Sales of real property by a foreign person (alien) within the United States are subject to the Foreign Investment in Real Property Tax Act (FIRPTA). 

As of January 1, 1985, sales of real property by a foreign person within the United States are subject to the Foreign Investment in Real Property Tax Act. In most cases, escrow is instructed to deliver the funds to the IRS and to make sure that the proper IRS procedures and documentation have been complied with.

If the buyer fails to withhold the FIRPTA tax from the seller’s sale proceeds, and if the seller does not pay the required taxes on time, the buyer may be liable for either the seller’s tax or a penalty equal to ten percent of the purchase price, plus interest and penalties, whichever is less.