New IRS Enforcement Campaign to Stop Tax Violations by Nonresident Aliens Renting and Selling U.S. Real Property




In light of the IRS’s new “compliance campaign,” nonresident aliens and those involved with foreign owners of U.S. real property would be wise to contact experienced tax/legal professionals in order to explore the options for proactively rectifying any issues with the IRS on the most beneficial terms available.

The good news is that large numbers of foreign investors are injecting money into the U.S. economy by buying real property. The bad news is that many are not paying the correct amount of U.S. income taxes when they rent or sell such property. The IRS is hyper-aware of this problem and several others, thanks to three reports issued by the Treasury Inspector General for Tax Administration (“TIGTA”) over the past decade. the IRS, following its normal playbook, announced a “compliance campaign” in March 2020 designed to correct the situation.

This article begins by explaining the unique U.S. tax rules applicable to nonresident aliens (“NRAs”) renting U.S. real property, as well as those pertaining to sales of such property. After establishing that foundation, the article discusses the contents of the three TIGTA reports, focusing on the extent of the tax non-compliance and its causes. Next, the article provides more details about the IRS’s new compliance and related enforcement efforts. The article concludes by exploring various options potentially available to NRAs who want to approach the IRS proactively to resolve matters on the most favorable terms possible.

Read the full article here.

About Hale E. Sheppard

HALE E. SHEPPARD, Esq. (B.S., M.A., J.D., LL.M., LL.M.T.) is a Shareholder in the Tax Controversy Section of Chamberlain Hrdlicka and Chair of the International Tax Group.

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