Posts by Jeremy Anderson63

Richard Howard55 said:I’d suggest accepting the response with reservations. It seems like we're just looking at a secondary supplement here, which shouldn't trigger any Value Added Tax obligations.
Otherwise, things are starting to get a bit ridiculous.
Anyway, let me know once you figure out the actual protocol.

Richard Howard55 said:I’d suggest accepting the response with reservations. It seems like we're just looking at a secondary supplement here, which shouldn't trigger any Value Added Tax obligations.
Otherwise, things are starting to get a bit ridiculous.
Anyway, let me know once you figure out the actual protocol.

ruggedmaker2 said:He's doing the work for you, so are you invoicing him?
I don't get it.
I don't see any Sales Tax involved at all, just income tax since it's a contractor deal. Correct me if I'm wrong.

Alright, let me give you the answer. It’s exactly what I suspected, though it sounds just as absurd to me as it did to you, so I wasn't even sure myself (the folks at Wells Fargo and the CPA Handbook gave me the answer).

Section 6, Subsection 1...

Under the Sales Tax law, a taxable person is defined as anyone who independently carries out any business activity regardless of why they're doing it or what the result is.

Section 6, Subsection 2...

"Business activity," per subsection 1, includes anything done by manufacturers, retailers, or individuals providing services, including mining, agriculture, or licensed professionals. Using tangible or intangible assets to generate steady income counts as a business activity too.

And because the definition of "providing services" has been broadened, the law interprets it such that if a physical person provides a service—like construction, translation, or brokering—via a contractor agreement or freelance fee (which is just miscellaneous income for a non-resident of the US or a third country), it is considered that you received that service from another taxable entity for the purpose of carrying out your own business operations.

If we're talking about services that fall under the standard B2B principle—you know, like what’s laid out in Section 17.1.—then... Look, under the Value Added Tax law, specifically Section 75, subsection 1, point 6... you guys are legally required to calculate the tax. It’s not optional...And you have to admit, if they meet all the other requirements, they should get that pre-tax credit immediately...

If we're talking about exemptions—like services tied to real estate or cultural stuff (Articles 19 through 26)—then you're strictly required to follow the Value Added Tax law... Section 75, subsection 2... typical. You gotta calculate the Value Added Tax right away, including the input tax... because the assumption is you've already received the service from another taxpayer.

Alright, here are three more examples of what tax advisors have been telling their clients...

Question...:
So, I’m working as a freelance consultant here in the States, just doing my thing under a standard independent contractor agreement. What's the deal with the Value Added Tax law when I'm providing services to clients overseas?

Response...:
Look, if you're an American business owner paying out a second income benefit for some consulting services, you've got to handle the Value Added Tax. You’re required to calculate and pay that tax based on the gross amount being sent to a non-resident. It’s just how it works... If you're running a taxable business and you have the right to claim input tax credits, then you go ahead and list that credit on your VAT return for the period when the consulting service was reported. Simple enough, I guess....

Question...:
So, here’s the deal. We've got a business entity here in the States, and we're looking to hire an individual—someone from outside the country, specifically Mexico—to handle some decorative interior design work. It’s going to be under a standard independent contractor agreement. Our big question is: when it comes to the Value Added Tax law, do we calculate the tax based on where our business is located...

Response...:
So, regarding the Value Added Tax law... basically, if a domestic business is paying out a non-resident for services that are taxable here in the States, they're the ones on the hook for calculating and paying it. I’m assuming you’ve got some non-resident contractor coming in to handle decorative interior design or something tied directly to real estate. Well, per Article 19 of the Value Added Tax law and Article 33 of the regulations, the place of supply—meaning where the tax actually applies—is wherever that property is physically located...

Question:
Got a question about some copyright work being done by a non-resident—someone outside the European Union, specifically over in Mexico—for a packaging design project. The work is actually being carried out in Mexico for a taxpayer based here in America. Do we need to calculate this as other income for a non-resident? And regarding the Value Added Tax law, do we pay that based on where the service recipient is located? Also, does it even matter where the service is physically performed... like, does the distinction between Mexico and America change anything...?

I don't even know where to start with this... just total nonsense. Honestly, it’s like nobody actually looks at the facts anymore before they start shouting. You look at the data and it tells one story, then you listen to these people and it’s something completely different. It's exhausting...
So, I was looking at Section 75, Subsection 1, Point 6 of the Value Added Tax law... and honestly, it’s just more bureaucratic nonsense. Basically, if you're a registered business entity—even if you aren't technically classified as a "taxable person" under the code—you're on the hook for paying VAT if some foreign entity provides services to you. Yeah, you heard me right. If they don't have a headquarters or a residence here in the States, the bill lands squarely on your desk. Then there's Subsection 2, which makes things even more ridiculous. If a non-resident business is delivering goods or services within the US, the responsibility to pay that tax falls on the local registered entity receiving them. It doesn't matter where the provider lives; the American side pays. And for anyone confused about who counts as a "taxable person"... according to the law, it's basically anyone running an independent business, regardless of why they're doing it or how much money they actually make. Just more red tape to choke everyone...

Based on how the rules work, if an American business or individual picks up a service from someone living in Mexico, they’re on the hook to calculate the American Value Added Tax on that service... doesn't even matter where the actual work happens...

On the other hand... The IRS says there’s no sales tax to worry about here because a private individual isn't actually transferring any taxable assets to us...

Oh, sure. You go ahead and be the genius then... 🤷🤷

David Green642 said:Need some help here:

How should I handle—or rather, book—an invoice for $117 that mentions a tax liability transfer per Section 75, Subsection 3a and Section 79, Subsection 7 of the Value Added Tax law?

Do I just put this on a standard VAT return? If so, where does it actually go?

Just to be clear, this is an input invoice, not an output one, so there's input tax to claim.

THANKS!!

The manual for domestic PAC tax liability transfers... what a joke.

VAT forms... honestly... what a nightmare...
II. 4. VAT on imports into the US...
The recipient handles the math... The whole damn Value Added Tax law... just more paperwork for everyone else to deal with...

III. 2.
Prepayments on incoming shipments...
In Rhode Island, what kind of Value Added Tax is the recipient actually responsible for calculating...?
pre-tax...

Alright, I've got a bit of a headache here,

Basically, we have an individual coming in from Mexico to do some construction work on a property owned by our firm (we're just the taxpayers here).

We’re handling the paperwork via an independent contractor agreement, and we've already requested a tax ID for a non-resident from the IRS. He’s going to provide proof that his social security and insurance contributions are fully settled in Mexico, so there shouldn't be any issues there. As for income tax, since the international double taxation treaty doesn't apply here, we'll be paying the 25% rate locally.

Now, here's where I'm stuck... do we need to calculate sales tax on this service? I'm thinking it might fall under Section 75, subsection 2 of the tax code...??

We agreed on a gross amount of $6.75. So, if we actually have to account for sales tax, what's the base amount? Is it the full $6.75 or the amount after we deduct the income tax—basically, whatever part he actually takes home?

stormyhound3 said:Thanks for the help. I guess mine is the last one, except the invoice doesn't show any tax liability transfer. Should I maybe ask them to fix the bill?

Look, you definitely have a taxable acquisition happening here in the US. If they didn't list the reverse charge on the invoice, that's on them, but honestly, maybe under their local laws they aren't even required to include that note. I don't think it's worth making a fuss... as long as the Austrian VAT ID is in the system, it should be fine.

rowdyhawk25 said:After spending way too much time digging through all the Value Added Tax Act rules, I’ve reached that point where I’m actually supposed to file, and now my brain is just totally fried. I honestly don't know what I'm doing anymore. So, here's the situation: I have imports coming in from outside the European Union. When my freight forwarder pays the VAT on those imports, I assume I should be recording that under section III 6. I really hope I'm getting that right. And then, what exactly goes into section II 14—is that specifically for the VAT calculated at the time of import?

Yeah, you nailed it. Just check the IRS instructions for filling out the VAT forms. Specifically, they say section II.14 is where you put the value of imported goods and the VAT calculated at the time of import according to Section 76, subsection 8 of the Value Added Tax Act.

Only importers who have been granted special status by the Department of the Treasury – IRS will be using that specific line... basically those guys who don't physically pay the tax at the border because it's handled through an accounting deferral instead.

Jeremy Anderson63 said:Look, when you're dealing with goods, you've got those specific thresholds for delivery and acquisition. But services? Those concepts don't even apply... which basically means everything changes...

When it comes to services, you’re looking at the whole "taxable person" concept... additional expansion... It all comes down to Article 16 of the VAT law... which basically means anyone performing those actions is officially considered a taxpayer... Running a business... just one more thing to deal with...Look, according to Article 6, Section 1 of the VAT law, the definition is pretty straightforward. Basically, anyone running their own business on their own terms is considered a taxpayer... regardless of why they're doing it or how much money they actually make from it. So, under the eyes of the IRS, that means any activity involving manufacturers, retailers, or... The person providing the services....

The IRS just dropped a new directive, and honestly, it’s a total mess. They’re claiming that for VAT purposes, people now have to register along with... So, you've got local tax obligors who actually received the services... and since they're the ones getting the deal, they're the ones stuck footing the bill for the VAT on those incoming services. It's just how the tax law works... Section 77, subsection 7, paragraph d...

Look, like I said before... Article 75, Section 1, Item 6 clearly states that the responsibility falls on the taxpayer. Basically, any tax-registered entity or legal corporation is required to handle the VAT law calculations themselves... So, who exactly isn't considered a tax filer... huh? It's registered just to deal with the VAT law...If you're getting services under Article 17, Section 1 of this tax law, but the person actually doing the work isn't based here in the States... well, that changes things...

So, here's the deal. Even if you’re just running a small business on a flat tax rate and aren't technically part of the VAT system, you're still considered a taxable person when it comes to service transactions. It’s a total headache... basically, you have to reach out to the IRS and get registered for VAT purposes anyway. All you really need to do is fill out this specific form... Check this out... http://www.irs.gov/VAT-regulations/....06.2013.pdf... Just more bureaucratic nonsense from the IRS. Typical....

Once the IRS hands you that VAT ID, you're officially in business... and suddenly you're part of the machine. B2B... honestly, what even is that? Just more corporate jargon to make simple things sound complicated... typical. So, when we're talking B2B, it basically means the whole service transaction is happening between two separate taxpayers. According to Article 17, Section 1... Where the services are actually being performed... Any taxpayer operating as such... It's basically considered the taxpayer's official headquarters... So, basically, since some other business provided the service to you, it means the place of taxation is right here in America... which gives the US every right to collect the VAT on those services... turns out that's just how it works...

Look, you aren't actually joining the VAT system. You don't get to claim any input tax credits either. On your outgoing invoices, you just don't show VAT at all... you're only registering for VAT purposes to handle service transactions with the European Union. In those specific months where you actually have that kind of business, you file the required tax forms—you know, the standard VAT returns and the ZP form. But if you don't have those transactions? Then you don't owe the IRS anything... nothing at all.

Just head down to the local IRS office and ask for the paperwork and some clarification on registering for VAT purposes. You probably just confused them with this whole limited registration thing...

Look, regarding VAT registration—like I mentioned before, because the definition of a taxable person is so broad when it comes to services, basically anyone qualifies. We're talking about people who are technically considered taxpayers already, like businesses running things that are exempt from VAT (think hospitals, schools, or banks), and then you've got the "small taxpayers"—basically contractors or freelancers who aren't in the VAT system but are providing services here in the US.

Let me finish this thought. I was just explaining what happens when a "small business owner" (like a freelancer or sole proprietor) receives services from the European Union or outside the US—it’s a bit different than getting physical products. In those cases, there might be a need (though not always) to file certain VAT forms. It's basically the same deal if they are the ones providing services—you know, things like transport, consulting, repairs, etc.—to clients within the EU or other foreign countries.

The person also has to register for VAT purposes in that scenario. They don't actually join the full VAT system and can't claim input tax credits, but they have to get a VAT ID from the IRS because even though they're considered small taxpayers here in America, the EU treats them just like any other professional. If that's the case, you have to submit a special report alongside your monthly tax filing. Of course, if there's no business activity with the EU during a specific month, you don't have to file anything at all.

Honestly, I think joining the European Union made life way more complicated for small businesses that aren't part of the standard VAT system. It's just more red tape...

If you need to see who is required to register for VAT purposes, check this link:
http://www.irs.gov/PdviEu/...2.05.2013).pdf

mistymason24 said:🙏🙏🙏

🙏🙏

So basically, I just log it in my books for the IRS as a straight expense, cool.

Man, this sales tax stuff is driving me crazy—just when I thought I finally had things figured out, something else trips me up. I give them my tax ID and they still hit me with the tax... isn't that what the B2B exemption is for? ...ugh, whatever. 😵😵

Regarding the fuel in your example and why you're getting hit with Canadian VAT despite providing a VAT ID for a B2B transaction—it actually comes down to this being a delivery of goods without transport.

Section 12 of the VAT law: The place of supply for goods that are not shipped or transported is considered to be where the goods are located at the moment of delivery.

That means this specific delivery falls under Canadian VAT, which is why you aren't required to report it as a taxable acquisition here in America.

slyfalcon22 said:So, a few days back, some small-time hosts—the kind who pay a flat tax and aren't part of the VAT system—got hit with a notice from Booking.com. Apparently, starting July 1st, they’re supposedly responsible for calculating and paying American VAT on those commission invoices sent over by Booking.com (and other foreign companies that don't have an American footprint). They mentioned that little guys who aren't currently in the VAT system can actually apply for limited VAT registration, which sounds like a total mystery because my local IRS office hasn't heard a single word about it. If anyone out there actually understands why a private host would be on the hook for VAT on Booking.com's fees—especially when they're just paying a flat tax and aren't even in the VAT system—could you please walk me through it? And does this limited VAT registration thing actually exist?

Look, when you're dealing with goods, you've got those specific thresholds for delivery and acquisition. But services? Those concepts don't even apply... which basically means everything changes...

When it comes to services, you’re looking at the whole "taxable person" concept... additional expansion... It all comes down to Article 16 of the VAT law... which basically means anyone performing those actions is officially considered a taxpayer... Running a business... just one more thing to deal with...Look, according to Article 6, Section 1 of the VAT law, the definition is pretty straightforward. Basically, anyone running their own business on their own terms is considered a taxpayer... regardless of why they're doing it or how much money they actually make from it. So, under the eyes of the IRS, that means any activity involving manufacturers, retailers, or... The person providing the services....

The IRS just dropped a new directive, and honestly, it’s a total mess. They’re claiming that for VAT purposes, people now have to register along with... So, you've got local tax obligors who actually received the services... and since they're the ones getting the deal, they're the ones stuck footing the bill for the VAT on those incoming services. It's just how the tax law works... Section 77, subsection 7, paragraph d...

Look, like I said before... Article 75, Section 1, Item 6 clearly states that the responsibility falls on the taxpayer. Basically, any tax-registered entity or legal corporation is required to handle the VAT law calculations themselves... So, who exactly isn't considered a tax filer... huh? It's registered just to deal with the VAT law...If you're getting services under Article 17, Section 1 of this tax law, but the person actually doing the work isn't based here in the States... well, that changes things...

So, here's the deal. Even if you’re just running a small business on a flat tax rate and aren't technically part of the VAT system, you're still considered a taxable person when it comes to service transactions. It’s a total headache... basically, you have to reach out to the IRS and get registered for VAT purposes anyway. All you really need to do is fill out this specific form... Check this out... http://www.irs.gov/VAT-regulations/....06.2013.pdf... Just more bureaucratic nonsense from the IRS. Typical....

Once the IRS hands you that VAT ID, you're officially in business... and suddenly you're part of the machine. B2B... honestly, what even is that? Just more corporate jargon to make simple things sound complicated... typical. So, when we're talking B2B, it basically means the whole service transaction is happening between two separate taxpayers. According to Article 17, Section 1... Where the services are actually being performed... Any taxpayer operating as such... It's basically considered the taxpayer's official headquarters... So, basically, since some other business provided the service to you, it means the place of taxation is right here in America... which gives the US every right to collect the VAT on those services... turns out that's just how it works...

Look, you aren't actually joining the VAT system. You don't get to claim any input tax credits either. On your outgoing invoices, you just don't show VAT at all... you're only registering for VAT purposes to handle service transactions with the European Union. In those specific months where you actually have that kind of business, you file the required tax forms—you know, the standard VAT returns and the ZP form. But if you don't have those transactions? Then you don't owe the IRS anything... nothing at all.

Just head down to the local IRS office and ask for the paperwork and some clarification on registering for VAT purposes. You probably just confused them with this whole limited registration thing...

Look, regarding VAT registration—like I mentioned before, because the definition of a taxable person is so broad when it comes to services, basically anyone qualifies. We're talking about people who are technically considered taxpayers already, like businesses running things that are exempt from VAT (think hospitals, schools, or banks), and then you've got the "small taxpayers"—basically contractors or freelancers who aren't in the VAT system but are providing services here in the US.

Steven Anderson14 said:But it literally says right there in Article 17, sections 1 and 2. Plus, we already took delivery of the goods. The price was agreed upon as franco—meaning zero shipping costs—and there isn't even a mention of freight anywhere on the invoice.

It’s definitely subject to American VAT regulations. Just record it as a standard taxable acquisition and be done with it. No big deal.

Steven Anderson14 said:So, we just got an invoice from a supplier over in Canada for some goods. It’s listed in USD. It claims a VAT exemption under Section 17, paragraphs 1 and 2 of the Value Added Tax Act.
Is this actually a legitimate acquisition? I'm a bit tripped up because the invoice is in USD (with no tax applied) and the payment is being sent to a bank account here in the States. I checked their info against the IRS database and everything looks fine there.
Any ideas? Help a guy out!

So you ordered goods, but the invoice cites Section 17, paragraph 1... that usually implies services. That specific section defines where services are taxed based on the basic principle.

Could it be some kind of shipping or freight service or something?

Based on what's written on that invoice, we're looking at an import of services from within the USA. As the recipient, per Section 75, paragraph 1, item 6, you're responsible for the sales tax—meaning you have to perform a taxable acquisition where you'll immediately claim it as an input credit. Basically, no actual cash leaves your pocket for the tax itself.

ruggedmaker2 said:First things first, are you and your client actually registered in the VAT system?

Assuming you are (and listen, you better have proof your client is a registered taxpayer, regardless of where they're based overseas), then you’re looking at an exemption under Section 45, subsection 1, item 1 of the Value Added Tax Act and Section 108, subsection 8 of the regulations (look those up yourself, I'm not in the mood to copy-paste a legal textbook right now).

For exports, obviously, everything has to be documented via customs declarations, and you need solid proof that the goods actually left the US.
Since you're dealing with an upgrade, you've also got to make sure you have all the right import customs paperwork in order.

On your VAT return, you just list this under the exempt supplies section... there's a specific line for exports somewhere in there (I don't recall the exact line number off the top of my head).
As far as your financial bookkeeping goes, just keep doing what you've been doing; nothing changes there.

Honestly, if you don't have all the proper documentation—meaning the customs declarations and proof that your client is a registered taxpayer—then I have no idea how you'd even pull this off.

mistymason24 said:Clients from Canada sent us a machine. Our job is to modify it—basically, we have to upgrade one part and then ship it back to them.

I'd just add one more thing. This falls under Section 46, Subsection 1 of the Value Added Tax Act. It covers exemptions for services performed on movable property imported into the US for repair or adjustment, provided ownership doesn't transfer to the service provider.

All that stuff I mentioned above applies regarding the requirement to have customs declarations, both for temporary imports and for the export.

On the invoice, just add a note: Exempt from sales tax per Section 46 of the Value Added Tax Act.

When booking it, it goes into the regular report under Other Exemptions.

Justin Jones12 said:I bought some inventory from a company based in the USA (specifically, a large firm in the UK). The invoice shows $0 in sales tax. How much sales tax am I responsible for paying, and what is the process for that?

You don't actually "pay" the tax out of pocket; you just handle the accounting obligation to the IRS.

Regarding the tax itself, since you have an EIN, this is just a bookkeeping entry. No actual cash leaves your hand... just record it like you always do.

In your books, you'll record

2210 P
650 (or 660) D

24022 D (VAT payable on imports from the USA - 25%)
14022 P (VAT credit on imports from the USA - 25%)

On your tax return, you list it under:
II. 7.
III. 3.

Also, remember you need to file the supplemental tax documentation by the 20th of next month alongside your regular filing.

Brian Sanders57 said:I have a question 😁, I'm feeling a bit lost here. I've read about every possible scenario online except this one: what happens when you acquire assets from a company that isn't part of the VAT system?
Basically, I buy something from a firm in the European Union, but that company isn't registered for VAT in its own country. How do I report the acquisition of these goods? I can't fill out the VAT forms because the company isn't in the database, which means I can't calculate input tax on the VAT return either (since I need the actual VAT invoices to do that), right? Or am I missing something? The more I read and think about it, the more confused I get. 🙂

If I'm following you, you're just buying goods from some "small business" over in the European Union.

In that case, you look at Section 4, subsection 2, paragraph a of the Tax Law which defines what counts as taxable. Based on that, a "small taxpayer" isn't treated as a full "taxable entity." That means there isn't even a taxable acquisition happening in the other European Union country where the shipment ends up once they complete the delivery (in this case, here in the US).

You don't fill out any special VAT forms. You just record the incoming invoice as a domestic one.

ruggedmaker2 said:Yeah, you absolutely do.
The government doesn't tell you exactly what the layout should look like—you can design it however you want—but you're legally required to keep those records per Section 163, subsection 4 of the Tax Code.

(4) To ensure all data regarding the acquisition of goods from other states, or services provided to other states or third countries is accounted for, as well as the sales tax paid during import, the taxpayer acting as the importer is required to maintain a separate record.

Honestly, I just made myself an Excel sheet. I put in columns for: entry number, posting date, invoice date, invoice number, company name, total value (split by taxable and non-taxable), and the sales tax (with columns for tax that’s deductible versus what isn't).
If I'm being totally blunt, I basically just copied the format straight out of the RRIF. 😁

Don't kill yourself over this... you can just use the U-RA manual for stuff like this 😁

copperstag95 said:I suppose I should ask, does the acquisition of goods or services from third-party countries also require being recorded in a separate ledger??

We're talking about imports here (acquisitions usually happen within the US). There isn't a specific official form for it, but you can always keep your own records if you want...

Drew Rogers6 said:I’m begging anyone with a soul—and please, just don't give me that "go read the tax code" nonsense—to tell me if I need to charge VAT when I'm hauling goods from Washington, D.C. to Buffalo for a company based in the European Union that's already registered for VAT. If I don't have to, which specific section of the law covers that?

Also, does anyone know which part of the law applies when I'm exporting goods to Mexico to a registered taxpayer?

Thanks in advance!🙂

We're talking about a transport service within the European Union performed by an American taxpayer for a business located in another member state. The standard rule applies here: the place of supply is where the recipient's headquarters are located. An American taxpayer shouldn't charge VAT on the invoice and should include a note stating the tax liability is being transferred under Section 17, Subsection 1 of the VAT law.
You also need to log this in the ZP form under "Services performed within the EU"

When you're exporting goods to Mexico, that's considered an export exempt from VAT under Section 45, Subsection 1, item 1. On the invoice, you just write "Exempt from VAT per Section 45, Subsection 1."]

ruggedmaker2 said:Of course not. It’s a non-issue. Neither interest nor exchange rate fluctuations are subject to tax at all.
Just look at Article 2 of the VAT regulations:
Article 2.
The scope of taxation includes every supply of goods or performance of services within the domestic territory for consideration, the acquisition of goods within the European Union by persons defined in Article 4, Section 1, Point 2 of the Law, and the import of goods if all other conditions prescribed by the Law are met.

An exchange rate difference isn't a supply of goods, and it sure as hell isn't a service. Same goes for interest. 😉

A negative exchange rate difference is just an expense, and a positive one is revenue.

Just one more thing regarding interest, based on how the IRS interprets things:

Interest is considered compensation for a financing service, so when we're talking about interest charged domestically, it's not subject to VAT according to Article 40, Section 1, subsection b, because that service is exempt under the law.

But, if our business owner grants a loan and charges interest to a business within the European Union, then that article doesn't apply. We're looking at banking and financial services that aren't listed as exemptions, so they get taxed based on one of two fundamental principles used to determine where a service is taxed, depending on the recipient's tax status:

1) B2B - the place of taxation is where the recipient is located (per Article 17, Section 1, you mark it as "reverse charge" on the invoice)

2) B2C - the place of taxation is where the business performing the service is located (according to this interpretation, if you're granting a loan to an individual, you'd actually have to charge American VAT on the interest invoice)

Jeremy Anderson63 said:I could use a little help here. I’m dealing with concert ticket sales, and if anyone has experience in this area, please weigh in. Here’s the situation:

Up until now, we've been selling tickets based on a gross price that includes sales tax. That was our starting point for everything:
- All the organizer's tax obligations were calculated from that total amount.
- As far as I know, royalties for ZAMP were also calculated based on that figure.

The old way looked like this:
Ticket sale price: $33
Sales tax included (10%): $3.25

The headache is that this final price includes both the sales tax and the ticketing service fee, which means it doesn't reflect the actual revenue for the organizer.

The idea is to list the price on the ticket as net value plus a pre-sale commission. This commission would basically be treated as a service provided by the ticketing platform, keeping it separate from the base ticket price used for other calculations (taxes, ZAMP, etc.).

The new method—assuming a 10% sales commission--would look like this:
Net ticket price: $30
Sales tax included (10%): $3.00

Pre-sale commission: $3.25
Total ticket sale price: $33

So, my question is... does the IRS strictly insist on using the gross price as the basis for all calculations?

Found the answer in the VAT regulations. If anyone else has a similar question, I can PM you the response.

I could use a little help here. I’m dealing with concert ticket sales, and if anyone has experience in this area, please weigh in. Here’s the situation:

Up until now, we've been selling tickets based on a gross price that includes sales tax. That was our starting point for everything:
- All the organizer's tax obligations were calculated from that total amount.
- As far as I know, royalties for ZAMP were also calculated based on that figure.

The old way looked like this:
Ticket sale price: $33
Sales tax included (10%): $3.25

The headache is that this final price includes both the sales tax and the ticketing service fee, which means it doesn't reflect the actual revenue for the organizer.

The idea is to list the price on the ticket as net value plus a pre-sale commission. This commission would basically be treated as a service provided by the ticketing platform, keeping it separate from the base ticket price used for other calculations (taxes, ZAMP, etc.).

The new method—assuming a 10% sales commission--would look like this:
Net ticket price: $30
Sales tax included (10%): $3.00

Pre-sale commission: $3.25
Total ticket sale price: $33

So, my question is... does the IRS strictly insist on using the gross price as the basis for all calculations?