Who is a “Foreign person”?

FIRPTA defines a “Foreign Person” by defining who is not a Foreign Person, so it is important to understand the following definitions:

1. A “Foreign Person” is defined as any person other than a “United States Person.”
2. A “United States Person” is any of the following:
   1. a U.S. Citizen
   2. a resident alien who has a Green Card
   3. a resident alien who meets the Substantial Presence Test
   4. a domestic (US) corporation, partnership or other legal entity (except a “Disregarded Entity” as defined by IRS Regulations), trustee or other fiduciary
   5. a Disregarded Entity, the owner of which qualifies as a “United States Person” under (i), (ii), (iii), or (iv), above
   6. a foreign entity which has elected to be treated as a domestic corporation (as evidenced by acknowledgement copy of election furnished by IRS).
3. The Substantial Presence Test: Under FIRPTA, a Foreign Person is considered a US Person for the calendar year of sale if they are present in the United States for at least:
   1. 31 days during year of sale and
   2. 183 days during the 3 year period that includes year of sale and the 2 years preceding year of sale, calculated as follows:
      • All days during year of sale;
      • 1/3rd of the days during the first preceding year; and
      • 1/6th of days during the second preceding year.

Notes:

When counting days, you may not include the days that a Foreign Person is present in the U.S. as a representative of a foreign government (e.g. foreign diplomat), as a teacher or student under a “J”, “Q”, “F” or “M” Visa, or as a professional athlete in a charitable sports event.

A “Disregarded Entity” is any single-owner domestic business entity (such as a single-member limited liability company) other than a corporation, unless it has elected to be treated as a domestic association for tax purposes.

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