The closing is done. Then your foreign seller gets an IRS letter.

You know the call. The deal closed months ago, the seller is back overseas — and now there is an envelope from the IRS: a balance due, a refund that changed, a withholding credit that never landed. Your client does not call a CPA. Your client calls you — the realtor, the closing attorney, the title team, the property manager. Here is what that letter usually means, why the clock on it matters more than the amount on it, and the handoff that protects your client (and, in one narrow case, the buyer in your deal).

Why does the IRS write to a foreign seller months after closing?

Because for a foreign seller, closing day is the middle of the tax story, not the end. When a foreign person sells a U.S. real property interest, the sale is subject to FIRPTA withholding: the buyer, certain purchasers’ agents, and settlement officers generally withhold 15% of the amount realized (essentially the gross sale price) and send it to the IRS with Forms 8288 and 8288-A.

That money is a prepayment the IRS later reconciles against the seller’s U.S. tax return. And reconciling is exactly when letters are born. The IRS says it sends a notice or letter when there is a balance due, when a refund has changed, when it has a question about a return, or when it changed or corrected a return. If the seller never filed, filed with numbers that do not match the withholding record, or is expecting a refund that the IRS computes differently, the letter is how the conversation starts.

Wasn’t the 15% withheld at closing the tax?

No — and this is the misunderstanding behind most of these calls. The 15% is withholding, calculated on the amount realized, not on the seller’s actual gain. It is a credit waiting to be claimed, not a settled bill.

When the seller’s TIN is on the form, the IRS stamps Copy B of Form 8288-A and sends it to the seller. To receive credit for the tax withheld, the seller must file a U.S. income tax return and attach that stamped Form 8288-A. No return, no credit applied — and any excess withholding over the real tax is sorted out through that return, not automatically. A seller who assumes “the closing handled my taxes” can end up with an IRS balance-due notice on a sale where the IRS is already holding their money.

The missing-TIN trap that starts at your closing table

Here is the quiet paperwork failure behind a surprising number of these letters. If the seller’s taxpayer identification number was not included on Form 8288-A, the IRS will not stamp or forward Copy B to the seller. That withholding credit does not disappear — but claiming it gets harder: the seller must instead attach substantial evidence of the withholding, such as the closing documents, plus a statement containing all the information required on Forms 8288 and 8288-A, including the TIN. In the meantime, the IRS mails the seller a Letter 3794 instructing them to apply for an ITIN on Form W-7.

Translation for your file: a missing or mismatched TIN at closing becomes your client’s notice, dispute, and delay months later. It is fixable — but it is a fix, with deadlines, not a shrug.

What happens if the letter just sits?

IRS notices run on printed deadlines, and the IRS’s own guidance is blunt about them: if a notice asks for a response, act by the due date. Replying by that date is what protects the taxpayer’s appeal rights. And where there is an amount due, paying by the due date can reduce interest and penalty charges — which means every week of silence potentially costs money.

Now add the overseas reality. The letter may go to a U.S. address the seller no longer checks, a property manager’s office, or a mailbox that gets opened monthly. By the time it reaches your client — and then reaches you — part of the response window may already be gone. The amount on the notice is rarely the emergency. The date is.

One case where it can land on your side of the table

In many cases, your role ends at a fast, clean handoff. There is one exception worth knowing. The withholding duty itself reaches the transferee, certain purchasers’ agents, and settlement officers — and if the seller was a foreign person and the required FIRPTA withholding was not done, the IRS states that the transferee — the buyer — may be held liable for the tax. If a closed file has a withholding gap, that is a “surface it to a professional now” problem, not a “wait and see” one.

What does a resolution CPA do with the letter?

The fix is representation, and it does not require your client to fly back. A CPA steps in under a power of attorney (Form 2848) — the IRS’s own FIRPTA guidance even spells out the Form 2848 language for these matters: “Withholding Tax – IRC 1445,” Forms 8288, 8288-A, 8288-B. From there, the work is concrete:

• Answer the notice by its deadline, to protect the taxpayer’s appeal rights.
• Reconcile the withholding credit — match the stamped Form 8288-A (or the closing-document evidence, if the TIN trap sprung) to the seller’s return, so money the IRS already holds is actually credited.
• Repair the record — the ITIN application, the mismatched figures, the unfiled return — so the next letter never gets written.

At TAXCPA.COM, that work is handled entirely online for clients in all 50 states and abroad — the seller stays home, the CPA deals with the IRS. That is the whole point of the handoff: your client gets a licensed CPA on the notice, and you get to go back to closings.

Questions intermediaries ask us

My client already left the country. Can this still be fixed?
Yes. With a signed power of attorney, a CPA deals directly with the IRS on the notice. The response, the credit reconciliation, and the record repair all happen without the seller traveling back to the United States.

The IRS withheld more than the tax. Where is my client’s refund?
The 15% is withholding, not the final tax. It is credited when the seller files a U.S. tax return with the stamped Form 8288-A attached, and any excess over the actual tax is resolved through that return. If no return was filed, that reconciliation has not happened yet — which is often exactly why a notice showed up.

I am the agent / closing attorney / title officer. Is any of this my liability?
The withholding duty can reach your side of the table — it applies to the transferee, certain purchasers’ agents, and settlement officers. The liability the IRS describes for a missed withholding attaches to the transferee (the buyer), who may be held liable for the tax. Outside that, your exposure is reputational — and a fast handoff is what protects it.

How fast do we need to move?
By the date printed on the notice. That deadline is what protects your client’s appeal rights, and acting inside it can limit interest and penalty charges. Send the client over the day the letter surfaces, not the week after.

Alex Volkov, CPA is a New York-licensed CPA with over two decades in accounting, focused on resolving IRS tax problems — back taxes, liens, levies, garnishments, and audits — for individuals and businesses in all 50 states and around the world.