Posts by Lisa Newman34

Thanks ruggedmaker2, I’m heading out to get my Sales Tax ID this Monday.

The whole situation still feels incredibly off, though. My client keeps insisting they don't actually need my Sales Tax ID or even formal invoices; apparently, they’ll just handle everything via the reverse charge mechanism without any documentation from my side. They told me I can send them invoices if I really want to, but there's absolutely no guarantee they’ll even process them...

How does that even work?

Typically, for a reverse charge setup, both parties should be exchanging Sales Tax IDs, so I can't help but feel like I might be getting played here. If they would just give me a straight answer and tell me to send over my ID, I’d feel much better, but this level of ambiguity is genuinely unsettling... Is there a risk that I’ll end up on the hook if I record everything in my Sales Tax filings and the aggregate reports, but they fail to fulfill their end of the deal regarding the reverse charge?

We're talking about a massive, reputable corporation, so I assume they know the rules, and I've already done my due diligence to make sure this isn't some fly-by-night scam.

They provided me with their Sales Tax ID, it's verified in the VAT Information Exchange System, and everything looks legitimate on paper. Since it's such a giant company, I can't get a hold of anyone with real decision-making power; I'm stuck dealing exclusively with their vendor relations department.

I was looking for that discussion regarding Sales Tax within the European Union, but I can't seem to find it anywhere...

mistyseal51 said:AICPA consultant: No
Tax Associate: No
Accountant #1: I have no idea
Accountant #2: Maybe
RRIF: Yes
I managed to get a phone number from the IRS, but nobody ever picked up. Instead of calling again, I just sent an inquiry through their online contact form. Now, I'm just waiting on a response.

If you take a closer look at that FAQ you linked, that last sentence feels off. What does it have to do with Sales Tax not being charged if there's a transfer of tax liability?

You might want to check out sections 17, 77, and 90 of the Sales Tax code. Based on those, I can't say for certain which way it goes either.

I'm still waiting on that email from the IRS. If they tell me it's required, I'll grab the ID and use it. But honestly, it’s not practical because I'd end up needing to hire a professional bookkeeping service.

It's the same story everywhere—every answer you get is different. Once you actually hear back via email, please share it with the rest of us.

I did manage to have a brief chat with a Sales Tax advisor at my local IRS office, and she suggested that I might need a Sales Tax ID if I'm providing services to companies within the European Union as a sole proprietor (though, judging by her tone, she wasn't entirely certain herself).

mistyseal51 said:AICPA consultant: No
Tax Associate: No
Accountant #1: I have no idea
Accountant #2: Maybe
RRIF: Yes
I managed to get a phone number from the IRS, but nobody ever picked up. Instead of calling again, I just sent an inquiry through their online contact form. Now, I'm just waiting on a response.

If you take a closer look at that FAQ you linked, that last sentence feels off. What does it have to do with Sales Tax not being charged if there's a transfer of tax liability?

You might want to check out sections 17, 77, and 90 of the Sales Tax code. Based on those, I can't say for certain which way it goes either.

I'm still waiting on that email from the IRS. If they tell me it's required, I'll grab the ID and use it. But honestly, it’s not practical because I'd end up needing to hire a professional bookkeeping service.

I suspect those first two sentences apply if you're servicing businesses in the European Union, while the remaining three probably pertain to providing services to individuals over there.

It's a classic American bureaucratic mess—nobody seems to have a clue, the laws are written with zero clarity, and even the official FAQ fails to state exactly what's required. Yet, I'm sure when an auditor eventually shows up at my door, they'll be the one person who claims to know everything.

Nicole Wells38 said:Exactly. Once a business is registered for Sales Tax, they are legally required to submit all their filings through the IRS online system. This means you have to purchase an official digital ID and certificate, which isn't exactly cheap. On top of that, it usually necessitates hiring an Accountant to handle the specialized ledger work. Since you're operating as a sole proprietor under the standard tax regime, you aren't even in the Sales Tax system, so I don't see why you'd bother. Your only real option might be submitting an aggregate report in paper form to your local IRS office—assuming they even allow that. An aggregate report is specifically used to document goods and services provided to other countries within the European Union. You'll need the specific country code, their VAT ID number, and the total value of the services rendered, all of which you'd plug into the form for the relevant tax period.

I heard that Sales Tax forms and aggregate returns can only be submitted to the IRS electronically through their online portal. Are sole proprietors actually allowed to hand these forms in on paper at the local office?

I'm still struggling to figure out what happens if a client—a company based in the European Union—claims they'll handle the Sales Tax via the reverse charge mechanism, but then insists they don't need my Sales Tax ID. Is it even possible for them to calculate the tax without my ID? And am I left vulnerable to some kind of penalty if they fail to account for it properly? Has anyone actually dealt with this before?

mistyseal51 said:Greetings to everyone.

I run a small business under a simplified tax structure (not registered for sales tax). I started this year, focusing primarily on software programming. So far, I’ve sent out several invoices that have already been settled. My clients are based in India, the United Kingdom, and Estonia. However, following advice from my local Chamber of Commerce, I didn't register for a sales tax ID, nor have I listed one on my invoices. No one has requested that number from me yet.

Reading through some of the posts here, it seems like I might be doing things incorrectly. Is that actually the case? I was under the impression that registering for a tax ID and filing those specific reports only applied when purchasing from companies within the USA. What should I do if I've been handling this the wrong way?

Naturally, I plan to contact the IRS, but I would love to hear some opinions alongside theirs.

I’m facing the exact same dilemma. From what I can gather, even those on the simplified tax plan should be requesting a VAT ID and filing the necessary paperwork with the IRS for the month the service was provided to a company within the USA:
http://www.irs.gov/VAT-regulations/...registration.aspx#5
Did you bother asking the IRS directly? What was their take?

My issue is that my client in Ireland isn't interested in seeing my VAT number at all. 🙂 They informed me that since we're using the reverse charge mechanism, they will handle the VAT payments to the Irish authorities themselves. Apparently, they don't require my VAT ID and don't even want me to send them formal invoices. They just pay the agreed amount every time, but they refuse to look at an invoice. They mentioned I could send one if American law strictly requires it, but they'll likely just ignore it anyway.

I assume they still have to submit some sort of tax form to the Irish IRS that lists the VAT numbers of all the companies providing them services. I'm wondering if I'm somehow exposed to risk here—could I get in trouble if my client fails to list my VAT number in their tax reports and doesn't pay the VAT?