For those of you in the public, Realtors have an annual requirement for licensing in Michigan. This requirement is 6 hours per year of continuing education. 
Here is something that is an obscure IRS Act that most people have no idea is on the books. What would you say if I told you there is something called an Affidavit of Non foreign Status.
Then what would you say if I told you it was created because the IRS was concerned about nonresident aliens who purchase properties in the United States, resells them without paying capital gains on the profits. All that sounds reasonable but wait until you hear the rest of this story.
- The rule referred to as "FIRPTA" requires the buyer to confirm whether the seller is a nonresident alien!
- The rule also requires the buyer to withhold 10% of the purchase price and pay it to the IRS if the buyer confirms that the seller is a nonresident alien. Oh there is more!
- The rule also makes the buyer responsible for paying the seller's capital gains taxes if the seller doesn't and the buyer failed to confirm whether the seller is a nonresident alien.
Many brokers and agents do not know this Foreign Investment in Real Property Tax Act (FIRPTA) even exists. Now here is a little news flash to get you up to date. How long do you think this has been on the books? Would you believe since 1985?
Here is the kicker...you have to use a form called the "Affidavit of Non foreign Status". Now try and find that form.
How can a buyer protect themselves and the real estate broker? One disclose this tax act to your buyers. Two, make sure you use the form at every closing and get a copy put in the closing file. Make this part of your closing documents requirements. If the Tax Act is on the books it could be enforced and your client could be charged this tax if the seller is a foreign alien and does not pay the capital gains. Then guess who your seller is going to ask to pay since you didn't tell them about this act? Yup....YOU!
Here is how to protect buyers. Use an affidavit to provide evidence that the seller is a US citizen, a 
resident alien in possession of a green card, or a foreign corporation that's registered as a domestic corporation; or prove that he or she has purchased the property as a personal residence, and the purchase price is $300,000 or less. It should be noted that the $300,000 limit has also been in effect since 1985!
There are many issues with this IRS act, identity theft is one of them. But you should look into this Tax Act and protect your clients and yourself.
Just thought you should know what is lurking in the wings that could be enforced on you and your client.
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