Posts by ruggedmaker2

Christian Cruz41 said:Anyone dealt with something like this before?

Check this out—it might actually answer your first question:
http://www.irs.gov/VAT-rules/...QPDVZakon.aspx

Nicole Lee6 said:I don't handle physical exports, but I do bill transportation services to third countries. At an accounting seminar, they told us to include the exact same notation as if the service were going to another state—specifically, noting the transfer of tax liability under Section 17, Paragraph 1. Since we aren't collecting sales tax ourselves, the note goes on there; whether those people over there end up paying tax or how they handle it with their local authorities isn't our concern.🤷

To me, it sounds perfectly logical that those invoices fall under reverse charge too. Section 79, which I mentioned earlier, doesn't say this is strictly for USA member states; it just mentions the recipient is responsible for the tax.🤷

Anyway, to wrap this up 😁: screw reverse charge.🙂

By the time someone finally explains this to us in plain English, we'll be old and gray.☕

I’m honestly stuck on whether we need to use "reverse charge" for exports or not.
According to Section 79 of the Tax Code:
(7) If the recipient of goods or services is responsible for paying the sales tax, the supplier has to include the phrase "tax liability shift" or the English term "reverse charge" on the invoice.

At my company, we don't really deal with exports since we only work with other US states, so I haven't gone down the rabbit hole of researching this further. I'm just praying someone actually bothered to call their consultants at the IRS to get some real answers.

I'll eventually have to comb through the tax code and all those federal regulations again, but up until now, I've mostly just focused on our internal company stuff. Honestly, trying to wrap my head around everything else right now is just way too much.

Patrick Peterson49 said:ruggedmaker2, what do you think about this... do I charge tax or not when dealing with Americans? 🤷
Oh, one more thing... while doing this work, I run into expenses—travel, phone bills, gas, translations, copies, etc.—which I then invoice back to the US and other places. Should those be taxed too, or would that just count as part of the service under that B2B rule? Personally, I'm thinking no tax should be added, it should just follow the service line...

First off, you really need to pin down exactly what kind of service you're actually performing. It’s a totally different ballgame whether you’re doing real estate consulting, legal representation, or IT work—plus, some services are exempt from tax altogether. You’ve got to dig into the tax code and the regulations to see where the "place of taxation" actually falls for your specific situation.

Take a look at Article 41 of the regulations; it breaks down what gets added to the tax base for goods or services. Check that out specifically based on what you're actually invoicing them for.

If they’re legitimate businesses, I’m pretty sure you can skip the sales tax using the reverse charge method. They’ll handle the tax on their end over there.
If you’re doing this constantly and pulling in decent money, my advice? Don't play games. Get a formal written opinion from the Internal Revenue Service in Washington, D.C. so you can sleep at night knowing you're 100% covered.
Just grab the statement they sent you, draft a quick letter, and mail an inquiry to their office at 1600 Pennsylvania Avenue NW. Word is, they get back to you pretty fast.

If they’re considered a business taxpayer in America, then yeah, absolutely.
But you can't just take their word for it—you actually need to grab a certificate or some kind of paper trail to prove it. I think we touched on this somewhere else in this thread, so maybe scroll back and give it a look.

Look, whenever you’re sending out an invoice, you have to know exactly what the tax status of your client is, and you better have the proof to show for it if anyone comes knocking. If you're dealing with someone from the European Union, you verify them through a Viasat lookup, but if they're coming from outside the EU, the burden is on them to hand over documentation proving their status.
I'm talking about B2B scenarios here, obviously. 🙂
When you're dealing with a regular individual? Man, that's a whole different ballgame.

Patrick Peterson49 said:where did you guys find that? Like an article or something... totally missed it myself...

Look, under the old IRS regulations, Article 133 was pretty clear:
2) In addition to the requirements in paragraph 1 of this article, when taxing based on collected fees (Article 17, paragraph 3 of the Code), the condition must also be met that the invoice used to claim the input tax credit has actually been paid.

But in the updated tax code, they just scrubbed that whole rule. Now, among other things, it just says:
"(1) The taxpayer is entitled to an input tax credit in the accounting period during which the good was received or the service was performed, provided an invoice containing all data required by Article 79 of the Code has been received."

Christian Cruz41 said:If I'm reading this right, starting July 1st, will corporations be able to claim those prepayments on the R-2 forms immediately?

You nailed it. Spot on. 👍

I finally tracked it down.
After I nearly lost my mind searching for it, I just called one of those toll-free customer service lines. Some super polite lady on the other end walked me through everything and gave me the physical address for the main office in Washington, D.C.
She basically told me not even to bother trying through the IRS website—if you go that route, you’ll be waiting forever. Those guys move at a snail's pace.

So, I'm doing it the old-school way: sending a certified letter with return receipt requested straight to the headquarters in Washington, D.C., and calling it a day. Now, I just have to sit around and wait for them to actually reply. 😁

Hey 🙂

Got a quick one for you guys before I go cluttering up the main boards. Figured this was the place to ask.
So, what’s the deal with getting an official ruling from the IRS on a specific issue?
Basically, if I just fire off an email with my question, can I actually get them to give me a formal answer? I need something in writing so I have a paper trail to fall back on later.

Richard Howard55 said:Go ahead and take a breather, then maybe write up a few thoughts about that seminar. You had some pretty interesting examples, and I guess I’d actually be curious to see how that all works out. 🙂

Basically, I spent most of my time obsessing over real estate projects located in another country.
Long story short: if we're acting as subcontractors and billing a company that actually registered for VAT in that other country, we just use the reverse charge mechanism. But, if we're billing a company that *hasn't* registered there, then the responsibility falls on us to register and pay their local tax if their laws demand it. So, yeah—register over there and cough up their VAT.
The big takeaway from the seminar was that this isn't a universal rule. It’s not the same everywhere. You really have to dig into the specific laws of every single country you deal with.

At the end of the day, it all comes down to what the local statutes say. But honestly? I am not about to start digging through foreign lawbooks or calling up some IRS-equivalent overseas just to annoy their tax authorities until I have every single contract detail in front of me. There’s zero point in asking questions now when the job itself isn't even fully defined yet. As long as I have the general idea, I'm good.

I actually had this nagging doubt about a small business owner from another country who wasn't registered for VAT, but the seminar cleared that right up. Turns out, that guy actually started his registration process today. So now, since he's officially in the system, we're looking at a reverse charge situation where I handle both the liability and the input tax credit. 👍

One thing that totally slipped my mind—and I wasn't even paying attention to it before—is the fact that now, as corporate taxpayers, we can claim our input tax credits as soon as we get the invoice. We don't have to wait until the check actually clears.
That is a massive win for us, especially since some clients love to drag their feet and give us 60-day terms. 🙂

So, I finally knocked out that seminar on Friday, and it actually helped me clear up some headaches regarding two specific situations I've been stuck on.
It was mostly just hitting those fundamentals we always talk about here. My next session is strictly focused on sales tax forms, VAT-style filings, and the consolidated returns in two weeks. Hopefully, it all sticks by then—I'm also banking on our developer to build out a custom fix for us.

To be honest, I didn't waste my time on the fluff; I focused almost entirely on the actual scenarios we deal with at my firm. The rest of the theory? I'll pick that up as I go.

Things are a bit chaotic right now since I’m juggling payroll on top of everything else. Trying to run two different tracks at once is exhausting, but hey, what can you do?

Nicole Lee6 said:I’m feeling a bit lost in the weeds with this conversion stuff; everything feels like a total blur right now. "If the elements used to determine the tax base—excluding imported goods—are determined in a foreign currency, the mid-market exchange rate from the Federal Reserve on the date the VAT liability arises shall be used ."

What does that actually mean in practice? For instance, if I have an invoice from an overseas partner who is transferring the tax liability to us, and let's say the invoice is dated July 20th, 2013.
When exactly does the VAT liability arise? Which mid-market rate am I supposed to use: the one from July 20th, the one from July 31st, or the one from August 20th when the actual VAT return is due? 🤷

Just use the rate from the date on the invoice. So, in this case, July 20th. Your business partner is going to report it using that date on their monthly filing, so you need to stay in sync and use that same date for yours.
The latest IRS publication has a specific table that clears up all these headaches regarding when tax liabilities kick in for goods and services within the European Union.

I honestly don't get why they told me at Fannie Mae that I didn't have to. Look, I just put the sales tax in dollars, but now I’m going to end up having everything mixed between dollars and euros.

Thanks!
🙂

stormygardener44 said:We just got word from the Democratic Party that all invoices need to be reported in USD (for domestic and international transactions). Do we need to include the specific exchange rate used to convert the currency into dollars on the invoice itself?

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. 😕

It’s tough to give you a concrete example of what an invoice looks like because everything depends on who’s sending it—whether it’s some massive corporation, a small local contractor, or just some guy running a side hustle—and what they’re actually billing for, like goods versus services or whatever margins are involved.
On top of that, federal regulations dictate the bare minimum requirements for an invoice, but beyond that, you can pretty much toss in whatever extra details you need based on how you run your business or what you've hashed out with your partners.
For our shipments to other distribution centers, we go way overboard and include a ton of stuff the law doesn't even require. We’ll throw in the contract or purchase order number, product codes from our internal database, draft numbers, the full delivery address down to the specific warehouse unit, item counts, net and gross weights in pounds, tax IDs, and all that good stuff.

At the end of the day, you can tailor your invoices however you want, as long as you hit those basic legal requirements.

jadenomad24 said:Did I get this right?

Yeah, 🙂

I’m still a little fuzzy on the whole VAT form situation since I haven't sat down to dig through the fine print yet. No rush, though—the deadline isn't breathing down my neck just yet.

Just don't forget, besides all the specific requirements for invoices laid out in the Value-added tax law, you’ve gotta make sure you're hitting everything else required by other federal regulations too.

On top of that, you need solid proof that you're actually shipping to a business entity and that the goods have officially crossed into another VAT zone.
Basically, on the day of delivery, just print out a verification from the relevant database for that customer, stash it in your files along with the invoice, and attach all the paperwork—like a signed delivery receipt or whatever else counts as official documentation.

Nicole Lee6 said:Look, I was just venting to some colleagues in my industry—we handle both B2B and B2C services—and honestly, nobody has any intention of changing a single thing. They’re going to keep billing everyone exactly the same way they always have, whether it's local clients, people from other countries, or folks within the European Union. Everything stays subject to VAT, and there’s absolutely no plan to implement a reverse charge mechanism for B2B transactions. When I brought this up, they just stared at me like I had two heads...

Anyway, I’ve been sitting here waiting for the official VAT regulations to be released because I assumed they would finally clarify what actually counts as proof that someone is a legitimate tax resident in a non-EU country. But from what I can see, there isn't a single word about it in the regulations. Did I somehow miss a section?
RIF No. 7 states: "The fundamental principle of taxing services based on the recipient's tax seat also applies when services are provided to taxpayers located outside the European Union, and regulation 282/2011 specifies when a user located outside the European Union may be considered a taxable person." Can someone please help me out here? Has anyone actually figured out what kind of supporting documentation I need to hold onto to justify a reverse charge for a third-country partner under Article 17, Paragraph 1?

So, I’m back at it again, digging through paperwork, and I stumbled upon this bit in the RIPUP:
When dealing with service recipients from so-called third countries—meaning nations outside the European Union—under the provisions of Article 18, point 3 of Regulation 282/2011, the service provider can assume the recipient based outside the European Union is a taxable person, unless they know otherwise:

a) if the service recipient provides a certificate from the competent tax authority in the country where they are registered for VAT, which is typically issued by that authority when requesting a VAT refund in a European Union member state under Directive 86/560 / EEC (the so-called Thirteenth Directive),

b) when the recipient doesn't have that specific certificate, but the service provider has their VAT identification number or a similar ID assigned in the country where they are based or headquartered—something used to identify business entities—or any other proof of their status as a taxpayer, provided the supplier performs a reasonable check on the accuracy of the info provided, using standard commercial safeguards like identity verification or payment checks.

My first shipment to the second FBI office went off without a hitch—fingers crossed it actually arrives safe and sound—so here’s a little update
🙂🙂
Moving right along...
I'm not even going to bother wasting my breath on all those forms before the seminar. I'll just show up with a list of questions and hope that makes me look halfway competent.

restlessnomad10 said:Yeah, even the instructions say you should list services provided by taxpayers from third countries, but then they go and throw in taxpayers from the USA too.
Specifically, the guidance for section II.12 states that you enter the value of received supplies where the provider isn't based here in the States (meaning a taxpayer based in the USA or a third country), and where the recipient is responsible for calculating and paying the sales tax according to Article 75, paragraph 2 of the law.

And for section II.10, they say: Enter the value of the service received from another state and the amount of sales tax at the 25% rate that the recipient taxpayer needs to calculate and pay in accordance with the provisions of Article 75, paragraph 1, point 6 of the law.

Of course, Article 75 references a bunch of other sections... and honestly, that's where I lose the thread. I am completely lost here... 😵

This stuff drives me absolutely insane.
One article points to this section or that subsection, and by the time I’ve scrolled back and forth trying to find it, I’ve completely forgotten what the hell I was even reading about in the first place. 🙂
It all just blurs together into one giant mess. 😲
I’ve got a seminar this Friday, so I’m just going to write down a list of questions on paper. I'll shove the paper right in their faces the second I walk through the door and make them deal with it. Hopefully, they actually give me some real answers.

Edit: oh yeah, my first shipment headed out to Austria today. Fingers crossed I didn't forget anything.

Zachary White17 said:I haven't quite wrapped my head around this one.
In the IRS manual, what exactly is the distinction between:

"DELIVERY OF GOODS TO OTHER MEMBER STATES"
and
"DELIVERY OF GOODS WITHIN THE EUROPEAN UNION"
?

The regulations clear this right up.
That first one refers to:
"under item I.2., you report data from column 8 of the Issued Invoices Book (Form I-RA), basically entering details regarding goods deliveries under Article 13, paragraphs 3 and 4 of the Act, where the taxpayer, acting as the supplier or through someone else on their behalf, transports or ships goods from the United States to another state where the VAT obligation kicks in because the taxpayer hit that specific delivery threshold set by that state, or they just chose to opt into that state's threshold instead.,"

But this second one is different:
"under item I.3., you pull data from column 9 of the Issued Invoices Book (Form I-RA), which covers goods deliveries within the European Union per Article 41, paragraph 1 of the Act—specifically, data concerning tax-exempt goods deliveries to taxpayers registered for VAT purposes in other member states. You also log details for triangular transactions from Article 10 of the Act, plus deliveries under Article 7, paragraph 5, or the transfer of goods that are part of the taxpayer's business assets, which counts as delivering goods to other European Union member states. Also, this line includes the value of goods sent to other European Union member states under customs procedures 42 and 63 or the value of exempt deliveries to other member states involving imports from a third country into the United States under certain VAT exemptions.