7 posts shown.
Benjamin Palmer80 said:If you're charging American sales tax, you record it in columns 17-22 of the ledger based on the specific rate, and it needs to be entered into section II3 on the tax return.
You can't include an invoice like that in the Collective report since you don't have a tax ID for the customer.
ruggedmaker2 said:Look, under the old IRS regulations, Article 133 was pretty clear:
2) In addition to the requirements in paragraph 1 of this article, when taxing based on collected fees (Article 17, paragraph 3 of the Code), the condition must also be met that the invoice used to claim the input tax credit has actually been paid.
But in the updated tax code, they just scrubbed that whole rule. Now, among other things, it just says:
"(1) The taxpayer is entitled to an input tax credit in the accounting period during which the good was received or the service was performed, provided an invoice containing all data required by Article 79 of the Code has been received."
Nicole Lee6 said:Alright. I'm currently wading through the regulations.
Article 197: (copy-paste):
For any taxpayer looking at the rules as they stood through the end of 2014, the obligation to calculate sales tax kicks in the moment you actually receive or collect payment for goods or services rendered. However—and this is where things get unnecessarily complicated—there are a handful of specific exceptions to that rule. We aren't talking about standard domestic transactions here; instead, the rules shift when dealing with goods acquired from within the EU, certain transfers of assets outlined under specific sections of the tax code, or those specialized service categories defined by the law. There’s also the matter of reverse charge scenarios, where the recipient is the one on the hook for the tax, and those peculiar edge cases tucked away in the secondary statutes. It’s a dense thicket of regulatory fine print, frankly.
Let’s take a moment to dissect this specific section of the tax code, because if you don't pay close attention to how the taxable base is calculated, you're basically asking for an audit nightmare. According to the regulations regarding settlements based on received or charged compensation under Section 139, we have to look at what the recipient actually considers payment for the goods or services provided—and I mean everything *except* the sales tax itself. But here is where people usually trip up: the taxable base isn't just the direct cash changing hands between the buyer and the seller. It also includes any additional amounts that a third party might pay, or is even obligated to pay, to the taxpayer for those same goods or services. Essentially, if someone else steps in to cover part of the cost, that amount gets pulled back into the calculation for the tax base. You can't just ignore those side payments; they are legally part of the transaction.
When you’re transferring an entire business unit, VAT is always calculated based on the actual invoices issued. It doesn't matter whether the buyer is actually permitted to claim tax credits on the reimbursements they receive—it’s all about those specific invoices. Period.
The taxpayer identified in paragraph 1 of this section. You absolutely have to make sure that "R-2" designation is clearly marked on all the invoices. It’s not just a suggestion; it's a requirement.Look, let me be perfectly clear on this point because I know there’s been some confusion floating around: you can absolutely claim that input tax credit during the specific accounting period in which the invoice was actually settled. It's straightforward once you stop overcomplicating it.
Look, let’s be clear about the compliance side of things here. Under the regulations laid out in Section 1 of this article, any taxpayer falling under that umbrella is absolutely required to maintain their books with total precision. You can't just wing it when it comes to sales tax. You are legally obligated to track and document every single shred of data necessary to calculate and settle your tax liabilities, strictly following the specific procedures dictated by Article 168 of this Regulation. It’s not a suggestion; it’s a requirement.
Alright, who has actually lost their mind here?! The law clearly states that R-1 and R-2 are being scrapped, yet those responsible for the CDC tax filings are pointing to this new clause about "calculation based on collected fees." Then, just to make things even more infuriating, I woke up this morning to an email from Pupille saying the exact same thing—that starting July 1st, the R-1 and R-2 designations are being wiped from all modules, and anyone previously under R-2 now has to include that specific clause at the bottom of their invoices?!?!?
I’ve been combing through the regulations, and as far as I can tell, there isn't a single word in there about what kind of documentation we actually need to collect. We’re supposed to be asking our partners in non-EU countries for specific proof to ensure a valid transfer of tax liability, but the guidelines are completely silent on the matter. We were all just sitting around waiting for the official manual to be released because we assumed it would finally lay out those requirements... and now what? We're just left hanging.
Drew Rogers6 said:Look, we use Chase for our business account. Most of the time we don't even keep Euros in the foreign currency account, so when we need to pay something, we just convert from USD—and that conversion amount becomes my base for the VAT form calculation. Am I doing this wrong?
Richard Howard55 said:Yeah, it’s not an issue for corporate taxpayers, unless you have some R-2 invoices getting paid in July.
When I was writing that previous post, I was thinking strictly about those cash-basis taxpayers—the ones who handle VAT based on when money actually changes hands. They’re the ones who really have something to worry about. 🤔