Bryan and Ingrid Zappulla thought they’d finally found their dream home in Florida. They were particularly thrilled with a hand-painted mural of a Parisian street that adorned one wall.
“This is the perfect house for my son,” Ingrid told 7 News Miami. The Zappullas bought the property for $790,000 in 2020 from two Russians who had built the home themselves.
However, a few months later, the Zappullas’ dream became a nightmare when the couple received a $30,000 fine from the IRS — a penalty they say they shouldn’t have to pay.
The fine is the result of the failure of the seller’s attorney to pay the required capital gain taxes on the home. According to 7 News Miami legal expert Howard Finkelstein, foreign nationals — like the Russian duo — who sell property in the U.S. are required to pay capital gains taxes.
Specifically, they must fill out an IRS form 8288 and pay 10% of the sale price within 45 days of the property sale.
However, Bryan was told that the attorney for the Russian pair had closed his office for nine months during the COVID-19 pandemic and, once he reopened, he finally submitted the outstanding $79,000 to the IRS. But by then, it was January 2021 — nine months past the due date.
“He just sat on it [during the pandemic],” Bryan said. “Maybe it was ignorance. Maybe it was COVID.” Either way, the IRS fined the Zappullas $30,000 in late payment penalties.
When Bryan contacted the IRS and told them that the Russians’ attorney was at fault, he was told by a representative that he was “‘the only one with an asset we [the IRS] can attach.’”
Although the attorney had also admitted his mistake to the Zappullas, Bryan was concerned about a “final balance reminder” sent out by the IRS, which included a “notice of intent to seize.”
Even though the mistake was made by the attorney for the Russian sellers, News 7 Miami lawyer Howard Finkelstein said IRS rules allow them to pursue the homebuyers for any outstanding balances.
“Legally, the attorney who was hired to pay the IRS is responsible for the fine,” he explained. “But Congress has created a lazy way to get the money by going after the buyer of the house… legally, the IRS can do this to Bryan, but it’s not the right thing to do.”
According to Finkelstein, this would force the couple to sue the attorney in order to get the $30,000 back that they now have to pay the IRS in late fees.
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It’s an unusual situation, but not a particularly uncommon one. According to the National Association of Realtors, foreign buyers purchased 1.3% of all existing homes sold between April 2023 and March 2024, totaling roughly 54,300 properties.
When those homeowners are ready to sell, the new sellers may find themselves in a similar situation to the Zappullas.
To help prevent running into similar issues with the IRS, buyers should work closely with a knowledgeable real estate attorney to confirm that all taxes are paid as required, especially when purchasing a home from foreign nationals.
Buyers should request proof that the necessary tax forms have been filed and the fees paid.
In this case, the Zappullas resolved the situation after contacting 7 News Miami, who then reached out to the attorney directly. Once reporters became involved, the attorney was more willing to cooperate and ultimately paid the overdue taxes to the IRS on behalf of the the couple.
Although Bryan and Ingrid’s $30,000 headache has been resolved, their situation serves as a warning about the complexities of real estate transactions involving foreign nationals.
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
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