Posts by ruggedmaker2

Nicole Lee6 said:Small business taxpayers = those covered under Section 90 of the new law (under $230k)
Legal entities that aren't taxpayers = government bodies and public institutions
Taxpayers who exclusively provide goods or services for which VAT deduction isn't allowed = which ones would those even be?

And as for these "R" designations—honestly, it’s a mess. We haven't even harmonized the law with the regulations, so instead of simplifying things, they're just adding more layers of bureaucracy.🙂 To make matters worse, Pupilla already sent out notices stating that all "R" designations have been completely scrapped in the new modules. Just wonderful... absolutely brilliant planning there.

Honestly, I think it covers pretty much everything sold to people who aren't even in the VAT system—like those small-time operators who can't claim credits, or government offices, etc. Plus, anyone doing strictly tax-exempt business can't deduct their input tax either. It’s just a giant loop of paperwork for nothing.

So, I was digging through the FASFA site earlier and stumbled upon this whole mess regarding the R1 vs. R2 dilemma:

And then, get this—I found this specific bit on the IRS website regarding their official interpretations about the acquisition threshold:
"12. Who does the acquisition threshold apply to?
The threshold is determined for taxpayers who exclusively provide supplies of goods or services for which VAT input credits aren't allowed, for small business taxpayers, and for legal entities that aren't registered taxpayers."

Thanks, guys 🙂

Check this out:

Nicole Lee6 said:Ugh, honestly, I hadn't even given those acquisition thresholds a second thought. I just sort of internalized this idea that they only applied to physical goods, not services... totally missed the mark there.

But seriously, how can someone who has been part of the USA since 2004 be so shocked by basic concepts like a VIES database or VAT numbers?!

It’s possible it really does just apply to goods... I guess I'll have to dig through the fine print again. Hopefully, once the official regulations actually drop, they'll make it crystal clear. We just have to wait for them to get their act together.

Maybe someone who actually knows their way around 🙂
can weigh in.

Nicole Lee6 said:I honestly thought I had finally mastered this stuff, but clearly, I’m still a student;
I’m invoicing a towing service for a share of a trip involving a business partner based in Mexico (he claims he's a registered taxpayer there). This is a B2B transaction—assuming, of course, that he provides me with a signed statement confirming his tax status in Mexico—so my plan is to issue the invoice without Sales Tax and include a clause stating, "Tax liability transferred per Section 17, Paragraph 1 of the Sales Tax Law."
Am I totally off base here?
Because I had a colleague trying to convince me this morning that dealings with Mexico (or any other non-USA country, essentially a third country) haven't changed at all. He’s insisting that the domestic portion of the service is taxed under local Sales Tax, while any foreign portion just escapes taxation entirely?!?!?!?
🙂🙂🙂🙂

My understanding was that since July 1st, when you're providing services, you have to look at who the recipient is, which breaks down into:
1. B2B—a tax registrant within the USA who is listed in the IRS database, or a partner from a third country who is a registered taxpayer in their own nation.
2. B2C—an individual consumer, or a legal entity within the USA that isn't listed in the IRS database.

So, am I right or am I wrong?

P.S. If I’m dealing with a business partner in the USA and they claim they don't have an IRS number—acting all shocked that I'd even ask for it—should I just treat them as B2C? In that scenario, say I'm invoicing for a transport route from, I don't know, New York to Philly, would I be applying local Sales Tax to the entire amount?🙄

Honestly, I think you’re spot on here. Since you're providing a service to another business entity, the standard rule applies under Section 17: "The place where the service is performed is considered the location of the business entity receiving it."
Section 17 doesn't care whether someone is part of the USA or not when determining where the service is taxed.
Passenger transport would be a different beast entirely, but that's clearly not what you're dealing with.

And regarding that partner over in the USA—yeah, I think your logic holds up there too. They don't have a tax ID, which means they aren't a registered business entity in this context; they're just an end consumer, so you charge them our local sales tax.
Now, whether you actually need to keep an eye on their local sales tax thresholds and potentially register for taxes over there if you blow past a certain limit? That's the real headache. 🤷

Those registration thresholds always make my head spin. 🤣
If anyone here has actually navigated that nightmare, please, for the love of god, elaborate and explain how it works.

I’m basically breathing down their necks on the phone, practically begging them to just send over the damn invoice already. 🤷

It’ll probably get here sooner than you think. I mean, if we got ours on Monday, that means they’ve already started shipping them out.

Ethan Mitchell4 said:Wait, so did anyone actually get that "famous" number from the IRS?
I just got a note from a supplier over in Canada asking me to provide it. For now, I’m playing dumb since I don't have it yet, though I was half-tempted to just send them our US Tax ID... I don't even know....

I haven't been to any seminars lately... so there's nothing for me there... I'm basically flying blind here.
but this is going to be fun 🙂

We finally got our notice this past Monday. It was dated June 19, 2013. 👍

Brian Kern70 said:I want to run through a specific scenario involving acquisitions within the European Union just to make sure I’ve actually got this down:

- An American business, let's call it Company A, buys $10,000 worth of goods from Company B in Germany (which is also a VAT-registered entity).
- The shipment arrives with an invoice and a delivery note; on the invoice, the German company charges the full $10,000 without any sales tax (they mark it as "reverse charge" to indicate they aren't collecting tax because we'll handle the tax liability here in the States).
- To be valid, the invoice needs to list both the American and German VAT IDs, and we have to verify those IDs in the VIES database to ensure they're legitimate.
- We record the invoice at, say, $25000 (depending on the exchange rate), and during that month, we account for both the input credit and the tax liability for $6250, so everything nets out on the monthly tax return.
- Aside from having the "reverse charge" label and both companies' VAT IDs, is it true that we can only claim the input credit if the invoice arrives by the 20th of the following month? In other words, if the invoice doesn't show up or we miss the filing deadline for the month the goods were delivered, are we barred from claiming that tax credit in future periods?
- Once that's settled, if we sell those goods here in the US, we just charge the standard sales tax on our outgoing invoice like usual.

I'm honestly not 100% sure on that one. I'm guessing you'd just list it, if nothing else, on the sales tax return.
The seller is going to include that invoice in their filing, so we really ought to match it in ours. 🤷
I don't know if there's a statute of limitations on the obligation to calculate or the right to claim those credits. Or maybe I'm just missing something obvious. 🤷

Alright, here’s that famous piece of legislation everyone’s buzzing about:

Am I reading Article 140 right? Does Linić actually have a three-month window to get those regulations finalized? 😲

Edit: Honestly, trying to wrap my head around this Law is giving me a massive headache. I’m just scrolling back and forth through these pages and everything starts to 😵

darkjackal17 said:I have a quick question regarding imports starting from July 1st, 2013.

For instance, let's say I'm importing a printing press from a Canadian supplier valued at $10,000.00.
E, so, is this the right way to handle it: I take that $10,000.00, convert it into US dollars using the exchange rate from the invoice date, and then just record it in my books as a standard entry without any extra duties or paying import VAT, just like I've always done?

If anyone could point me in the right direction on this, I would be absolutely incredibly grateful!

Are you registered for VAT? If you are, then besides what you mentioned, you also have to record the VAT liability and the input tax in the same period—both in the general ledger and on the VAT form. There isn't actually any cash moving for the tax part itself.
When you file your VAT form for July by August 20th, you'll need to submit it to the IRS along with a declaration for acquiring goods and services from another EU member state.

If you're in the VAT system, you should be getting a notice regarding your tax ID from the IRS any day now. You absolutely have to give that tax ID to the company you're buying the machine from. It shows the foreign firm that you're officially part of the VAT system and that you'll be handling the tax calculation yourself. If you don't get the ID automatically, you'll have to reach out to the IRS and request one.
Honestly, though, your best bet is probably calling your specific agent at the IRS and asking them directly. From what I've been reading, even the IRS doesn't seem to agree on how to interpret this part.

rowdyscout8 said:That bolded part is throwing me off a bit... how are there no more labels?
Maybe this is a "dumb" question since I'm not doing accounting professionally yet, but does this mean I can write off any receipt through the company regardless of what label it has? Like, I won't have to specifically ask for an R1 anymore? 😕 hm...

I figured out the whole R1 and R2 thing is dead too.
But don't get it twisted—that doesn't mean you can claim every single receipt under the sun. You can still only deduct stuff that's actually made out to your business, and you can only claim input tax on invoices that check all the legal boxes required by the IRS.

I printed out the new tax code to pore over it myself; I want to have some solid questions ready to throw at the instructor during the seminar.

Richard Howard55 said:Everyone is hyper-focused on the new VAT rules, while sweeping these kinds of issues under the rug. But honestly, we’re going to hit a wall in the very first month. Small business owners and freelancers are going to struggle even more when they can't figure out how to log a payment or collection for an invoice dated before June 30th that actually clears after July 1st within the EU.

Just to make things even more complicated—and I say this loosely—we'll have payments or collections for imports/exports that were valid through June 30th but aren't anymore. They won't fit the EU forms, and they won't fit the domestic ones since those haven't been updated properly yet, or so it seems looking at the new VAT form. Where am I supposed to put them? The forms separate goods and services... and there's just a mountain of other issues. Besides, they don't even belong in the books after July 1st, unless maybe some random line on the VAT form under Section III to adjust the liability.
I have absolutely no clue, and I haven't heard a single soul ask this during any seminars, let alone have a lecturer actually warn us about it.
Bravo, handyman. That is a "killer" question, and the answer?... who knows when we'll get it! 😁

My gut feeling is that invoices for things still technically classified as imports or exports will just follow the old rules. Since they carry a June date, they'll land in the June VAT form, just like they always have.
At least that's how it works for corporate income taxpayers. 🤷

Honestly, we aren't even sitting around waiting for some official notice from the IRS. We’ve already reached out to all our clients and vendors to let them know about the number, and frankly, nobody is breathing down our necks asking for a formal VAT form to prove anything. A quick heads-up from us is plenty; they can just hop online and verify everything through the standard databases if they’re feeling skeptical.
If they really want to be extra, they can go check the IRS website right now to confirm we're active in the system.

We did shift our acquisition and delivery dates around a little bit just to give ourselves some breathing room.
Look, if we mess something up early on—and hey, life happens—we’ll just fix it. What else are we supposed to do?
It’s not like this is our first rodeo. 😁

Kimberly Harris6 said:"When the new tax law first kicks in, following the transitional rules laid out in the final tax bill, the IRS is going to automatically assign VAT IDs to domestic taxpayers who handle transactions with foreign entities. Everyone else will just have to apply for their ID manually."

Does anyone know..
Is the IRS actually going to notify the taxpayers they’ve assigned an ID to, or are we just supposed to figure it out ourselves?
Is there a specific application form for those domestic taxpayers who don't get an ID automatically?
And if the IRS assigns an ID to someone who doesn't even need one, is that person required to go through the hassle of requesting a cancellation?

For the business owners who’ve been doing international deals—meaning the IRS already sees all that activity on their filings—they’re just going to send out official notices directly.
Word from my contact at the agency: everything is ready to go. They were just sitting around waiting for the new tax law to be officially published in the federal register. Now that it’s finally live today, expect those formal VAT ID notifications to start hitting mailboxes pretty soon.

As for everyone else, there should be instructions posted somewhere on the IRS website, and I'm pretty sure the local agents already have the technical specifics down pat.
My number is coming through automatically, so I haven't bothered digging through the fine print yet. But yeah, I'm certain I saw some guidance about it somewhere.

Richard Howard55 said:@ruggedmaker2,
I haven't quite wrapped my head around that example of yours yet. 🙂
Tomorrow is another day, I guess.

🙂
It’ll work itself out. Just gotta take it easy, wait for the new federal regulation 🙂 and just stay cool ☕

Anyway, I’m off to double-check if we actually have to return all those employee personnel files within three months of joining the European Union, or if I’ve just completely lost my mind here. 🤔

You can go with either the directive or just cite a specific section of our own law. At least, that’s what they told us during that snooze-fest of a seminar we attended.
I see it all over the place on invoices from my suppliers over in the European Union—some guys list the directive, while others just point to a specific article in their local law.

Honestly, my head is spinning from all this 🙂
I’m just praying these new regulations actually clear things up, especially since I’ve got a seminar coming up on July 5th.
We already messed up our shipping schedule for the European Union a bit at the office—we're rushing most of it out by June 27th, then we'll have the next batch going around July 10th. Hopefully, by then, we’ll all have a better grip on what’s happening.

But honestly? It's the service side of things that's giving me a headache. Like, say an individual—a resident of another European Union country who isn't even registered for VAT purposes—performs a service for us, like some kind of business brokerage. What's the deal with the VAT there? Who owes what to whom? 😁
Or take a situation where we're acting as a subcontractor for a major overhaul project being done overseas, but we're billing an American taxpayer... you name it, it's a mess.

Anyway, everything is just great. Just peachy. 😁

Good luck to us all!

Look, you’re going to have to cough up the whole thing. That means the principal, the interest, and if things have already gone south and hit the collection stage, all those extra legal fees too. The longer you sit on your hands, the more this pile of debt just grows.
And don't give me that excuse about being out of the country—you can wire money from anywhere. Just call Chase or whatever bank you use, get the exact payoff amount, and settle it. I'm assuming since you're abroad you've actually got a job and some kind of income coming in.

silverviper44 said:Does anyone here actually know how the billing process works for this kind of thing?

For example, I run a business here in the States (Company A), and I strike a deal with a firm based in Germany (Company B) to handle some installation work over there.

In that scenario, am I supposed to invoice them with sales tax included or leave it off?

I know for a fact that in Germany, Company A wouldn't charge sales tax to Company B, since Company B is selling the product to the end consumer who pays the tax, which they then remit to the government.

I honestly think when you're looking at these assembly setups, the delivery location is everything. It changes the whole math. According to Article 17:

Look, I’m telling you, the tax man keeps it simple, even if it feels like they’re trying to trip you up. Basically, where you actually do the work doesn't matter nearly as much as where that business is officially parked. If you're providing services to a business client, the place where they're legally headquartered is what counts as the service location. It's all about that official headquarters address. Simple as that, though I'm sure there's some fine print somewhere designed to make our lives miserable.
If you were in my shoes, you'd be looking at a place like Germany.
Look, here’s the deal with the tax side of things. If you sell a product and then head over to install it yourself, you aren't charging VAT on the actual item—they handle their own input tax credits on that end. But that installation service? That's a different beast entirely. To stay legal on the service side, you’d actually need to get yourself registered for VAT in Germany. It's just one of those bureaucratic headaches that keeps you up at night.
That’s how it looks from where I'm sitting. I mean, I'm not one hundred percent sure yet. Still waiting on that seminar to kick off—again. Honestly, if I have to sit through one more of these endless training sessions just to get my head around the paperwork, I might actually lose it. 😵And that whole regulation thing too. Everything's just one giant mess of red tape. 😁

Ryan Wilson2 said:I am requesting some clarification from the experts here:

"Final Proposal for Amendments to the Sales Tax Law"

Article 79.

The invoice must include the following information:

Paragraph 6.

the unit price excluding sales tax, specifically the amount of compensation for goods delivered or services
rendered, categorized by sales tax rate

If my interpretation of this language is correct, does this imply that every single line item on a restaurant receipt must now explicitly list its individual price before sales tax is applied?

I’m pretty sure this only applies to what we still call R-1 or R-2 invoices—you know, the ones for B2B transfers between tax entities—rather than standard retail receipts. Regular cash register receipts still fall under the standard VAT rules. That said, I caught a glimpse of some proposed changes to the VAT Act on the US Congress agenda recently, but I didn't stick around long enough to dig through all that tedious fine print.

I honestly don't get it. Why on earth does Article 79 of the Value Added Tax Act even exist? It makes zero sense to me. Why should we be forced to scribble down every single customer's full name, home address, and Social Security number just to print out a basic cash register receipt? It’s ridiculous. I mean, really, who has the time for this level of micromanagement? It feels like a total waste of energy.

darkmaker94 said:I swung by Student Services today to drop off my bank account info, and the guy there basically told me they don't even need it. I have no idea how they're planning to handle my payouts starting July 1st. 🤷

They don't need it because they probably already have it on file. The IT guys have likely automated everything by now—anyone who actually needs one can just convert a standard account number into a routing format in two seconds flat.
The tech support guys set that up for me months ago, so I’m guessing the university has it handled too.