/or IRS related issues.

  2. The IRC states that the Internal Revenue Service (IRS) will assess, refund credit, and collect taxes within specific time limits. These limits are known as Periods of Limitations. When they expire, the IRS can no longer assess additional tax, allow a claim for refund by the taxpayer, nor take collection action. There are different periods of limitations for Assessment, Refund, and Collection Statutes. The expiration of these periods is tracked separately.

  3. The different periods of limitations expiration dates that are tracked are:

    • Assessment Statute Expiration Date (ASED): Return filed early - 3 years from the RDD or 3 years from approved extended date; Returns filed late - 3 years after the return was filed; No return filed - assessment may occur at anytime. IRC § 6501(a) and IRC § 6501(c)(3).

    • Refund Statute Expiration Date (RSED): 3 years from the time the return was filed or, if later, 2 years from the date after the tax was paid. IRC § 6511(a) and (b)(2)(A).

    • Collection Statute Expiration Date (CSED) is generally 10 years from the 23-C date or 10 years from the date of the Transaction Code (TC) 29X or 30X adjustment. IRC § 6502(a).

    Note:

    Exceptions may apply to change the periods of limitations.

  4. There are several conditions that may change the general Assessment Statute Expiration Date (ASED). They include:

    • IRC § 6501 (c) (1) -- False Return

    • IRC § 6501 (c) (4) -- Extensions by Agreement

    • IRC § 6501 (b) (3) -- Substitute for Return by Authority of IRC § 6020(b)

      Caution:

      IRC § 6020(b) is not a tax return that triggers the period of limitations on assessment under IRC § 6501(a). If the taxpayer subsequently files a return reporting an additional liability, that return constitutes an original tax return allowing for the assessment of any additional amount not already assessed under the Substitute for Return program and triggering the running of the period of limitations on assessment for the tax year.

    • IRC § 6501 (d) -- Is request for Prompt Assessments, which shortens the Assessment Period

    • IRC § 6501 (e) -- Substantial (in excess of 25 percent Omission of Income provides for a 6 year period of limitations.)

    • IRC § 6503 (a) -- Issuance of Statutory Notice of Deficiency (90-day Letter, which suspends the running of the period of limitations.)

    • IRC § 6503 (h) -- Bankruptcy

    • IRC § 6229(a) through IRC § 6229(h) -- Partnership Items

3.22.261.8  (01-01-2014)
Attachments to Form 8288

  1. Use the instructions in the following subsection when handling attachments submitted with Form 8288.

    Note:

    Form 8288 is also used to transmit Form 8288-A to the IRS. Copy A of Form 8288-A is not to be detached from Form 8288.

  2. Examine all attachments to the return being processed and take action as required by the attachment.

  3. When an attachment has an effect on the document being processed leave it attached, unless a specific instruction requires that it be detached.

    Reminder:

    If the taxpayer requests an address change, the entity on the front of the return should be changed and the request should be left attached to the return.

    Note:

    Form 8288 is also used to transmit Form 8288-A to the IRS. Form 8288-A must be recorded in the International Web Application (INTL WebApps) Database by the FIRPTA unit. Therefore, if the attached Form 8288 does not contain the "FIRPTA Stamped Copy B Mailed " on it, then Form 8288-A has not been recorded in the Treasury Information Executive Repository (TIER) II INTL WebApps Database by the FIRPTA unit.

  4. In the event that the FIRPTA stamp does not appear on Form 8288. See IRM 3.22.261.1.1.1 for additional instructions.

  5. Do not detach from Form 8288:

    • Any Form 8288-A documents, or

    • Any W/H Cert , appearing in the table below.

      Withholding Certificate Letter Numbers for Transferee/Buyer
      Letter 3309 (SC/SG) Withholding Certificate (Zero/Exempt - Generic)
      Letter 3310 (SC/SG) Withholding Certificate (Reduced MTAXL - Generic)
      Letter 3312 (SC/SG) Withholding Certificate (Reduced Installments)
      Letter 3313 (SC/SG) Withholding Certificate (Rejected - RFMI not Rec'd)
      Letter 3314 (SC/SG) Withholding Certificate (Rejected - MTAXL >10 percent)
      Letter 3316 (SC/SG) Withholding Certificate (Rejected - Generic)

    Note:

    These numbers are found in the lower, right corner of the W/H Cert (See Exhibit 3.22.261-4):

  6. Withholding Certificate: This document is attached to Form 8288 when:

    1. the transferee withholds less than the required FIRPTA tax of 10 or 35 percent, or

    2. if the person requested reduced withholding, but was denied in full. The withholding certificate must be attached to Form 8288 to confirm the extended filing due date.

  7. Form 8288-B, Application for Withholding Certificate for Dispositions by Foreign Persons of U.S. Real Property Interests. This document is not supposed to be attached to Form 8288.

    If Then
    Form 8288-B is attached,
    1. Photocopy Form 8288

    2. Detach Form 8288-A Copy B, and

    3. Forward to the OSPC Code and Edit FIRPTA unit along with any supporting documentation for processing.

    .

  8. Form W-7 and Form W-7SP, Application for IRS Individual Taxpayer Identification Number .

    If Then
    Form 8288with remittance has a Form W-7 or Form W-7 SP attached to it, Forward Form W-7 and copy of Form 8288 to the Individual Taxpayer Identification Number (ITIN) unit located at the Austin Submission Processing Campus (AUSPC). Forward it to the Internal Revenue Service, Attn: ITIN Unit, Austin, TX 73301-0002
    Form 8288without remittance has a Form W-7 or Form W-7 SP attached to it, Forward the original Form 8288 and Form 8288-A along with Form W-7 or Form W-7 SP and all associated documentation to Austin Submission Processing Center (AUSPC) for processing. Forward it to the Internal Revenue Service, Attn: Individual Taxpayer Identification Number (ITIN) Unit, Austin, TX 73301-0002.

    Note:

    Once an ITIN is assigned Austin Submission Processing Campus (AUSPC) will notate ITIN # on Form 8288 and send back to Ogden Submission Processing Campus (OSPC) for return processing.

    Form W-7 or Form W-7 SP and Form 8288-B are attached to Form 8288,
    1. Forward to Austin Submission Processing Center (AUSPC) Form W-7 or Form W-7 SP and Form 8288-B to the Austin Submission Processing Campus, Attn: ITIN Unit for processing.

    2. Enter the following remarks on the transshipping transmittal; Edit the ITIN number on Form 8288-B and forward it to the
      Ogden Internal Revenue Service
      Attn: Accounts Management
      P.O. Box 409101
      Ogden Utah 84409, along with any supporting documentation for processing.

3.22.261.9  (01-01-2014)
General Correspondence Procedures

  1. All taxpayer correspondence is governed by the guidelines in IRM 21.3.3, Incoming and Outgoing Correspondence/Letters.

  2. Correspondence includes all written communication from a taxpayer or their representative, excluding tax returns, whether solicited or unsolicited, and includes:

    • Responses to IRS requests for information or data;

    • Requests for information, including that which may accompany tax returns;

    • Annotated notice responses; or

    • Other correspondence providing additional information or disputing a notice.

  3. In all instances where you are instructed to correspond for missing information on Form 8288, completely examine the return to ensure that all missing information is requested in the same letter. Initiate correspondence one time only.

3.22.261.9.1  (01-01-2014)
Processing Taxpayer Correspondence

  1. Enter a Correspondence Received Date (CRD) in the right margin of the address line in Line 1.

  2. Enter the "CRD" date (in YYYYMMDD format) except in the following situations:

    1. The reply from the taxpayer was received before the due date of the return.

    2. The correspondence was required because of an IRS processing error (e.g., a request for an attachment that was lost during processing).

  3. If there is no reply edit document with Computer Condition Code (CCC) "3."

3.22.261.10  (01-01-2014)
Pre-Master File Processing of Form 8288

  1. Reject (Action Code 3) any Form 8288 which has a Date of Transfer (DOT) of 12/12/2005 or prior.

  2. Rejection Action:

    1. Prepare Form 4227, Intra-SC Reject or Routing Slip, indicating the reason for rejection.

    2. If there is NO remittance in Field 01A: Annotate on Form 4227 "Renumber to NMF - DOT prior to 12/13/05." Void the DLN in Rejects (2-D on the register and line-thru the DLN on the return) and transship Form 8288 to CSPC Accounting Branch NMF with Form 4227 attached.

    3. If there is remittance in Field 01A: Annotate on Form 4227 "Renumber to NMF" , prepare Form 3244, attach Form 4227 to Form 3244 (Payment Posting Voucher), line thru the DLN on the return, release Form 3244 with the register (to be numbered), and transship Form 8288 to CSPC Accounting Branch NMF with Form 4227 attached.

3.22.261.11  (01-01-2014)
Unprocessable Conditions

  1. A return must contain the following specific items before it is considered processable.

    • A Taxpayer Identifying Number (TIN)

    • A legible name (for the Name Control)

    • A valid Tax Period (200512 and subsequent)

    • Legible data

    • Signature

  2. Perfect all documents to the extent possible from other attachments.

  3. Conditions which make a document unprocessable are:

    • The name is so illegible or incomplete that the Name Control cannot be determined.

    • The TIN contains other than nine numeric characters and cannot be perfected from information on the return or attachments.

    • The document has more than one TlN.

    • The filer has stated that they have combined information for more than one transfer or more than one type of return.

    • Data entries are so incomplete or illegible that they cannot be perfected or transcribed.

    • The document has been mis-blocked.

    • The return is unsigned.

    • The return has only entity data and no other statements or attachments from the taxpayer.

    • Any condition set forth as unprocessable in the sections on processing specific documents.

  4. Correspond with the taxpayer for the required information using IDRS Letter 3104C (FIRPTA and Foreign Partnership Withholding Tax Return Processing and Unsubstantiated Refundable Cr) or the appropriate IDRS Letter when Form 8288 is unprocessable.

3.22.261.11.1  (01-01-2014)
Illegible or Missing Data

  1. IF the error condition involves an Illegible or Missing Name and/or Address, and the required data cannot be perfected through research of the document, then:

    1. Enter Action Code 3.

    2. Re-charge the return out of the block.

    3. Prepare Form 4227, attach it to the return.

    4. Route it to the Rejects unit.

  2. Rejects will input a Notice of Action on the Master File as discussed below by using IDRS Command Code REQ77/FRM77.

    1. When an unprocessable return is rejected and sufficient information is available: enter TC 599 and enter Closing Code 17 to defer the normal delinquency check.

    2. When the TIN, Name Control, MFT, and Tax Period are present; enter TC 599 and enter Closing Code 17.

3.22.261.12  (01-01-2014)
Fiscal Year/Calendar Year Returns

  1. Form 8288 is filed only as the result of a specific transaction on a United States Real Property Interest (USRPI). The entries on the return refer only to that one transaction.

    Note:

    Form 8288 is an ad-hoc return, which can be filed every month by the same withholding agent (a.k.a. transferee/buyer). For example: A transferee who purchases a USRPI in January 2006 from a foreign person will have to file Form 8288 with the IRS no later than the 20th day from the Date of Transfer (purchase date). The same transferee may purchase another USRPI from the same or different foreign person in February 2006, thus another Form 8288 filing will be required.

    Reminder:

    "Ad-Hoc," in this case refers to a tax return that deals with one specific purpose. Form 8288 is filed with data from only one specific real estate transaction happening at one specific time.

  2. As a result of this uniqueness in processing, there will never be Filing Requirements appearing on INOLE for Form 8288, MFT 17.

  3. The tax period can end with any month 01-12, but the tax period shows the month when the transaction took place (refer to the DOT). Therefore, there are no fiscal or calendar year Form 8288 returns.

    Note:

    A Form 8288 can be filed every month of the year by the same withholding agent (transferee). In a situation like this, the same withholding agent can have a Form 8288 processed for 200512, 200601, 200602, 200603, 200604, 200605, 200606, etc., and even have multiple filings in a month, thus creating an amended return (CCC G) condition.

  4. If the tax period is later than the current date, compare the tax period to the DOT to be sure it is correct. If it is correct, ERS will reject the return (Action Code 3) and Rejects will hold it until the first day after the month of the tax period, when it will be worked.

3.22.261.13  (01-01-2014)
Special Returns

  1. Use the following instructions in processing Collection or Examination secured or prepared returns.

3.22.261.13.1  (01-01-2014)
♦Compliance Secured/Prepared Returns♦

  1. Compliance functions secure returns from the taxpayer and also prepare returns if the taxpayer does not provide them.

    1. Prepared tax returns are notated with "6020(b)" or "SFR" (Substitute for Return).

    2. Secured tax returns are notated with "TC 59X" or "ICS" (Integrated Collection System) or notated "Process as Original" with an attached Form 13133, Expedite Processing Cycle. The "Delinquent Return" box on Form 13133 should be checked. If Form 13133 is attached, enter the Computer Condition Codes (CCC) that are checked on the form for Form 8288.

      Note:

      Enter CCC "R" when there is an indication on the return, such as "DO NOT ASSESS FAILURE TO FILE PENALTY" and the appropriate checkbox is not marked.

3.22.261.13.2  (01-01-2014)
♦IRC § 6020(b) - Prepared by Collection♦

  1. When the taxpayer fails to file a required return, IRC § 6020(b) is the authority for the IRS to prepare the return.

  2. These returns are identified by the notation: "PREPARED AND SIGNED UNDER THE AUTHORITY OF SECTION 6020(b) OF THE INTERNAL REVENUE CODE" which is located in the center bottom of Page 1 of the return.

    1. Returns must have a Received Date. If no Received Date is present per the Compliance Function, follow the normal procedures for editing the Received Date.

    2. The returns or an attached Form 13496, "IRC § 6020(b) Certification Form " must be signed by Compliance. If not, route to Compliance using Form 4227.

    3. Enter CCC "4" .

      Note:

      CCC "R" should not be used with CCC "4" .

    4. Do Not correspond with the taxpayer for unprocessable conditions. If the return is completely unprocessable, enter CCC "3" and continue processing.

    5. Enter CCC "W" if the Received Date is more than 2 years and 9 months after the Return Due Date. Do Not send the return to Statute Control.

3.22.261.13.3  (01-01-2014)
♦Collection Secured♦

  1. These returns are identified by the notations: "TC 59X" or "ICS" .

    1. Do Not enter CCC "G" on these returns.

    2. Correspond for conditions that cannot be processed (e.g., missing signatures, missing schedules, etc.).

    3. Enter CCC "W" if the Received Date is more than 2 years and 9 months after the Return Due Date. Do Not send the return to Statute Control.

3.22.261.13.4  (01-01-2014)
♦Examination Prepared♦

  1. These returns are identified by the notation: "Substitute for Return (SFR)" on Page 1 or,

    1. Return must have a Received Date. If no Received Date is present, follow the normal procedures for editing the Received Date.

    2. Do Not correspond with the taxpayer for unprocessable conditions. If the return is completely unprocessable, use No Reply procedures and enter CCC "3" and continue processing.

    3. If Form 13133 is attached, enter the Computer Condition Codes that are checked on the form.

      Note:

      CCC "R" should not be used with a CCC "4" .

    4. Enter CCC "W" if the Received Date is more than 2 years and 9 months after the Return Due Date. Do Not send the return to Statute Control.

3.22.261.13.5  (01-01-2014)
♦Examination Secured♦

  1. These returns are identified by the notation: "Process as Original" on Page 1 of the return and a Form 13133, Expedite Processing Request, attached with the "Delinquent Return" box checked..

    1. Correspond for conditions that cannot be processed (e.g., missing signatures, missing schedules, etc.).

    2. Enter the Computer Condition Codes that are checked on Form 13133

    3. Enter CCC "W" if the received date is more than 2 years 9 months after the Return Due Date. Do Not send to Statute Control function.

3.22.261.13.6  (01-01-2014)
♦Frivolous Argument♦

  1. A frivolous argument is used for the purpose of expressing dissatisfaction with the substance, form or administration of the tax laws by attempting to illegally avoid or reduce tax liabilities. Recognized frivolous arguments made by businesses include, but are not limited to, the examples in IRM 4.10.12.1.1, Frivolous Arguments.

  2. Review the return to determine whether it appears to be a frivolous return. See Exhibit 3.22.261-5.

    If... Then...
    The return meets any of the conditions identified as a frivolous return.

    Caution:

    If the return shows Action Code 331 and has a Form 4227 attached with the remarks, "Refer to Exam FRP for audit after processing," continue to next procedure.

    Remove return from the batch and place the return in the locally designated basket for Examination, Frivolous Return Processing (FRP) for review.

    Note:

    IRM 4.10.12.1.3.3, Campus FRP Coordinators, requires Examination to expedite the return and make a determination whether it qualifies as a frivolous return within two (2) business days.


    If a determination is not made within the allowed time frame, the Examination examiner will edit Action Code 331 in the lower left margin of the form.
    Examination has selected the return as frivolous,

    Example:

    Indicated by an Action Code 331 and a Form 4227 with the remarks, "Refer to Exam FRP for audit after processing," but sends the return for processing,

    Continue processing the return using procedures in IRM. However, do not circle or void the Action Code indicating a frivolous return.

    Note:

    Returns having only zeros, no entries, are blank or indicate "None," "Not Liable," etc. with no evidence of a frivolous argument are not to be considered as frivolous returns.

3.22.261.13.7  (01-01-2014)
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3.22.261.13.8  (01-01-2014)
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3.22.261.14  (01-01-2014)
"Amended" Form 8288 Return

  1. All Form 8288 returns are to be processed as an original return.

  2. Never assign Computer Condition Code G. Delete CCC G from the error register. Use Action Code 6.

  3. Use Action Code 5 to add Section 02 to the error register. Then process the Form 8288 record as an original return.

  4. Do not enter a CCC "G" on a Form 8288 document, even if it clearly indicates it is an:

    • "AMENDED" ,

    • "SUPERSEDING" ,

    • "DUPLICATE" , or

    • "REPLACEMENT" , or

    • A positive statement that the return is not the first one filed for the same tax period is attached.

3.22.261.15  (01-01-2014)
Definitions For Use in Processing Form 8288 Error Register

  1. The following definitions are for terms used in the FIRPTA Error Correction Program.

3.22.261.15.1  (01-01-2014)
Error Register

  1. A listing of documents on which the transcribed data failed one or more of the consistency, math verification, or validity tests in the computer program.

  2. The register is made up of Sections and Fields that are directly or indirectly related to the Data Sections and items transcribed and input to the computer.

3.22.261.15.2  (01-01-2014)
Loop Register

  1. An error or reject record that has had a correction record input but still contains an invalid or math error condition that requires correction.

3.22.261.15.3  (01-01-2014)
Section

  1. A portion or segment of a record containing data fields related to a specific schedule or portion of the source document.

  2. Each Section is identified by a two digit numeric section number.

3.22.261.15.4  (01-01-2014)
Field

  1. A specific item transcribed from a form, schedule, or other document.

  2. Each Field may contain data, or be blank, and is identified by an Alpha/Numeric Field Designator.

    1. Fixed Field – All spaces must be accounted for as there is no Field Breaker at the end of a Fixed Field.

    2. Variable Field – All spaces need not be accounted for. However, all variable fields must contain a field breaker.

3.22.261.15.5  (01-01-2014)
Field Breaker

  1. A special symbol which indicates the end of a field.

  2. It appears at the end of a field, even if no data is in the field.

  3. A field that ends with a field breaker is known as a "Variable field."

  4. In addition to indicating the end of a field, the field breaker can also indicate if the amount of money in the field is positive (+) or negative (-). If it is not a money field, and a field breaker is required, a "+" is used.

  5. If it is necessary to change a field breaker on the error register (both for Error Resolution System (ERS) and Rejects) then:

    1. Enter a positive field breaker as a comma ","

    2. Enter a negative field breaker as a pound sign "#"

    3. These two entries convert to the usual "+" and "-" after they are transcribed.

  6. Some fields (noted in the text) do not end with a field breaker. There is nothing to show the end of these particular fields. This type of field is known as a "Fixed field."

  7. When data is entered into a fixed field on the error register, and the data does not completely occupy the allotted number of spaces for the fixed field, then the unused spaces must be accounted for by entering the number of unused spaces in a circle immediately (See Figure 3.22.261-5) after the last character entered. This is most commonly required in the name control, but also occurs if the entry in a non-essential fixed field is deleted.

3.22.261.15.6  (01-01-2014)
Action Codes

  1. Action Codes (AC) are used to indicate that specific information is missing or that the record is to be rejected from processing. The Action Code must contain sufficient detail to indicate if correspondence is to be sent to the taxpayer or the specific in-house research or action required.

    Action Code # Action Purpose Location May use more than one code
    0 Accepts the taxpayers figure Use when the record is correct, disregard computer computation To the left of Section 01 No
    1 Taxpayer math error To issue Taxpayer Notice Code (TPNC) to the taxpayer To the left of Section 01 along with the TPNC number No
    2 Rejects use only Used with Reject Designator D, R, or N To the left of Section 01 No
    3 To delete a record from the correction system To reject a document that is unprocessable To the left of Section 01 No
    4 To delete a section from the error register Whenever a section is not needed To the left of the section being deleted Yes with AC
    5 To add a section to the error register When data is present for a section but has not been entered To the left of the section being added Yes with AC
    6 To correct data fields with a section When data is missing or incorrect in a field To the left of the section being corrected Yes with AC
    7 To clear the error register Whenever there is a validity check and no correction is necessary To the left of Section 01 No
    9 Rejects use only To put a loop register into Re-reject (RAW) Status. To the left of Section 01 on a reject loop No

3.22.261.15.6.1  (01-01-2014)
Action Code "0"

  1. Action Code "0" accepts the taxpayers or examiners figures.

  2. Enter to the left of Section "01" when the record is correct and the computer computation should be disregarded.

  3. Never use Action Code "0" unless the error register already contains the correct tax data.

  4. When Action Code "0" is used, no other Action Code is valid.

3.22.261.15.6.2  (01-01-2014)
Action Code "1"

  1. Action Code "1" -- Taxpayer math error above tolerance.

  2. Action Code "1" is entered to the left of Section 01 with a taxpayer notice code to indicate that the taxpayer has made a math error.

    1. Enter Action Code "1" when the data in a record has been transcribed correctly, but the taxpayer made an error on the return and the computer's tax computation should be accepted by the Master File.

    2. All taxpayer entries have been transcribed correctly but the total tax is in error.

  3. Action Code "1" must be followed by a TPNC that is valid for the type of return and correctly advises the taxpayer of the reason for the error. Use a two-digit numeric code when a math error is present which affects the tax liability or settlement amounts. Enter this code to the right of AC "1" , preceded by a hyphen (e.g., 1 - 01).

    Note:

    The maximum number of TPNCs that can be entered are two (2). For example: 01, 02.

3.22.261.15.6.3  (01-01-2014)
Action Code "2"

  1. Enter to the left of Section "01" .

  2. Action Code "2" is used only in the Rejects unit.

  3. Action Code 2 must be used with reject designator;

    • D -- Delete (void) record

    • N -- Re-number

    • R -- Re-input (with Form 3893)

  4. "D" and "R" can be used on Rejects Loop Register.

3.22.261.15.6.4  (01-01-2014)
Action Code "3"

  1. Enter to the left of Section "01."

  2. "Action Code 3" is used only in SCRS, not rejects.

  3. Use "Action Code 3" to reject a document that is unprocessable or Non-ADP.

    Note:

    When using "Action Code 3" , do not use any other Action Code.

  4. Use of this code will send the entire record to Rejects.

3.22.261.15.6.5  (01-01-2014)
Action Code "4"

  1. Enter to the left of the section that needs to be deleted.

  2. Use "Action Code 4" to delete any section of a record when the section is not required.

    Exception:

    DO NOT USE "Action Code 4" in Section "01" of a record.

  3. Do not use "Action Code 4" to delete any section with an asterisk appearing before the section number.

  4. "Action Codes 4, 5 and 6" may be used on the same Error Register, but only in different sections.

  5. If an entity section appears on the Error Register but contains no significant data it is not necessary to delete the section, because the section will be automatically deleted when the record posts.

3.22.261.15.6.6  (01-01-2014)
Action Code "5"

  1. Enter to the left of a section that needs to be added.

  2. Action Code "5" is used to:

    • Add a missing section to the record.

    • To add a missing section that is required to be present, but which has not printed on the Error Register.

      Exception:

      DO NOT USE Action Code "5" in Section "01" of a record.

  3. When adding a section,

    1. Enter only the fields which have significant data.

    2. Enter the Alpha Field Designation and the appropriate field breakers for each field entered (e.g.,: "5 06A1000," Action Code 5, Section 06, field A, positive amount 1000).

  4. Action Codes "4" , "5" and "6" may be used on the same Error Register, but only in different sections.

3.22.261.15.6.7  (01-01-2014)
Action Code "6"

  1. Enter to the left of any sections containing fields which need to be corrected.

  2. Action Code "6" is used to correct a field in error within a section of the Error Register.

    Note:

    Correct as many fields as necessary within every section on one correction attempt.

  3. Action Codes "4" , "5" and "6" may be used on the same Error Register, but only in different sections.

  4. When this code is used, at least one field within the section where it is entered must be changed.

    1. Line through the data following a field designator.

    2. Enter the corrected data above the lined-through data.

    3. When blanking a field in a section with fixed length fields, always encircle the number of positions (characters) prescribed for the field.

  5. If any transcription entry is in error, illegible, entered on the wrong line, or entered on an attachment;

    1. Enter information on the return itself, and

    2. Enter the proper information in the appropriate field on the Error Register.

3.22.261.15.6.8  (01-01-2014)
Action Code "7"

  1. Enter to the left of Section "01."

  2. Action Code "7" is used to indicate that the data on the error register is correct and that no action is necessary.

  3. Use Action Code "7" to clear an error record that is on the register for a one time only validity condition.

    Note:

    Action Code "7" must not be used unless all other information on the register is correct.

  4. Action Code "7" will not clear a math error condition.

  5. When Action Code "7" is used, no other Action Code is valid.

3.22.261.15.6.9  (01-01-2014)
Action Code "9"

  1. Enter to the left of Section 01 on a reject loop register.

  2. Action Code "9" is used on loop reject registers to put the document into re-reject (RAW) status.

    Note:

    The reason for this action is that if a return requires correspondence to the taxpayer or needs to be sent to a different area (such as Statutes, renumbering, or Entity), it must be in RAW status (or the record will continue to loop). It is not necessary to use Action Code "9" to re-input or void a record, which can be done on a loop register.

3.22.261.15.7  (01-01-2014)
Validity Errors

  1. Three general types of errors that will cause a record to print on the Error Register are:

    • Field Validity Errors,

    • Section Validity Errors, and

    • Math/Consistency Errors.

3.22.261.15.7.1  (01-01-2014)
Field Validity Errors

  1. These errors result when required data is missing, or when incorrect data is present.

  2. These errors are indicated by an asterisk (*) printed before the invalid field.

  3. An asterisk may also be printed before a field for verification purposes.

  4. Correction procedures:

    1. Compare the return entry with the Error Register field.

    2. Enter "Action Code 6."

    3. Line out the incorrect field.

    4. Enter the correct data immediately above the lined-out data.

    5. Do not line through the Field Breaker, unless you are changing it.

3.22.261.15.7.2  (01-01-2014)
Section Validity Errors

  1. These errors include:

    • Missing data

    • Extraneous data

    • ISRP errors

    • Terminus errors

3.22.261.15.7.2.1  (01-01-2014)
Missing Section Errors

  1. Caused by the absence of data for required sections.

  2. These errors are indicated by an asterisk (*) to the left of the section number.

3.22.261.15.7.2.2  (01-01-2014)
Extraneous Section Errors

  1. Caused by the transcription of an unnecessary section.

  2. These errors are indicated by one pound sign (#) preceding the section number.

3.22.261.15.7.2.3  (01-01-2014)
ISRP Errors

  1. Caused when too many characters have been entered for a field.

  2. Extra characters are dropped when the data is converted to Error Register format.

  3. These errors are printed to the left of the Section Number and will be shown on the Error Register as described in (4), (5), (6) and (7) below:

  4. "#1" : Split screen transmission.

    • The Key Verifier attempted to change Check Digit

    • The Key Verifier changed four or more digits of TIN

    • The Original Entry operator entered required Section as "missing" .

  5. "#3" : Invalid Section ending point.

  6. "#4" : Invalid field length.

  7. "#5" : Questionable section. A section was entered twice or entered out of sequence by ISRP.

3.22.261.15.7.2.4  (01-01-2014)
Terminus Errors

  1. Caused when a non-numeric character is entered in a numeric field or when the format of a section is incorrect.

  2. These errors are identified by two asterisks (**) printed to the left of the section number.

3.22.261.15.7.2.5  (01-01-2014)
Correcting Section Validity Errors

  1. Compare the section(s) entry with the Error Register fields.

  2. Line out each incorrect field and enter the correct data immediately above the lined-out data.

  3. Enter Action Code "6" .

  4. If no error is found, use Action Code "7" to clear the Error Register.

  5. For Terminus Errors, if a return entry is truly larger than the maximum size field that is acceptable for computer processing,

    1. Reject the return record with Action Code "3" .

    2. Attach Form 4227 with an explanation.

3.22.261.15.7.3  (01-01-2014)
Math/Consistency Errors

  1. These errors are caused when the computer computation differs from the taxpayer's computation or the transcribed amount.

  2. Math Errors occur when:

    • There is a transcription error

    • The taxpayer reports more entries than can be transcribed

    • The taxpayer makes a mistake in a calculation

  3. When a Math Error occurs,

    • The computed amount in question will underprint with the computer's calculation.

    • The tax verified field is Field 02J.

  4. Use the "tax verified" field to bypass the math check on a loop. Use Action Code "0" on Loop.

  5. If the transcription is correct, use Action Code "6" to enter the computer's calculation in the "tax verified" field.

  6. If the computer cannot compute the amount correctly (because there are more taxpayer entries than can be transcribed),

    1. Verify the taxpayer's computation, and

    2. Enter Action Code "6" to enter the verified total into the "tax verified" Field 02J.

  7. To correct math/consistency errors:

    1. Compare the transcribed amount listed above the underprinted figure on the Register to the Form 8288 to ensure that the information was transcribed accurately.

    2. If the transcription is correct, and the error is within tolerance, bring up the underprinted amount into the tax verified field. Use Action Code "0" on Loop.

    3. If the transcription is correct, and the error is not within tolerance, use "Action Code 6" to enter the correct amount in the "tax verified" field.

    4. Always leave a working trail to ensure that any correction made on the Error Register is also made to the return itself.


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