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North Dakota Non-Foreign Affidavit Under IRC 1445

North Dakota Non-Foreign Affidavit Under IRC 1445

Category:

Real Estate - Closings

State:

North Dakota

Control #:

ND-CLOSE7

Format:

Instant download

Overview of this form

The Non-Foreign Affidavit Under IRC 1445 is a legal document that a seller of real property can use to affirm their status as a non-foreign person as defined by the Internal Revenue Code Section 26 USC 1445. This affidavit is important for U.S. tax purposes, particularly when real estate transactions are involved, as it helps establish the seller's exemption from certain withholding requirements that apply to foreign persons. It is distinct from other affidavits in that it specifically addresses tax compliance related to real estate sales.

Form components explained

Identification of the seller(s) and their taxpayer identification number.
Details of the property being sold, including location and description.
A statement affirming that the seller(s) are not foreign persons as defined by the law.
Signature and date fields for the seller(s) to verify the affidavit.
Notary section for legal validation of the signatures.

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Ownership Disclosure Statement

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Common use cases

This form should be used when a seller who is not a foreign person sells real property in the U.S. It is necessary to present this affidavit to the buyer as part of the transaction, ensuring that the seller can document their non-foreign status and avoid the withholding tax that applies to foreign sellers under IRC 1445. Using this form helps to facilitate smoother real estate transactions and compliance with federal tax laws.

Who should use this form

Individuals or entities selling real property who are confirmed U.S. residents.
Real estate agents and attorneys assisting clients with property sales.
Buyers who need to ensure compliance with IRS withholding laws.

Steps to complete this form

Identify all sellers and provide their taxpayer identification numbers.
Specify the property being sold, including its address and parcel number.
Include a statement declaring that the seller(s) are not foreign persons.
Sign and date the affidavit, ensuring all sellers have signed.
Have the affidavit notarized to confirm its validity.

Notarization requirements for this form

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Mistakes to watch out for

Failing to include all sellers' information or taxpayer identification numbers.
Omitting the property details such as address and parcel number.
Not notarizing the document, which could invalidate it.
Incorrectly asserting foreign status when the seller is a U.S. resident.

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Non-Foreign Affidavit Under IRC 1445

Description: Under Federal law, (the Foreign Investment in Real Property Tax Act (FIRPTA)(26 USC 1445) and the regulations thereunder (26 CFR Parts 1 and 602)), a buyer of real estate is required to withhold a tax from the sale of real property to a foreign person unless an exemption applies. An exemption from withholding is provided for individuals who purchase property for use as their principal residence for $300,000 or less. Principal residence is defined to mean that the buyer will reside there for more than 50% of the time in each of the next two years. If you have a duty to withhold and you fail to do so, you can be liable for an amount equal to your compensation in the transaction and in some cases for the amount of tax that should have been withheld The affidavit is needed to provide the buyer with assurance that the seller is not a foreign person.

The general rule and exemptions as stated in Sec. 1445, Withholding of tax on dispositions of United States real property interests, provides:

(a) General rule

Except as otherwise provided in this section, in the case of any disposition of a United States real property interest (as defined in section 897(c)) by a foreign person, the transferee shall be required to deduct and withhold a tax equal to 10 percent of the amount realized on the disposition.

(b) Exemptions

(1) In general

No person shall be required to deduct and withhold any amount under subsection (a) with respect to a disposition if paragraph (2), (3), (4), (5), or (6) applies to the transaction.

(2) Transferor furnishes nonforeign affidavit. Except as provided in paragraph (7), this paragraph applies to the disposition if the transferor furnishes to the transferee an affidavit by the transferor stating, under penalty of perjury, the transferor's United States taxpayer identification number and that the transferor is not a foreign person.

(3) Nonpublicly traded domestic corporation furnishes affidavit that interests in corporation not United States real property interests. Except as provided in paragraph (7), this paragraph applies in the case of a disposition of any interest in any domestic corporation if the domestic corporation furnishes to the transferee an affidavit by the domestic corporation stating, under penalty of perjury, that -

(A) the domestic corporation is not and has not been a United States real property holding corporation (as defined in section 897(c)(2)) during the applicable period specified in section 897(c)(1)(A)(ii), or

(B) as of the date of the disposition, interests in such corporation are not United States real property interests by reason of section 897(c)(1)(B).

(4) Transferee receives qualifying statement

(A) In general. This paragraph applies to the disposition if the transferee receives a qualifying statement at such time, in such manner, and subject to such terms and conditions as the Secretary may by regulations prescribe.

(B) Qualifying statement. For purposes of subparagraph (A), the term ''qualifying statement'' means a statement by the Secretary that -

(i) the transferor either -

(I) has reached agreement with the Secretary (or such agreement has been reached by the transferee) for the payment of any tax imposed by section 871(b)(1) or 882(a)(1) on any gain recognized by the transferor on the disposition of the United States real property interest, or

(II) is exempt from any tax imposed by section 871(b)(1) or 882(a)(1) on any gain recognized by the transferor on the disposition of the United States real property interest, and

(ii) the transferor or transferee has satisfied any transferor's unsatisfied withholding liability or has provided adequate security to cover such liability.

(5) Residence where amount realized does not exceed $300,000. This paragraph applies to the disposition if -

(A) the property is acquired by the transferee for use by him as a residence, and

(B) the amount realized for the property does not exceed $300,000.

(6) Stock regularly traded on established securities market. This paragraph applies if the disposition is of a share of a class of stock that is regularly traded on an established securities market.

(7) Special rules for paragraphs (2) and (3). Paragraph (2) or (3) (as the case may be) shall not apply to any disposition -

(A) if -

(i) the transferee has actual knowledge that the affidavit referred to in such paragraph is false, or

(ii) the transferee receives a notice (as described in subsection (d)) from a transferor's agent or a transferee's agent that such affidavit is false, or

(B) if the Secretary by regulations requires the transferee to furnish a copy of such affidavit to the Secretary and the transferee fails to furnish a copy of such affidavit to the Secretary at such time and in such manner as required by such regulations.

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Non-Foreign Affidavit Under IRC 1445

The general rule and exemptions as stated in Sec. 1445, Withholding of tax on dispositions of United States real property interests, provides:

(a) General rule

(b) Exemptions

(1) In general

No person shall be required to deduct and withhold any amount under subsection (a) with respect to a disposition if paragraph (2), (3), (4), (5), or (6) applies to the transaction.

(B) as of the date of the disposition, interests in such corporation are not United States real property interests by reason of section 897(c)(1)(B).

(4) Transferee receives qualifying statement

(B) Qualifying statement. For purposes of subparagraph (A), the term ''qualifying statement'' means a statement by the Secretary that -

(i) the transferor either -

(II) is exempt from any tax imposed by section 871(b)(1) or 882(a)(1) on any gain recognized by the transferor on the disposition of the United States real property interest, and

(ii) the transferor or transferee has satisfied any transferor's unsatisfied withholding liability or has provided adequate security to cover such liability.

(5) Residence where amount realized does not exceed $300,000. This paragraph applies to the disposition if -

(A) the property is acquired by the transferee for use by him as a residence, and

(B) the amount realized for the property does not exceed $300,000.

(6) Stock regularly traded on established securities market. This paragraph applies if the disposition is of a share of a class of stock that is regularly traded on an established securities market.

(7) Special rules for paragraphs (2) and (3). Paragraph (2) or (3) (as the case may be) shall not apply to any disposition -

(A) if -

(i) the transferee has actual knowledge that the affidavit referred to in such paragraph is false, or

(ii) the transferee receives a notice (as described in subsection (d)) from a transferor's agent or a transferee's agent that such affidavit is false, or

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Note: All Information and Previews are subject to the Disclaimer located on the main forms page, and also linked at the bottom of all search results.

North Dakota Non-Foreign Affidavit Under IRC 1445

Overview of this form

Form components explained

Related forms

Common use cases

Who should use this form

Steps to complete this form

Notarization requirements for this form

Get your form ready online

Mistakes to watch out for

Benefits of using this form online

Looking for another form?

Viewed forms

Form popularity

Explore more forms

Trusted and secure by over 3 million people of the world’s leading companies

North Dakota Non-Foreign Affidavit Under IRC 1445

Overview of this form

Form components explained

Related forms

Common use cases

Who should use this form

Steps to complete this form

Notarization requirements for this form

Get your form ready online

Related legal definitions

Mistakes to watch out for

Benefits of using this form online

Looking for another form?

Viewed forms

Form popularity

North Dakota Non-Foreign Affidavit Under IRC 1445 Related Searches

Explore more forms

Trusted and secure by over 3 million people of the world’s leading companies