Sellers concerned with identity theft are often reluctant to disclose this information to potential buyers.

A seller who is concerned with identity theft may be tempted to refuse to include their social security number on the Foreign Investment in Real Property Tax Act (FIRPTA) form. This information is requested on the Seller’s Affidavit of Nonforeign Status and/or California Withholding Exemption form. What happens if they refuse to provide this information?

Internal Revenue Code § 1445(b)(2) provides that in order for the buyer to be exempt from the withholding requirement, the seller must provide to the buyer "an affidavit by the transferor [seller] stating, under penalty of perjury, the transferor’s United States taxpayer identification number and that the transferor is not a foreign person."

If your seller withholds their social security number (and other relevant information on the form), the buyer is obligated by Internal Revenue Code § 1445(a) to withhold 10% of the purchase price. There’s a similar requirement under California law, although the withholding amount is 3.33% of the purchase price.

Source: California Association of Realtors

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