Posts by Nicole Lee6

So, I had an international client come in for some repairs today. He wants the invoice issued to his company, and the total amount including tax comes out to $1805.

1. Is he actually allowed to just hand me cash for this? Or am I required to issue a transaction receipt so I can take the cash from him—since he’s heading back home "today" and wants to settle up now because, say, the local bank systems are acting up—and then I basically carry that cash to the bank myself to make a deposit in his name? It would be like he paid via transfer when he really just handed me bills. I’m asking because I’m genuinely unsure if that cash payment limit of $1667 applies to a situation like this, where a foreign corporation is paying a sole proprietor for on-site repairs in cash.

2. Now, looking at the breakdown: if the labor fee is $640 and the cost for the installed parts is $0.80 (which means the parts make up more than 50% of the total), my understanding is that this should be treated as a supply of goods. In this case, we're talking about a car repair—though it essentially functions as a sale of goods because of the value of the parts versus the labor. The vehicle is owned by a foreign legal entity, the repair was performed here in the States, and the guy is driving that car straight back to Germany. He provided all his corporate details and VAT ID, so my question is: am I permitted to issue an invoice without sales tax? I might have handled this wrong, but honestly, I charged him the full tax, and if he wants a refund, he can deal with the authorities once he gets back to Germany.

silentsurfer11 said:...assuming we're still talking about an invoice dated August 6th from that Canadian partner; I doubt they can file an IRA for a commission issued in August back in the July tax period.

Look, once I finally get off the phone with them, I'll let everyone know what the verdict is. I've decided to just follow their lead—we'll both report it in the same month so there isn't some messy discrepancy where I file in August while they claim it in July.🤷

I was playing around in QuickBooks earlier and noticed that if I issue an invoice for a service involving a transfer, dated August 6th, but set the actual service date to July 15th, the system automatically pulls it into the August sales tax and VAT reports because it tracks based on the invoice date. I need to see how they are presenting things on their end...

The thing is, for every single service performed—per the specific work order or guarantee—I generate a separate invoice. My goal is always to have invoices for services rendered during the month issued no later than the very last day of that month.

But here's the catch: they take all my individual invoices that I've sent over and instead of creating a unique commission invoice for every one of my bills, they consolidate everything into one massive "summary invoice." This single document lists every single intervention number, our corresponding invoice amount, and their specific commission share for each line item. So, this "summary invoice" they generate is dated August 6th, even though it covers the entire period from July 1st to July 31st.

Now, I actually received a clarification on this: if they are taking their commission for a service performed in July, then my obligation to account for the sales tax on that commission also arises in July. Why? Because that commission pertains to a July service, and realistically, they acted as the broker for that service in July.🤣 Since this is a summary invoice covering commissions for services on July 5th, July 18th, and July 23rd, I am certainly not going to break down the total commission amount by those specific dates—especially not trying to recalculate the individual tax bases using the exchange rates from July 5th, then July 18th, and so on. Instead, I should probably just use the exchange rate from the last day of the month to convert the total commission base in one go.🤔 I suppose, 🤔 at least that's how I interpreted it.

Steven Anderson14 said:Just got word back from the IMF. Turns out the Federal Reserve uses the exchange rate from the actual invoice date.

😂 Honestly, everything in this country is just pure chaos 🤣
In the meantime, I actually heard back from the RRIF, and apparently, for services, they don't care about the invoice date—they look at when the service was actually performed. So, in my specific situation, they’re telling me I should be converting the currency using the rate from July 31st (since that was the last day of the period the service providers are billing commission for) and then include that in my July VAT filing for liabilities/input tax.

🙄

I'm going to try calling the service providers over in the Midwest to see if they plan on putting their commission invoice into their July or August reporting. I want to align myself with whatever they do, because their reporting and my acquisition filing absolutely have to match up perfectly—like a mirror image, right?

silentsurfer11 said:I guess the invoice date is what matters. I’d probably just print out the Federal Reserve mid-market rate for that specific day (August 6th), staple it to the invoice, calculate the total in USD, and book it that way.

What's actually tripping me up is the inconsistency; it seems like we look at the delivery date for physical goods, but when it comes to services, the rules seem to shift entirely....

I’m scratching my head over something again.
So, here’s the deal: I handle transport services through a partner’s web portal. They have these little input fields where I just plug in the mileage and the specific jobs I completed, and then the software spits out the total value of those services in USD.
When I go to generate my own outgoing invoice based on the figures provided by that app (basically their price list), I set the invoice date as July 31st, but the actual delivery date was July 15th. To get the numbers right, I took the USD amount generated by the application and converted it into my local currency using the average exchange rate from the Federal Reserve on the date the invoice was issued—so, using the July 31st rate.

Now I'm stuck wondering if I actually did this correctly. Should I have been using the exchange rate from the day the service was actually performed (July 15th)? Or does it even matter much in this scenario? Since it’s a B2B transaction where the tax liability is transferred to the partner, there's no VAT obligation on my end; it's just the fee amount hitting my IRA. Given that, does it really matter which exchange rate I applied?

Steven Anderson14 said:We had an intra-community acquisition on July 25th. The invoice from the Canadian carrier is dated August 7th, but the actual service was performed back on July 25th.
Should this transport invoice be reported in the VAT return for July or August? And am I supposed to use the Federal Reserve exchange rate from July 25th or August 7th?

Honestly, this is driving me crazy too. I handled a few transport jobs in July for a partner over in Canada. He issued me an invoice for his commission (based on those transport services I did for him during July), but the invoice itself is dated August 6th. On that one document, he listed all my July shipments and showed exactly how much he's keeping as a cut.

So now, which date am I supposed to use to convert the USD to my local currency?
- August 6th (the date he actually issued the invoice)?
- July 31st (the last day of the accounting period when the services covered by his commission were actually completed)?
- Or is there some other rule I'm missing?

Nicole Lee6 said:Oh, I just realized you guys were referencing Section 75, Paragraph 3, but I could have sworn I read Section 79, Paragraph 3 somewhere.😂

In my specific situation, would it be enough to just write "transfer of tax liability under Section 17, Paragraph 1 of the Sales Tax Law," or am I supposed to list both "Section 17, Paragraph 1 AND Section 79, Paragraph 7 of the Sales Tax Law"?🤷

Well, would you look at that. Now that I'm digging through the IRS regulations, I found an example where they suggest using this specific clause:

Not subject to taxation under Section 17, Paragraph 1 of the Sales Tax Law - transfer of tax liability

At the seminar, the instructor told us to just write "Transfer of tax liability under Section 17, Paragraph 1 of the Sales Tax Law," so I've already sent out at least 30 invoices with that exact wording on them.

🙂

Alright, seriously, what are we actually supposed to put on these invoices?! At least in Canada, they issued a definitive list of approved clauses so there wasn't all this constant guesswork. Here, this damn clause seems to change its wording every single week.

Which one are you all actually using?

ambercobra21 said:Hey guys, thanks for all the input—you really helped me clear my head (I think yesterday’s heatwave just turned my brain to mush 🙄). Anyway, we're looking at a tax liability transfer under Section 17, Paragraph 1 here. We’re heading over to Canada to service a fire suppression system, which means the service location is technically the recipient's headquarters. That Section 45, Paragraph 1, Point 4 stuff? That's strictly for export-related shipping services. Thanks again, everyone! 🙂

Don't forget to grab some kind of proof from them showing they are actual tax entities in Canada. Since you're handling the reverse charge, you need documented proof that they are registered taxpayers; you can't just check them against an IRS database because they aren't in the USA. Whether they decide to charge tax on their end is none of your business.

Raymond Martinez10 said:The tax liability doesn't shift for customers located in third countries. It's simple—old lady over there was quoting incorrectly; when dealing with customers in third countries, nothing changes. Everything stays exactly as it was before. The only difference is the specific section mentioned in the footnotes regarding US tax code.

If we are strictly talking about services (B2B service provision), then it applies.

Arthur Bishop6 said:Look, I just re-read this and I think we’re talking about two different things entirely. I’m talking about moving physical goods for export. But, if you've got a client over in Mexico and you're exporting services, then yeah, the tax liability shifts—and that buyer better be able to prove they're actually registered for sales tax.

I finally realized you were asking about services, not physical goods. 🤷 When dealing with services, there isn't much of a distinction whether you're providing them to someone within the UN or someone in a third country; as long as you have documentation proving the recipient is a registered tax entity in their home country, it falls under the "reverse charge" mechanism per Section 17.

ambercobra21 said:So, I’m billing for service exports to Canada using USD, but I’m listing the conversion to Euros based on the Federal Reserve mid-market rate. I also throw in this little disclaimer: "VAT is not charged per the provisions of Section 45, Subsection 4 of the tax code."
Is that actually legit? Do I need to add any other fine print? And am I required to include their business tax ID on there?

Look, you asked about services, not goods. That’s why I answered the way I did. The rules for service exports are entirely separate from the rules governing the export of physical merchandise.

If you’re providing services to a partner based in a third country, you need to include a specific note stating that the tax liability is being transferred under Section 17(1) of the VAT Act 🤔. Just keep in mind, you absolutely have to have documentation proving they are actually registered as a tax entity in Canada; otherwise, there is no transfer, and you'll be stuck calculating the VAT yourself

If you’re referring to that section regarding small tax entities, that’s actually been moved to Section 90 now.

ruggedmaker2 said:So, I finally got some feedback from the IRS regarding the reverse charge situation. It was just a quick verbal heads-up for now, but I sent off an official email, so I’m waiting on the formal paperwork to hit my inbox.
Apparently, they told me the same thing they told Voyageur—for those standard goods delivery invoices under Section 41, you don't apply the reverse charge. That only kicks in for specific service-based invoices.

Heh, well, I guess I'm officially one step closer to actually understanding this tax nightmare 😁

Well, that aligns perfectly with what they drilled into our heads at the seminar. Let me scroll back down to my previous post... reverse charge only kicks in for services (the so-called "mandatory" transfer and triangular transactions). When it comes to delivering goods, the reverse charge doesn't apply because the invoice doesn't show tax based on a transfer, but rather based on an exemption; that's why you cite the text "exempt from tax per Section 41."

Nicole Lee6 said:That was my takeaway from the seminar.
So, essentially, if we are providing services between two business taxpayers where one is American and the other is either from the USA or another foreign nation, the American side doesn't charge sales tax on their invoice; instead, they include a clause stating the tax liability has been transferred under Section 17, Paragraph 1.

However, if it involves the delivery of goods, you use the exemption clause under Section 41.

They repeated it to us three times: reverse charge is mandatory only for services and triangular transactions; everything else falls under an exemption.

The whole debate centered on whether invoices for freighting goods intended for export should strictly state "reverse charge" per Section 17, or if they also need to mention the VAT exemption under that specific export provision.

Karen Smith34 said:So, here’s my take on the whole "reverse charge" thing...

We just had an invoice sent back to us from the USA, and they're asking me to include specific wording like "reverse charge procedure according to US Code"

We already invoiced them for the service.

So, my question is:

How am I supposed to know which specific code to cite? It seems like just writing "reverse charge" isn't quite enough.
I mean, when companies over here send us goods or bill us for services, they always seem to reference all sorts of different regulations—you know, things like the 2008/8 or 2006/112 ones (which I think covers everything related to physical goods, like equipment rentals or repairs and stuff).

Also, just to make sure I've got this straight—if a service is tax-exempt, does that mean we don't use the reverse charge at all?

Thanks so much in advance for any help!

At the seminar, they mentioned that some business partners might request that we cite the specific article from the Executive Order that pertains to the exemption. Usually, you just cite our own domestic law (since it's aligned with the Executive Order), but since foreign entities aren't expected to be experts in our local statutes—even though everyone knows the Executive Order—they might demand that we reference the corresponding article from the Executive Order instead. Which is exactly what happened to you.😬

Patrick Peterson49 said:Man, you gotta be kidding me, that makes zero sense 🤷

If the customer or service recipient is the one on the hook for the sales tax, the vendor has to mark the invoice with "reverse charge" or just write out "tax liability transfer"

So if I'm shipping goods to a business in the USA, they’re the ones responsible for the tax—per Section 79, Article 7, I’ve gotta put "reverse charge" on there...

Same thing happened when I was bringing in supplies from Italy lately—both my suppliers labeled everything as reverse charge on their invoices

It’s possible their specific laws define this slightly differently. For instance, back when companies in Canada were billing me for services while we were considered a third-party country, they didn't bother mentioning the transfer of tax liability—they'd just note that tax wasn't charged per some specific code. But now that we are part of the European Union, they explicitly list "reverse charge." Unlike them, we apply the "reverse charge" designation to everything, whether the invoice is going to the European Union or to a third-party country.

ruggedmaker2 said:Is there actually a minimum amount you have to hit if you're trying to get a refund on sales tax paid while traveling in another state?
I feel like I read some specific number somewhere once, but honestly, my memory is shot and I couldn't find anything useful on the IRS website either. Either I'm totally missing it, or everything online is just a giant, confusing mess. 😵

Like, could I realistically try to claim a $60 refund for sales tax I paid in Texas on hotel stays and gas?

So, I’m looking through my seminar notes—just some quick scribbles I jotted down;
The minimum amount for a VAT refund depends on the filing period;
-for a period between 3 months and 1 year, the minimum is $400
-for a full calendar year, the minimum is $50

However, I have a nagging feeling they were specifically talking about foreign nationals requesting refunds here in the States. They mentioned certain sections of the regulations governing this, but I didn't manage to write down which ones specifically.😢 It's entirely possible that for refunds from other states, you'd need to contact their local authorities directly...

But none of this matters until that new portal on our tax agency's site actually goes live for submitting claims (the VAT refund system)—unless, of course, that's already up and running.🤔

Also, it was mentioned that for things like fuel receipts, you'll likely need to provide copies of any invoices exceeding $250.

P.S. How should a sole proprietor record a fuel receipt from a neighboring state where VAT is shown? Should it be booked under revenue or as an expense, and do you report the total amount or just the base price without the VAT? This is assuming they aren't planning to claim a VAT refund.

Drew Rogers6 said:Exactly!

I’m gonna keep the count going because—let's be real—those guys at the Fed might come up with yet another version before the year is out, so we'll need to pull the cumulative 😁

and if I end up with two "number 1"s, I'm totally screwed.

😂 Honestly, I don't even know what to do anymore except laugh... It's absurd. I called them personally while my colleague was busy sending an email, and we agreed that I would follow up with a formal email myself. Then, today, I get a response stating that the filing sequence starts right back at number 1 😂 yet they told her that the numbering continues sequentially... 😂🤣

ruggedmaker2 said:I’m still waiting on my new IRA and 401(k) statements to hit, but I’m guessing the sequence numbers will just keep rolling along.
It actually makes sense to me, honestly—it’s not like the fiscal year changes or anything.

If I don't enter the first sequence number into the IRA ledger, will it just default back to starting at number 1? Right now, I'm stuck: should I manually input "207" so the subsequent numbers follow that sequence, or should I just leave it blank and let the system reset to 1?🤔

Nicole Lee6 said:😂 for verification

Wait, I don't follow. Are we talking about number 1 or number 109? They didn't specify anything regarding that in the documentation, so I sent them an email. Just waiting to hear back. 😬

EDIT: Got a reply; the new IRS ledger starts over at number 1 effective July 1st.

hm 🤔

Okay. In my case, they told me the new IRA in the updated module begins at number 1.

I was just discussing this with a colleague today, and she mentioned that her email response was different. Apparently, if the last sequence number for the IRA in the old module was 206, then the first sequence number for the IRA in the new VAT module should be 207. 😕🤷☕

I'm curious how people actually working in the field are going to handle this... I'd love to hear your thoughts.
Are you planning to just continue the existing sequence, or are you all starting fresh from number 1?

Henry Edwards33 said:It's 😉

I'm just browsing through the threads to double-check your answers. 🤣

It’s the same deal we dealt with when the sales tax jumped from 23% to 25%. We had to manually input the first IRS number for the new module, essentially picking up right where the previous one left off.

And yeah... I haven't actually grabbed the new license yet, so I'm just talking hypothetically here. ☕

😂 for verification

Wait, I don't follow. Are we talking about number 1 or number 109? They didn't specify anything regarding that in the documentation, so I sent them an email. Just waiting to hear back. 😬

EDIT: Got a reply; the new IRS ledger starts over at number 1 effective July 1st.

hm 🤔

Drew Rogers6 said:Should I keep the sequence going in the IRS ledger after that last entry from June 30th, or am I supposed to start back at 1?
With my regular invoices, I just kept the numbering continuous—they definitely don't restart at one. But now that I've installed this new sales tax software and started posting those entries into the IRS ledger by pulling in the recent records from Salesforce, all my IRS numbers are resetting to 1.🤷

That’s exactly what I was just about to ask. 😬 I’ve gone ahead and continued my work on the billing accounts, moving all those payment terminals over to the new module.

I’m currently staring at my screen in a complete state of confusion regarding these cash receipts from the Fiskal1 tablet—specifically the ones issued between July 1st and July 10th. Since I hadn't integrated the new Sales Tax module yet, I went ahead and logged them into the old IRS regular accounts ledger, though I neglected to include the payment dates. This is a business operating on a cash basis, so that distinction matters. Now, I find myself in this tedious position where I have to go back, delete everything from the old system, and re-enter it all into the new Sales Tax module and the new IRS ledger. My concern is the sequencing. If the very last entry in my old regular accounts ledger (under the old Sales Tax module) was, say, number 108, does the numbering in the new module's IRS ledger pick up right where I left off at 109, or am I expected to restart the entire sequence at 1?

ruggedmaker2 said:Wait, which seminar were you actually at?

But then why does Section 79 (7) clearly state:
(7) In cases where the recipient of goods or services is liable for the sales tax, the provider must note "reverse charge" on the invoice.😕

Good grief, 🙂 I am officially done reading about sales tax. Not one more word. I’m not touching a single page of the tax code until the IRS sends me an official response via email. This is just making my head spin even more.

Patrick Peterson49
Hmm, they did mention that mandatory reverse charge applies to services and tripartite deals, but if we're talking about a delivery of goods, you don't list reverse charge—instead, it falls under the exemption per Section 41. Now, I think they briefly touched on some sort of "optional" reverse charge for certain goods deliveries, but honestly, kill me now; I really need to sleep this off. Maybe after a nap, it will all actually make sense.😢