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Fidelity National Title Insurance Company. SETTLEMENT. Odds and Ends. Federal Reporting/Withholding Requirements. Cash payments over $10,000 Real Estate Reporting Sales of U.S. Real Estate by Foreigners Agricultural Foreign Investment Disclosure Act .

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SETTLEMENT

Odds and Ends


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Federal Reporting/Withholding Requirements

  • Cash payments over $10,000

  • Real Estate Reporting

  • Sales of U.S. Real Estate by Foreigners

  • Agricultural Foreign Investment Disclosure Act


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Always obtain the most current IRS forms at www.irs.gov. Submitting outdated forms can result in rejection of report or withholding.


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Reporting Cash Payments

  • > $10,000 in cash

  • One transaction, or 2 or more related transactions

  • IRS Form 8300


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Filing requirement

  • File IRS Form 8300

  • By the 15th day after the date the cash transaction occurs

  • Civil and CRIMINAL penalties for failure to file


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Real Estate Reporting—1099S

  • Sellers of real property are required to have their gross proceeds from the sale reported on IRS Form 1099S.

  • When a settlement agent is used, the IRS makes this person responsible for delivery of the information on Form 1099S.


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1099S Information

The information is collected by the settlement agent, and transferred to the appropriate media for reporting to the IRS:

● name, address and taxpayer ID of seller(s)

● general description of property (address)

● closing date of transaction

● Gross proceeds of the transaction

● any property involved other than cash

● name, address and ID of settlement agent


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1099S Covered Transactions

  • Improved or unimproved land, including airspace

  • Inherently permanent structures, including any residential, commercial or industrial building

  • Sales and exchanges of any interest

  • Includes houses and condos

  • Includes stock in a cooperative housing corporation

  • Includes fee simple, life estate, reversion, remainder, and leaseholds with remaining term of at least 30 years


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1099S Excluded transactions

  • Foreclosures, deeds in lieu or abandonments

  • Gifts, bequests

  • De minimus transfers (<$600)

  • Refinances

  • Qualifying sale or exchange of principal residence

  • Transaction where transferor is corporation

  • Exempt volume transferors (>25)



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F.I.R.P.T.A. – Foreign Investment in Real Property Tax Act

  • Withholding obligation on the buyer or other transferee (withholding agent) when a U.S. real property interest is acquired from a foreign person

  • Withholding agent must withhold 10% of gross amount paid


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You’re not a withholding agent if you Actonly perform one or more of the following acts:

  • Receipt or disbursement of consideration

  • Recording of any document

  • Typing, copying or clerical tasks

  • Obtaining title insurance reports or property condition reports

  • Transmitting documents between parties


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Definition of Foreign Persons Act

  • A nonresident alien

  • Neither a U.S. citizen nor a U.S. resident

  • To qualify as U.S. resident, generally:

    • Has a green card, or

    • Is physically present in the U.S. for 183 days or more during the current calendar year


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“Green Card” Act

The U.S. Permanent Resident Card


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IRS Form 8288 Act

When a non-U.S. person sells U.S. real estate, the IRS requires that 10% of the gross sales price be withheld at closing and remitted as an estimated tax payment on behalf of the foreign seller.


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Exceptions to withholding: Act

  • Seller is not a foreign person

  • Seller obtains a qualifying statement (a withholding certificate) from the IRS

  • Purchaser intends to use real property a a residence and purchase price is not more than $300,000


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Common misconceptions Act

  • “Foreign seller has a U.S. tax ID number or has applied for one” – the 10% withholding applies!

  • “Foreign person is selling at a loss” – the 10% withholding applies!

  • “Foreign seller files U.S. nonresident income tax returns each year” – the 10% withholding applies!

  • “1031 exchanges” – the 10% withholding applies


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FSA-153 Act

The Agricultural Foreign Investment Disclosure Act Report


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  • All foreign owner of U.S. agricultural land must report their holdings to the Secretary of Agriculture.

  • Program is administered by the Farm Service Agency

  • Report must be made within 90 days of closing

  • FSA asks that settlement agents notify foreign investors of these requirements


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State Reporting Requirements their holdings to the Secretary of Agriculture.

Virginia Department of Taxation

Nonresident Property Owners

• Nonresident Real Property Owner Registration (Form R-5)

  • Exemption certificate (Form R-5E)

  • Shareholder/partner schedule (Form R-5P)


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R-5 requirements: their holdings to the Secretary of Agriculture.

  • Form must be filed by real estate reporting persons on all nonresident seller closings

  • If client doesn’t complete, you must complete on client’s behalf

  • Must be filed by the 15th of the month following the month in which closing occurred

  • Nonresident payees include individual nonresidents, corporations not organized in Virginia, estates and trusts administered outside of Virginia, partnerships, limited liability corporations and S-corporations with nonresident partners or shareholders


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Exemptions their holdings to the Secretary of Agriculture.

  • Sales exempt from federal and state income tax are also exempt from registration—exemption certificate required

  • Principal residence up to $250,000 gain

  • Like-kind exchanges

  • Tax-free gifts or inheritances

  • Tax-free contribution for partnership interest

  • Transfer of property pursuant to tax-free corporate reorganization


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State Reporting Requirements their holdings to the Secretary of Agriculture.

West Virginia Department of Tax and Revenue

Nonresident Real Property Owner

Withholding Tax

WVC Section 11-21-71b


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Requirements: their holdings to the Secretary of Agriculture.

  • Effective January 1, 2008

  • “Real estate reporting person” must withhold 2.5% of net proceeds of sale paid to a nonresident individual or entity (or 6.5% of estimated capital gain)

  • Must be paid to Tax Commissioner within 30 days

  • “Real estate reporting person” is person responsible for closing the transaction (including attorney or title company)


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Exemptions: their holdings to the Secretary of Agriculture.

  • No withholding is required if:

    • Transfer pursuant to foreclosure or deed in lieu of foreclosure

    • Transferor is US, the state, or a unit or political subdivision of the state

    • Certification that property is transferor’s principal residence (certification in deed or recorded affidavit required)

    • Consideration is zero


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Odds and Ends their holdings to the Secretary of Agriculture.


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SDN their holdings to the Secretary of Agriculture.

  • Specifically Designated Nationals (SDN) List, maintained by the United States Department of the Treasury at http://www.treasury.gov/offices/enforcement/lists/

  • Last updated November 5, 2007 (updated frequently, often weekly)

  • FINRA search engine link on our webpage at www.fidelitymidatlantic.com in the Underwriting Tab under Patriot Act searches

  • Affiliates of Fidelity National Financial, FNF’s direct operations and EC Purchasing members can use the SDS Patriot Search at a discount- $2.00/name at www.patriot-search.com


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SDN – Patriot Act – Terrorist Act Search their holdings to the Secretary of Agriculture.

  • IT IS THE RESPONSIBILITY OF EVERY SETTLEMENT AGENT TO CHECK THE SDN LIST FOR THE PARTIES INVOLVED IN THEIR TRANSACTION.

  • If you find a name which matches up on the list, you should follow the OFAC checklist, and contact the hotline at 1-800-540-6322


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GOOD FUNDS their holdings to the Secretary of Agriculture.

  • Reminder: Do not record or release any funds or wires until you have confirmed funds in your account.


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Real Estate Fraud their holdings to the Secretary of Agriculture.

  • IRS Criminal Investigations:

    • Property flipping

    • Two sets of settlement statements

    • Fraudulent qualifications


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JUDGMENT AFFIDAVITS their holdings to the Secretary of Agriculture.

  • What is “due diligence”?

  • When do you accept a judgment affidavit without further inquiry?

    When in doubt, call local counsel for approval!


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Bankruptcy Court Records their holdings to the Secretary of Agriculture.

PACER SYSTEM

http://pacer.psc.uscourts.gov


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FAMA SEMPER VIVAT their holdings to the Secretary of Agriculture.


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Society of Combat Counsel their holdings to the Secretary of Agriculture. Eligibility Requirements

  • Must have litigated a neighbor dispute.

  • Must never have been adverse to Fidelity.

  • Must pass a secret ballot.

  • Can’t be a bad person,

    AND………..


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5. WE HAVE TO LIKE YOU their holdings to the Secretary of Agriculture.