Posts by casualorca5

Zachary White17 said:I wonder if the service amount from a USA carrier counts toward both tax liability and input tax simultaneously, or if it just hits the liability side. In other words, are we actually exempt from Sales Tax on services provided by USA carriers?

Also, what exactly does "Value of goods delivered under procedures 42 and 63" mean?

The American business should calculate the Sales Tax (B2B), though they don't actually pay it; instead, they report the liability and the input credit on their tax return (this applies when a US carrier transports goods for an American business).

Brandon Anderson10 said:One more thing—maybe I’m overthinking this, but I wanted to touch on how shipping works when you're acquiring goods within the USA.

Here’s my take on how the math flows: say a taxpayer in Germany ships some goods to another taxpayer here in the States. They get an invoice for the goods, calculate the sales tax, and report it as both a liability and an input credit on their tax return. On top of that, they have to file the necessary acquisition tax reports with all the specific details included.

Then, for that exact same shipment, they get a bill from a foreign carrier. That’s a separate line item where we look at taxable services and the place of taxation. According to the law, since the service is provided to a domestic taxpayer, the place of taxation is based on the recipient's business headquarters. This means we’d need to calculate the sales tax ourselves and report it on the tax returns and the aggregate filings. In this scenario, a local US carrier would probably just list the tax amount directly on the invoice, but with a foreign one, we have to handle the calculation and reporting on every single filing... And then the IRS just runs checks against whatever database they use?????

Is that basically how the process plays out? 😉

A carrier from DC, say Vienna-Prague, doesn't charge Sales Tax (B2B).
The American taxpayer calculates the Sales Tax.

An American carrier transports goods for an Austrian taxpayer, say Chicago-Vienna; the American taxpayer doesn't charge Sales Tax (B2B).

An American taxpayer transports goods for an American taxpayer: the carrier charges Sales Tax.
Transport during export = exempt under Section 45 of the Law.
These are just my notes from a seminar; I suppose it takes time for it all to click. 🙄

Douglas Nguyen30 said:Reporting acquisitions on the VAT return
When acquiring goods within the European Union, the taxable person reports the assessed VAT on the acquisition on their VAT return, but they also report the right to deduct that same tax in the same filing. This means there is NO physical cash payment required for the VAT.

Example:
A business in the European Union supplies goods to a domestic business for $10,000.00.
The European entity issues an invoice but does not charge VAT—as it is a supply to a US business.
The US business calculates the VAT on the goods purchased from the European entity and simultaneously uses that calculated VAT as an input credit.
Consequently, the US business will not physically pay any VAT on the acquisition of goods from the European supplier.

$10,000.00 x the Federal Reserve exchange rate on the date of acquisition (e.g., 1.25)
x 25%
= $12,500.00 x 25% = $3,125.00 VAT

Accounting entries:
Accounts Payable - Vendor (Credit)
Inventory (Debit)
VAT Payable on Acquisition - Liability (Credit)
Input VAT on Acquisition - Credit (Debit)

Maybe there's also a shipping invoice to consider. I suppose that needs separate handling regarding sales tax, depending on whether the carrier is domestic or from overseas?😕

Richard Howard55 said:Article 79 lists everything required for an invoice under the sales tax law.
If the law allows it, you can claim the credit.
In paragraph 12 of that same article, they added another type of receipt (which the IRS website says also works for credits) called a "simplified invoice." The difference here is that prices are shown inclusive of sales tax (like a price tag in a shop), rather than the "standard" way where you list the item price, then the tax, then the total at the bottom.
Now, here is the catch: that "simplified" invoice cannot exceed $233. I have no clue if that's 700.00 including tax or before tax, because the law just says... "for deliveries of goods or services..." (what exactly counts as a delivery in this context? Honestly, I don't feel like digging that up, I'd rather $233 and call it a day).
And that’s where this whole wholesale headache starts, since those follow the full requirements for a "proper" invoice.
I suspect retailers are being told things have become "complicated," and everyone will just have to figure out their own way to deal with it (probably by praying the software developers come up with something to get us out of this mess).
There. I tried to explain. Maybe it helps, maybe not....

Also, could someone explain which boxes on the sales tax form should be used for shipments to the USA (or even other countries), assuming I have proof they are tax-exempt and I still need to account for "domestic" sales tax?

Check Section 175 of the Regulations; that should go under subsection II.3. They lumped everything together there, even the 22% and 23% shipments.

ruggedmaker2 said:Can you walk me through this whole dollar thing?
I remember calling the IRS back in the day to ask if everything had to be in USD, and they basically told me it wasn't strictly required by law. Now I'm just sitting here totally confused. 😕

At the IRS seminar, Markota mentioned that EU delivery invoices have to be in USD, though maybe another currency works too??? According to Article 81 of the Internal Revenue Code. We were all pretty exhausted by then, so nobody really felt like arguing about it. 🙂

Hello everyone,
I will share some personal experiences;
after reviewing the law and the regulation : article 185., and waiting on our developers, we finally shipped goods to the European Union yesterday. How? Quite simply, using a delivery note and a CMR. I'll send the invoice once we receive the updated versions from our pupils. The goods have arrived, and the delivery notes and CMRs are confirmed.