Privacy Impact Assessment – Foreign Investment in Real Property Tax Act
FIRPTA System Overview:
Form 8288 and Form 8288-A is required to be filed by the buyer of a U.S. Real Property Interest (USRPI) from a foreign person or entity. Form 8288 is due to the IRS 20 days from the Date of Transfer. The production users mail a copy of Form 8288-A (stamped “copy B mailed”) to the foreign person or entity. The amount of tax required to be withheld and paid over by the buyer is 10% of the amount realized on the sale. If it is a foreign entity (Corporation, Partnership, Trust or Estate) recognizing a gain, then the buyer must pay 35% of the gain recognized. The transferor or transferee will use Form 8288-B to apply to the IRS for a reduction or elimination of withholding on the transfer of a USRPI. If the Withholding Certificate is approved, the IRS will issue one to the buyer and one to the foreign person or entity.
System of Records Number(s):
Treasury /IRS 22.027, Foreign Information System
Treasury /IRS 34.037, IRS Audit Trail and Security Records System
Treasury /IRS 42.027, Data on Taxpayers Filing on Foreign Holdings
Treasury/IRS 24.046 CADE Business Master File
Data in the System
1. Describe the information (data elements and fields) available in the system in the following categories:
A. Taxpayer
B. Employee
C. Audit Trail Information (including employee log-in info)
D. Other (Describe)
A. Form 8288 – Document Locator Number (DLN), Input Date, Name of Withholding Agent, Address, city, State, Zip Code, Identification Number, Penalty Codes, District Office, Status, Amount of Hours, Date of Transfer, Date Received, Due Date For Interest, Due Date For Penalty, Amount Realized on Transfer, Total Amount Withheld, Tax Paid, and Amount of Penalties. Form 8288-A – DLN, Date of Transfer, Withholding Agent, TIN, Identification Number, Date Copy B Mailed, Name of Person Subject to Withholding, Address, City, State, Zip Code, Country Code, Property Address, Federal Income Tax Withheld, Amount Realized on Transfer, Gain Recognized By Foreign Corp, Total Form 8288A, Total Amount of 8288, total Dollars 8288A, Tax Year, Debit Amount, Total Debit, Balance of Credits, and Remarks. Form 8288-B – File Control Number, Input Date, Received Date, Correspondence Date, Date of Transfer, Name of Transferor, TIN, Address, City, State, Zip Code, Name of Transferee, TIN, Address, City, State, Zip Code, Real Property Description, Users employee ID number, Users name, Users telephone numbers, Users Tour of Duty, Taxes paid button, return filed button, Amount Realized on Transfer, Tax to be withheld, Reduced withholding amount, Reason Code, Disposal Code, Date case closed, Date early refund processed, Date referred to LMSB, W/H Certificate number, Power of Attorney, Address, City, State, Zip Code, Withholding Certificate Letter selection,
B. The last five digits of the employee profile number.
C. The system the application resides on collects the employee log-in information.
D. The application does not contain data not collected from the taxpayer or the employee.
2. Describe/identify which data elements are obtained from files, databases, individuals, or any other sources.
A. IRS
B. Taxpayer
C. Employee
D. Other Federal Agencies (List agency)
E. State and Local Agencies (List agency)
F. Other third party sources (Describe)
A. The computed penalties and interest are obtained from the IRS.
B. All data elements except the computed penalties and interest and employee profile number and information is obtained from Forms filed by the taxpayer.
C. The employee profile number, Name, Tour of Duty, and telephone number are obtained from the employee.
D. No other Federal Agencies provide data for Form 8288/8288-A or 8288-B.
E. No State or Local Agencies provide data for Form 8288/8288-A or 8288-B.
F. No Other third party sources provide data for Form 8288/8288-A or 8288-B.
3. Is each data item required for the business purpose of the system? Explain.
The data items are taken from Forms 8288, 8288-A, 8288-B and Form 6335. All of the data items are necessary to process the Forms.
4. How will each data item be verified for accuracy, timeliness, and completeness?
The data items are manually entered into the FIRPTA database. There are several validation checks within the database for data verification. The tax examiner manually verifies each item for accuracy, timeliness, and completeness. In addition, individual quality review and PAS reviews are performed for accuracy, timeliness and completeness.
5. Is there another source for the data? Explain how that source is or is not used. No.
6. Generally, how will data be retrieved by the user?
The data is generally retrieved by DLN, File Control Number, TIN, Date of Transfer, Amount Realized, Property Description, or taxpayer name.
7. Is the data retrievable by a personal identifier such as name, SSN, or other unique identifier?
Yes, data is retrievable by Taxpayer Name and identification number. It is not retrievable by employee profile number.
Access to the Data
8. Who will have access to the data in the system (Users, Managers, System Administrators, Developers, Others)?
The Users, Manager, System/Database Administrator, and the Headquarters Tax Analyst will have access to the data in the system. Access is granted on a need to know requirement.
9. How is access to the data by a user determined and by whom?
Only User and managers, with a need to know, will gain access to the data. A Form 5081, Information System User Registration/Change Request is submitted, reviewed, and the user is added. A user’s access to the application is terminated when it is no longer required.
10. Do other IRS systems provide, receive, or share data in the system? If YES, list the system(s) and describe which data is shared. If NO, continue to Question 12.
Yes. Form 8288, and 8288-A data extracts are provided to the Enterprise Data Warehouse (EDW), and the Information Return Master File (IRMF) through File Transfer Protocol (FTP) using the Enterprise File Transfer Utility (EFTU).
11. Have the IRS systems described in Item 10 received an approved Security Certification and Privacy Impact Assessment? Yes.
12. Will other agencies provide, receive, or share data in any form with this system? No.
Administrative Controls of Data
13. What are the procedures for eliminating the data at the end of the retention period?
8288/8288-A - Destroy paper and electronic files 7 years after the end of the processing year.
8288-B - Destroy paper and electronic files 6 years after the case is closed.
See IRM 1.15.29, exhibit 1.15.29-1 Item No. 75 & 223.
14. Will this system use technology in a new way? If "YES" describe. If "NO" go to Question 15. No.
15. Will this system be used to identify or locate individuals or groups? If so, describe the business purpose for this capability.
The system will be used to identify or locate foreign persons or entities. The business purpose is to record the Buyer and Seller information regarding the dispositions of a United States real property interests (USRPI) by a foreign person or entity. The system is not used to identify or locate employees. The last five digits of the employees profile number are entered into the remarks field of the Form 8288-A screen, whereas, the employee contact information is entered by the employee in the 8288-B screen for correspondence purposes. The field cannot be searched and is not used for evaluative purposes.
16. Will this system provide the capability to monitor individuals or groups? If yes, describe the business purpose for this capability and the controls established to prevent unauthorized monitoring.
The system will be used to identify or locate foreign persons or entities. The business purpose is record the Buyer and Seller information regarding the dispositions of a United States real property interests (USRPI) by a foreign person or entity. The system is not used to identify or locate employees. The last five digits of the employees profile number are entered into the remarks field of the Form 8288-A screen, whereas, the employee contact information is entered by the employee in the 8288-B screen for correspondence purposes. The field cannot be searched and is not used for evaluative purposes. Access to FIRPTA is controlled by the System and Database Administrator. A new user must fill out Form 5081, Information System User registration/Change Request, to request access to the System. The System Administrator determines to which group and menu the user will have access.
UNAX training is also provided to inform users of the statutory rules governing and the IRS’ policy on unauthorized access and inspection of records by IRS employees.
17. Can use of the system allow IRS to treat taxpayers, employees, or others, differently? Explain.
All Forms 8288, 8288-A and 8288-B filed by a foreign person or entity are processed through FIRPTA. All taxpayers will be treated equally. The system is not used to identify or locate employees. The last five digits of the employees profile number are entered into the remarks field of the Form 8288-A screen, whereas, the employee contact information is entered by the employee in the 8288-B screen for correspondence purposes. The field cannot be searched and is not used for evaluative purposes. All employees will be treated equally.
18. Does the system ensure "due process" by allowing affected parties to respond to any negative determination, prior to final action?
The system cannot make determinations about taxpayers or employees. The system is not used to identify or locate employees. The last five digits of the employees profile number are entered into the remarks field of the Form 8288-A screen, whereas, the employee contact information is entered by the employee in the 8288-B screen for correspondence purposes. The field cannot be searched and is not used for evaluative purposes.
19. If the system is web-based, does it use persistent cookies or other tracking devices to identify web visitors?
The system is not web based.
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