Posts by David Kelly37

ruggedmaker2 said:

I don't know what to tell you. Sometimes things just happen, and there isn't much anyone can do about it. It’s just how the world works. Life's messy like that. ruggedmaker2 says:
Don't forget to grab some kind of proof that these guys are actually tax-paying entities over in Canada. Since you’re the one handling the transfer, you need hard evidence they’re registered for VAT. You can't just run them through the IRS database because they aren't part of the USA. Look, what they do on their end—whether they actually settle up the VAT or not—is none of your business. Just cover your own tracks.

Just got back from a seminar, still feeling that post-conference brain fog, so I figured I’d jump in here and add my two cents.
Like ruggedmaker2 said, you’ve gotta have actual proof that they’re registered with the IRS. You can't just take their word for it.
So, I’m sitting in this seminar today, right? And get this—one of the speakers actually has the nerve to claim that the evidence has to be "reasonable." Like, excuse me? What does that even mean in practice? Total nonsense. 😕It’s the truth. Plain and simple.
Honestly, they still haven't even figured out what they actually want from us. It’s a total mess. Are we talking about some official confirmation from the IRS? A copy of their final ruling? Who knows anymore. They’re just throwing spaghetti at the wall to see what sticks. All I know is that whatever this ends up being, it better be legitimate and make sense, because I am not playing these games.

I don't even know where to start with this one. Honestly, I’m just sitting here staring at my screen wondering how we even got to this point. It feels like everything is just sliding sideways lately, doesn't it? You try to do things the right way, follow the rules, play the game, and then—bam—the rug gets pulled out from under you anyway. It’s exhausting. Just constant, grinding exhaustion. I was grabbing a coffee downtown the other day—just a quick caffeine fix before starting the workday—and watching people rush around, and all I could think was, "Does anyone actually have a clue what's going on?" Probably not. We're all just winging it. Anyway, that's just my two cents. Don't mind me. kaže:
If we’re talking about services—you know, that B2B side of things—then yeah, it works. It holds up.

Spot on. Even when you're just talking about services, that tax liability follows you—it’s the same deal with B2B deals involving third countries. It doesn't matter how you slice it; the IRS is going to want their cut.

The folks at the IRS told me I need a business registry extract and a confirmation from them proving they're taxpayers—and I'm talking about three different countries...

ruggedmaker2 said:ruggedmaker2, you don't get to call this a three-way deal because Canada isn't even in the European Union.
You’re basically just sourcing high-quality stuff from Germany and shipping it over to Canada.

When you're pulling goods out of Germany, you've got to deal with the headache of VAT and prepayments hitting you all at once in the same accounting period.
Then, when you export those goods to Canada, you get a pass on the VAT side of things—as long as you have your customs declarations and proof that the shipment actually cleared the European Union.

Please, just check the official IRS pages—if you're hauling freight from Germany to Canada, it doesn't matter who you invoice, whether it's someone in the EU, a third country, or an American entity... it's considered transit through the US under Section 44. But then there's this RIF regulation from 2013 saying if you're moving stuff from Germany to Canada and the client is an American corporation, you're supposed to charge American VAT. I even called a tax consultant and he insists it's just transit, yet the RIF has its own whole theory... honestly, who's actually right here?

ruggedmaker2 said:I’m constantly refreshing those IRS pages, praying they’ll finally give us a straight answer about this miserable reverse charge mess. But nope... nothing 🤷

They told me today that they'll be posting those 40 remaining questions on their site tomorrow or the day after...

Nathan Doyle2 said:So, here’s my latest little saga regarding exports to Canada. Basically, I put together an invoice using dollars—but kept the euro amount in there too—added the exemption clause, and included all the standard details without the reverse charge. When I finally mentioned the bill to a seasoned accountant—since I’d been spinning my wheels on it for a few days now—he just looked at me like I was crazy. Apparently, he mostly handles clients in Italy or Austria (and occasionally Canada), and he *never* touches anything in dollars... Heeeeeeeelo... who’s actually losing it here? I tried telling him that including dollars is mandatory—you know, based on what I learned in my training—but he wouldn't budge from his "euros only" rule. Hmm... so, I went ahead and added the reverse charge to the invoice... but now I'm thinking... if he's tripping up on the currency, who knows if he'll mess up this part too?

The invoice has to be 100% in dollars, and you can't use reverse charge for exports.

ruggedmaker2 said:So, I hit up this FBI seminar last Friday, and they were preaching that reverse charge applies to pretty much every B2B deal where you're shifting the tax burden over to the buyer—doesn't even matter if the client is just down in another state or halfway across the globe.
But honestly? The more I dig into the fine print, the less sense it makes. It’s driving me absolutely nuts.

The IRS told us the exact same thing at their seminar too—if you're dealing with a legal entity, the tax responsibility transfers to them, whether they're in the European Union or out of the country.

awesome - thanks.

I actually have a shipment right now coming from Germany in the USA to Canada (a third country)... my client is based here in the USA... I'm trying to figure out if I should use code 44-1-38 and the reverse charge mechanism for an article I'm writing, or if it has to be 17-1—I'd lean toward 44-1-38 since the transit goes through America?

any help would be appreciated...

thanks

oh - also, what do you guys know about handling transport payments in cash? You issue a receipt, but then how do you settle it—via a bank deposit or just through the petty cash drawer (assuming there's a limit on the amount)

thanks

Patrick Peterson49 said:if you're exporting goods to a non-US country, then you don't use the reverse charge...

I'm thinking the same thing—no reverse charge in that case...

Nathan Doyle2 said:Thanks so much... I'll definitely be listening to you all more closely from now on. Oh, one more thing—given that we're VAT exempt under section 45, the reverse charge wouldn't apply, right?!

I don't think so—but I actually asked ruggedmaker2 that same question earlier in the thread. In my opinion, it shouldn't apply because exports are always tax-exempt... but let's just see what ruggedmaker2 has to say about it...

Nathan Doyle2 said:Hmm... they only mentioned Euros to me—just lovely... so what now? Do I just convert everything back to Dollars and send them a corrected invoice?

Yeah—you definitely have to. The lady at the IRS told us invoices absolutely have to be in dollars, though we can use other currencies if we want. Our programmer set it up with dollars as the main currency since that's how it has to be, but I still print out the USD amounts because basically 99 percent of our customers are overseas anyway!

What’s the deal with exporting to non-USA countries? Exports have always been VAT-exempt... so do I really need to mention reverse charge here—I'm thinking maybe not, OR am I totally overthinking this mess?

Also, if I have a driver on the clock, but the truck ends up sitting idle for three days because the cargo isn't ready—how do I bill a customer from the USA versus one from a third country? For a domestic customer, I just add tax to the price, right? What about the others? Hmm...

Sorry if you guys already covered this and I just missed it...

Thanks for the help

Nathan Doyle2 said:Hey there! So, we actually had an export shipment heading over to Canada last week—it was a bit of a headache, honestly! Some statements changed at the last minute, which left our freight forwarders scrambling for info, but hey, we managed to pull it off in the end. Anyway, I wanted to pick your brain on something—I’ve been drafting my invoices in US Dollars, just like always, without explicitly mentioning any other currency since I was told it wasn't necessary—and I haven't included the reverse charge note either... does that sound right to you?

All invoices have to be listed in USD—it’s clearly stated in the law—though you can certainly include another currency alongside it if you need to.

ruggedmaker2, thanks so much. That’s exactly what I was thinking—but honestly, getting a little confirmation really helps amidst all this chaos...

If an American carrier moves goods from the European Union over to Canada, and they're billing a Canadian client for the transport service, they'd fall under section 45(1)(38) of the tax code... does the invoice actually need to mention reverse charge?