MODIFICATION OF RULES PERTAINING TO FIRPTA NONFOREIGN AFFIDAVITS.

SEC. 3024. MODIFICATION OF RULES PERTAINING TO FIRPTA NONFOREIGN AFFIDAVITS.(a) In General.—Subsection (b) of section 1445 (relating to exemptions) is amended by adding at the end the following:“(9) Alternative procedure for furnishing nonforeign affidavit.—For purposes of paragraphs (2) and (7)—“(A) In general.—Paragraph (2) shall be treated as applying to a transaction if, in connection with a disposition of a United States real property interest—“(i) the affidavit specified in paragraph (2) is furnished to a qualified substitute, and“(ii) the qualified substitute furnishes a statement to the transferee stating, under penalty of perjury, that the qualified substitute has such affidavit in his possession.“(B) Regulations.—The Secretary shall prescribe such regulations as may be necessary or appropriate to carry out this paragraph.”.(b) Qualified Substitute.—Subsection (f) of section 1445 (relating to definitions) is amended by adding at the end the following new paragraph:“(6) Qualified substitute.—The term ‘qualified substitute’ means, with respect to a disposition of a United States real property interest—“(A) the person (including any attorney or title company) responsible for closing the transaction, other than the transferor’s agent, and“(B) the transferee’s agent.”.(c) Exemption Not To Apply if Knowledge or Notice That Affidavit or Statement Is False.—(1) In general.—Paragraph (7) of section 1445(b) (relating to special rules for paragraphs (2) and (3)) is amended to read as follows:“(7) Special rules for paragraphs (2), (3), and (9).—Paragraph (2), (3), or (9) (as the case may be) shall not apply to any disposition—“(A) if—“(i) the transferee or qualified substitute has actual knowledge that the affidavit referred to in such paragraph, or the statement referred to in paragraph (9)(A)(ii), is false, or122 STAT. 2896“(ii) the transferee or qualified substitute receives a notice (as described in subsection (d)) from a transferor’s agent, transferee’s agent, or qualified substitute that such affidavit or statement is false, or“(B) if the Secretary by regulations requires the transferee or qualified substitute to furnish a copy of such affidavit or statement to the Secretary and the transferee or qualified substitute fails to furnish a copy of such affidavit or statement to the Secretary at such time and in such manner as required by such regulations.”.(2) Liability.—(A) Notice.—Paragraph (1) of section 1445(d) (relating to notice of false affidavit; foreign corporations) is amended to read as follows:“(1) Notice of false affidavit; foreign corporations.—If—“(A) the transferor furnishes the transferee or qualified substitute an affidavit described in paragraph (2) of subsection (b) or a domestic corporation furnishes the transferee an affidavit described in paragraph (3) of subsection (b), and“(B) in the case of—“(i) any transferor’s agent—“(I) such agent has actual knowledge that such affidavit is false, or“(II) in the case of an affidavit described in subsection (b)(2) furnished by a corporation, such corporation is a foreign corporation, or“(ii) any transferee’s agent or qualified substitute, such agent or substitute has actual knowledge that such affidavit is false,such agent or qualified substitute shall so notify the transferee at such time and in such manner as the Secretary shall require by regulations.”.(B) Failure to furnish notice.—Paragraph (2) of section 1445(d) (relating to failure to furnish notice) is amended to read as follows:“(2) Failure to furnish notice.—“(A) In general.—If any transferor’s agent, transferee’s agent, or qualified substitute is required by paragraph (1) to furnish notice, but fails to furnish such notice at such time or times and in such manner as may be required by regulations, such agent or substitute shall have the same duty to deduct and withhold that the transferee would have had if such agent or substitute had complied with paragraph (1).“(B) Liability limited to amount of compensation.—An agent’s or substitute’s liability under subparagraph (A) shall be limited to the amount of compensation the agent or substitute derives from the transaction.”.(C) Conforming amendment.—The heading for section 1445(d) is amended by striking “or Transferee’s Agents” and inserting “, Transferee’s Agents, or Qualified Substitutes”.(d) Effective Date.—The amendments made by this section shall apply to dispositions of United States real property interests after the date of the enactment of this Act.122 STAT. 2897