What Happens If You File Your FIRPTA Return Late?
The deadline to file Form 1040-NR for non-resident sellers is generally June 15 of the year following the sale (or the next business day if June 15 falls on a weekend or holiday). Missing this deadline has different consequences depending on whether you owe tax or are owed a refund.
If You Are Owed a Refund (Most DVC Sellers)
If the FIRPTA withholding exceeded your actual tax — which is the typical situation for DVC sellers — filing late does not trigger a penalty. There is no penalty for filing late when you are owed a refund. However, the IRS pays interest on refunds only after a certain period, so filing late means you earn less interest on money the IRS was holding.
The critical deadline for refund claims is the three-year window. You must file your return within three years of the original due date to receive your refund. Miss this window and the refund is permanently forfeited. For a 2022 DVC sale (return due June 15, 2023), the three-year window closes June 15, 2026.
If You Owe Tax (Unusual for DVC Sellers)
In the rare case where your actual tax exceeds the withholding (this would mean you have a very large gain and your actual tax rate is higher than 15% of the sale price — almost impossible for a typical DVC sale), filing late triggers a failure-to-file penalty of 5% of the unpaid tax per month, capped at 25%. Interest also accrues on unpaid amounts from the original due date.
Extensions Are Available
Non-residents can request an extension to file their 1040-NR using Form 4868. An extension gives you an additional six months to file (until December 15). Note that an extension to file is not an extension to pay. If you owe tax, it is due by the original June 15 deadline regardless of whether you extend the filing deadline.
What If You Missed Previous Years?
If you sold DVC in a prior year and never filed, check whether you are still within the three-year refund window. If you are, file as soon as possible. See our guide on claiming late FIRPTA refunds for the specifics.
