Does the law always require withholding when the sellers do not qualify for any of the exemptions?
Yes, if the seller is not an exempt transferor or the sale is not an exempt transfer withholding is required. However, even if the seller does not meet an exemption, the calculation of withholding may still result in zero withholding. For example, if a property is highly leveraged (e.g., the debt on the property is equal to the sales price plus ordinary closing costs), withholding would be zero because net proceeds disbursed to the seller would be zero (Form WC, line 3).
