Last year an escrow officer closed two sales where the sellers were foreigners, selling their properties to their children. The transactions each involved seller carryback financing.

The closer applied the state withholding rules to the FIRPTA Withholding and only withheld based on the down payment amount of $15,000 rather than the full sales price $475,000 for each home. The escrow officer advised the principals herself, rather than advising them to consult with a tax professional.

Post–closing, each buyer received a Notice of Intent to Levy their properties for the balance due $32,500 plus penalties. The sellers did not have the money to send to the IRS because they did not receive that much in proceeds.

The sellers looked to the escrow officer, who had advised them on how to complete the forms and how much needed to be remitted, to protect their daughters from having their homes and bank accounts levied. The escrow officer's escrow company had to pay more than $65,000 to protect the buyers from an IRS levy.