Important Update: FIRPTA Payment Requirements Changing September 30, 2025

Starting September 30, 2025, the IRS will require all payments under the Foreign Investment in Real Property Tax Act (FIRPTA) to be made electronically. Paper checks will no longer be accepted.

What is FIRPTA?

When a foreign person sells U.S. real estate, FIRPTA requires the buyer to withhold 15% of the sale price and send it to the IRS within 20 days of closing. This ensures taxes are paid on gains from U.S. property sales by non-resident sellers.

What’s Changing?

Under a new federal mandate, all FIRPTA payments must be submitted electronically through the IRS’s Electronic Federal Tax Payment System (EFTPS). Buyers who don’t comply may face automatic penalties, interest, and delayed processing.

What This Means for Buyers

• Buyers are responsible: The buyer must withhold and pay FIRPTA taxes — not the title company or realtor.
• EFTPS required: Buyers will need to create an EFTPS account in advance. This process can take time and requires a tax identification number.
• No more paper checks: Mailing a check after September 30, 2025 will not satisfy the IRS requirement and will trigger penalties.

What This Means for Sellers

• Foreign sellers still receive credit for taxes withheld, but only if the buyer properly submits the payment.
• Sellers may want to work with tax professionals to ensure compliance and speed up refunds.
• In some cases, buyers and sellers can agree on cost-sharing for professional assistance to avoid delays or errors.

How We Can Help

Our team at Vested Land Services LLC is here to provide information and connect you with experienced FIRPTA tax professionals. We encourage buyers and sellers to start planning early — especially if foreign ownership is involved — to ensure a smooth, penalty-free closing.

Stephen M. Flatow, Counsel

Vested Land Services LLC is a family owned and operated title agency in New Jersey representing Old Republic National Title Insurance Co., CATIC Title Insurance Company, and WFG National Title Insurance Co.  We service the residential and commercial real estate markets in New Jersey. Headquartered in Fairfield, New Jersey, the office handles transactions throughout the state.  We bring more than 50 years of experience in the title insurance industry to the table and have seen it all.  Give us a call, we can help.