Seller Financing - International Seller

[Ryan Pubins]

Hey Everyone, 

I know there are tons of posts regarding seller financing but I didn't see any that referenced FIRPTA (and yes I read the bigger pockets guide to seller financing). So heres my problem: 

I am in talks with a friend to buy her house using seller financing. She does not want to sell her house through conventional methods because she is a foreign individual and the Foreign Investment in Real Property Tax Act of 1980 (FIRPTA) will apply. Meaning that 10-15% of the sale will be withheld by the government until she files her 2019 tax return. 

I've educated her on all of the upsides of seller financing (for both parties) and we both want to move forward with the process. What neither of us has been able to figure out is how to identify what taxes she will owe on the interest income portion of the seller financing and who that income needs to be paid to (i.e. the IRS/foriegn tax collector). My thought is that she would file a tax return in the US every year in which I make payments to her (she has a SSN from when she worked here last year) and taxes will be collected that way. Does anyone have any experience with FIRPTA and/or Seller Financing? Any input would be greatly appreciated! 

-Ryan