| What exactly do settlement agents have to report to the Internal Revenue Service?
In accordance with IRS Regulations the settlement agent must report the sale or transfer of an interest in U.S. real property by filing IRS form 1099-S Proceeds from Real Estate transactions, unless an exception applies.
The filing instructions require the settlement agent to solicit seller’s U.S. Taxpayer Identification Number (U.S. T.I.N., or Social Security Number). The settlement agent obtains the U.S. T.I.N. by having the seller complete a 1099-S Solicitation.
This form provides the IRS with the seller’s name, T.I.N., the date of closing and the amount of the gross proceeds (sales price) from the sale. Click here if you would like to see what the form looks like.
Escrow reports gross proceeds to the Internal Revenue Service based on the information provided to us directly from the seller. The information received is uploaded to the Internal Revenue Service along with the seller’s forwarding address.
If the seller is not a US citizen, the parties are advised to seek advice from a tax professional regarding the Foreign Investment in Real Property Tax Act (FIRPTA) and any applicable withholdings that may be required.
Settlement agents are often asked questions regarding taxes. We always encourage clients to seek the advice of a tax professional as we are simply reporting the information provided to us at closing. |
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