Friday, 12 July 2024

Thompson aims to protect real estate sellers from ID theft

WASHINGTON On Wednesday, an amendment authored by Rep. Mike Thompson (D-CA) to protect real estate sellers from identity theft was adopted by the Ways and Means Committee.

Thompson's provision changes the tax code to better protect people's Taxpayer Identification Numbers (TIN) or Social Security Numbers (SSN) during real estate transactions.

The National Association of Realtors has endorsed this critical change to the tax code.

"Privacy has become a growing concern for people involved in real estate transactions," said Thompson. "The current law gives too many people access to sellers' personal information. This change makes sure that information is protected."

Thompson's amendment updates the Foreign Investment in Real Property Tax Act (FIRPTA), a tax law enacted long before identity theft was a prevalent problem.

FIRPTA places sales of U.S. property under heightened scrutiny if the seller is from overseas, to ensure sellers pay all appropriate taxes to the U.S. government.

U.S. sellers can avoid this additional scrutiny by providing the buyer with their SSN or TIN. Fears of identity theft are making sellers reluctant to provide this personal information, causing transactions to fall apart or buyers to assume liability should the seller fail to pay certain taxes.

"Mr. Thompson has shown great leadership on an issue of growing importance," said Linda Goold, Tax Counsel of National Association of Realtors.

"The National Association of Realtors has identified transactions in different parts of the country where sellers have canceled the sale of their property simply because they don't want to give their Social Security number to a stranger,” said Goold. “Everyone wins under Mr. Thompson's proposal. It assures that the IRS will continue to receive important information, that seller's privacy is protected and buyers are not at risk of losing the opportunity to purchase a home solely because of a seller's legitimate privacy concerns."

"Congressman Thompson's amendment is the FIRPTA fix that's needed to help protect home sellers from concerns about identity theft," said Colleen Badagliacco, President of California Association of Realtors. "By enabling settlement providers to securely collect the information, this amendment also effectively protects home buyers from being held liable for someone else's due on sale taxes."

Ted Loring Jr., President of Consolidated Management, a Eureka, California-based property management company, said ID theft concerns have become so serious that some sellers won't provide a tax identification or Social Security number to the buyer.

"That leaves the buyer on the hook, liable for any taxes due on the sale that haven't been collected from the seller,” Loring explained. “Allowing the seller to give his or her tax id to a trusted party, like the escrow company, takes everyone off the hook. The seller's identify is protected; and the buyer doesn't run the risk of being billed for someone else's tax liability."

"This is an important solution to a big problem that affects people nationwide," said Thompson. "We were debating a bill to better protect taxpayers from fraudulent and predatory behavior, and my amendment was a perfect addition. Congress is a key player in the fight against identity theft, and today we expanded the tools taxpayers can use to protect themselves."

Thompson's amendment was included by the Ways and Means Committee in the Taxpayer Protection Act, HR 1677.


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