An escrow company in Las Vegas sent in a timely FIRPTA withholding payment, along with forms 8288 and 8288–A (copies A and B) as completed by the buyer. Because the Internal Revenue Service (IRS) separates the checks from the forms upon receipt, it has been a long–standing Company policy the seller or buyer's taxpayer identification number (TIN) be written on the face of the cashier's check, so that proper credit is applied. In this instance, the escrow officer failed to write the TIN and instead wrote the seller's nickname on the face of the check.

Lo and behold, seven months after closing when the IRS got around to processing the Forms 8288 and 8288–A, the buyer (as the withholding agent) received a penalty notice for failure to pay, since no payment was credited to either the buyer or seller's TIN.

The buyer of the property was a large investor with many properties who did a lot of business with the escrow company. Notice the word "did." They were furious when they received the penalty notice and demanded the escrow company contact the IRS, to prove timely payment of the withholding and pay any penalties.

The office contacted the bank to obtain a copy of the front and back of the cashier's check to send to the IRS as proof of timely payment. The IRS stamps the TIN where the payment is applied on the backside of the check.

Unfortunately, the bank could only render an illegible copy of the back of the check, so it did not help in tracking down where the TIN payment was applied. The escrow company had no choice but to file a loss and pay the withholding amount again to the IRS along with the outstanding penalties, since they could not prove payment and how it was applied.