I have recently purchased a house in the U.S. for ~$375,000 (and I'm a U.S. citizen). It was disclosed to me about a week before closing that the sellers were from China. Aside from a few headaches, the sale went through and I've now owned the house about a month.
The other day, I got a letter from the IRS stating that the sellers had filled out Form 8288-B and that the withholding amount had been reduced to ~$10,000. It then said something about being required to fill out From 8288 and 8288-A involving "withholding tax for dispositions by foreign persons".
What are these forms? Why do I have to withhold tax?
Should this have been disclosed to me by my attorney/real estate agent?