The Office of Special Counsel has credited an IRS whistleblower for spurring an investigation that led to the agency strengthening oversight of tax filings tied to foreign ownership of U.S. real estate.

Under the Foreign Investment in Real Property Tax Act of 1980 (FIRPTA), when a foreign person sells a U.S. real property interest, the buyer generally must withhold tax, with exceptions including when the IRS issues a withholding certificate reducing or eliminating withholding, an announcement said. Those decisions are made at the IRS facility in Ogden, Utah, which took over responsibility from a facility in Cincinnati around 2010, it said.

The whistleblower alleged to the OSC that the IRS “assigned this work to tax examiners in Ogden without sufficient training or a functioning FIRPTA coordinator, contrary to the Internal Revenue Manual. The whistleblower also reported that, as of February 26, 2026, the team had 7,435 related filings awaiting processing and that its principal written guidance was a three-page job aid issued in 2014,” the OSC said.

The OSC referred the disclosure to the inspector general for the IRS, which “confirmed the operational gaps.” Those included that the agency had no formal training program for several types of FIRPTA-related work; that the examiners relied on informal instruction instead; that the backlog existed; and that the IRS lacked a system for tracking it. The IG further “could not determine whether required withholdings, penalties, or...

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