The IRS Form 8288-B is the form for the Application for Withholding Certificate for Dispositions by Foreign Persons of the United States Real Property Interests. This form is used when a foreign citizen applies for a reduction or exemption for the withholding rates that were determined based on the sale price of their property.
If they apply for the reduction of the withholding amount, then they also need to submit the calculation of the expected capital gains tax together with their Form 8288-B. Moreover, they also provide documents proving that the taxes owed to the IRS will be less than the amount of the withholding.
If you make the application on time, an escrow agent will be assigned to your trade, and he or she will hold the withheld funds until the IRS processes your application. The official processing time for Form 8288-B is set as a minimum of 90 days.
The application will be approved by the IRS, and, as a result, the revised balance will be determined. Your assigned escrow agent will notify the IRS about remitting the requested amount. Then the remaining balance will be transferred to you.
As long as you can carry out all the procedures, including the application, compilation of required documents, and calculations, you can always work with a professional. Moreover, the buyer himself or herself, or his or her agent, can also carry out the process.
It is worth noting that you also need to notify the buyer at least one day before the sale and in writing when you apply for a withholding certificate. Since most foreigners do not sell their properties in the United States too often, we recommend working with a professional.
In this way, you can ensure the correct and accurate application, which can save you money in the long run. You can always find a reliable agent or professional by visiting the IRS website or doing quick research on the internet for your area.