Doing business with USA member states

Hi everyone! I have a quick question regarding the new IRS tax code forms...
Back at the end of June, we had some imports coming in from the US. The VAT on those imports was due and paid right at the start of July. Now, here's my dilemma: which column should I be using for that import tax? Maybe this one:
III. 6 - input tax on imports ???? 🙂
Thanks in advance!

I guess maybe I should mention what ruggedmaker2 said.

Douglas Nguyen30 said:Hi everyone! I have a quick question regarding the new IRS tax code forms...
Back at the end of June, we had some imports coming in from the US. The VAT on those imports was due and paid right at the start of July. Now, here's my dilemma: which column should I be using for that import tax? Maybe this one:
III. 6 - input tax on imports ???? 🙂
Thanks in advance!

Yes, column III.6 covers the input tax on imports. I guess it will all be settled in the July 2013 IRS tax code calculation.🙂

casualorca5 said:I guess maybe I should mention what ruggedmaker2 said.

Yes, column III.6 covers the input tax on imports. I guess it will all be settled in the July 2013 IRS tax code calculation.🙂

I gave it a shot, but it ended up pulling me under too.
Total taxable transactions.
Calculating the IRS tax code requirements during importation.

So, we're really looking at a zero here?

Wait, how can that be zero if the sales tax has already been paid?
There has to be another way. 🤷

Douglas Nguyen30 said:I gave it a shot, but it ended up pulling me under too.
Total taxable transactions.
Calculating the IRS tax code requirements during importation.

So, we're really looking at a zero here?

Wait, how can that be zero if the sales tax has already been paid?
There has to be another way. 🤷

I also had sales tax paid on imports back in July. If it pulls into my import liability, I'll just delete the entry.
Under Section 76, Subsection 8 of the tax code, there is an option to report import tax solely for accounting purposes. A specific ruling will be issued regarding this method. It should be detailed in the upcoming IRS tax code updates. 😁

I’ve got a quick question, hopefully I'm asking this in the right spot.
So, I was reading through one of those accounting journals today:

Generally speaking, an advance payment follows some kind of signed contract, a verbal agreement, or even just a sent quote. You really have to watch out that the quote doesn't look too much like an actual invoice—especially if it lists the base price and the sales tax amount. If it does, the issuer might end up being on the hook for calculating and paying that sales tax immediately. ...
...
...An estimate usually isn't considered an invoice for an advance payment. But, if you issue an estimate that includes all the elements of a formal invoice, the issuer triggers a tax liability regardless of whether the deposit was actually paid or the goods were delivered. Plus, the recipient can't claim any input tax credits from it either."

😕
I was looking over my own quotes and the ones we get from vendors, and honestly, they all list specific line items, prices, and sales tax. They're all generated from software that makes them look identical to a standard invoice. I guess I don't know if anyone actually ends up paying that sales tax because of it.

Karen Rodriguez3 said:I’ve got a quick question, hopefully I'm asking this in the right spot.
So, I was reading through one of those accounting journals today:

Generally speaking, an advance payment follows some kind of signed contract, a verbal agreement, or even just a sent quote. You really have to watch out that the quote doesn't look too much like an actual invoice—especially if it lists the base price and the sales tax amount. If it does, the issuer might end up being on the hook for calculating and paying that sales tax immediately. ...
...
...An estimate usually isn't considered an invoice for an advance payment. But, if you issue an estimate that includes all the elements of a formal invoice, the issuer triggers a tax liability regardless of whether the deposit was actually paid or the goods were delivered. Plus, the recipient can't claim any input tax credits from it either."

😕
I was looking over my own quotes and the ones we get from vendors, and honestly, they all list specific line items, prices, and sales tax. They're all generated from software that makes them look identical to a standard invoice. I guess I don't know if anyone actually ends up paying that sales tax because of it.

I don't bother putting an EIN on my quotes, and I usually just include a note stating that sales tax can't be deducted based on the quote.

casualorca5 said:I also had sales tax paid on imports back in July. If it pulls into my import liability, I'll just delete the entry.
Under Section 76, Subsection 8 of the tax code, there is an option to report import tax solely for accounting purposes. A specific ruling will be issued regarding this method. It should be detailed in the upcoming IRS tax code updates. 😁

In my software, under the "tax type" selection, I have options for "Import tax paid" and "Import tax assessed." The first one is only reported as an input credit, whereas the second one gets filed as both an input credit and a tax liability.😁

Hey everyone, I could really use some expert advice here—I'm feeling a bit stuck. So, I run an LLC, and according to our standard industry classification codes, we’re officially set up for general cleaning services for all sorts of properties. But, you know how it goes, things aren't always black and white—sometimes we jump in and handle stuff like facade repairs and renovations too. Back in July, we did some exterior work on an apartment complex, and we're currently billing HUD for the job. My big question is: based on those new tax laws regarding construction services, should I be charging sales tax on this specific invoice, or am I exempt? Any clarity would be huge!

Douglas Nguyen30 said:I gave it a shot, but it ended up pulling me under too.
Total taxable transactions.
Calculating the IRS tax code requirements during importation.

So, we're really looking at a zero here?

Wait, how can that be zero if the sales tax has already been paid?
There has to be another way. 🤷

casualorca5 said:I also had sales tax paid on imports back in July. If it pulls into my import liability, I'll just delete the entry.
Under Section 76, Subsection 8 of the tax code, there is an option to report import tax solely for accounting purposes. A specific ruling will be issued regarding this method. It should be detailed in the upcoming IRS tax code updates. 😁

From what I gathered regarding the Law's transitional provisions, the Secretary needs to issue the new VAT regulations within four months of joining the European Union. This would dictate how rulings are issued so that import VAT is treated as an accounting category; until then, everyone pays import VAT and simply lists it under Roman numeral III, point 6, as input tax.
It can't be an accounting category for anyone during July. If you happen to be using Synesis, check the help key (F10) under the special import records. If you set it to: "Without Ruling," it will only report the input tax.
If you don't see that option in the software (help key), you probably need to update your version.

I’m looking for some advice or maybe just a bit of confirmation on how this all works, because I want to make sure I've got my head wrapped around the tax side of things. If I’m offering up hotel accommodations in a city like Chicago to another agency—basically acting as a supplier for their end client—do I need to go through the whole process of registering for taxes in the US? Does it even matter if that agency I'm working with is based here in the States or somewhere overseas? Also, if I’m dealing directly with an individual traveler instead of a company, does that trigger a completely different set of margin tax rules? Any insight would be huge, thanks!

I think I’ve combed through everything, but I can’t seem to find this specific scenario mentioned anywhere. We’re talking about translation services being billed between two VAT-registered businesses within the USA—you know, where the provider and the client are both registered taxpayers but happen to be located in different states. Based on standard international business practice, it's pretty obvious that no sales tax should be applied here. However, for the sake of keeping the IRS happy, we need to point to a specific section of the Tax Code to justify why we aren't charging it. After a bit of digging, I stumbled upon this particular clause:

The Tax Code, version 73/13, Section 45, Paragraph (1), Item 4:

4. services rendered, including transportation and related ancillary services, excluding services exempt from sales tax under Section 39, Paragraph 1 and Section 40, Paragraph 1 of this Code, provided they are directly linked to the export or import of goods as defined by Section 28, Paragraphs 2 and 3, and Section 52, Paragraph 1 of this Code.

Is this the one I'm looking for?

Can someone please point me toward the right database for checking out a business partner? I tried using this link from the IRS site, http://ec.europa.eu/taxation_customs/vies/, but it’s just not loading for me.
What am I missing here?

Henry Edwards33 said:Can someone please point me toward the right database for checking out a business partner? I tried using this link from the IRS site, http://ec.europa.eu/taxation_customs/vies/, but it’s just not loading for me.
What am I missing here?

The link works fine on my end...
honestly, I think your cat chewed through your internet cable.🙂

Henry Edwards33, try this:
http://ec.europa.eu/taxation_customs/vies/
Just paste it straight from the browser... don't try going through the IRS site... it just kept opening the wrong menus for me. 🙂

wiredmarlin41 said:The link works fine on my end...
honestly, I think your cat chewed through your internet cable.🙂

🤣

silentsurfer11 said:Henry Edwards33, try this:
http://ec.europa.eu/taxation_customs/vies/
Just paste it straight from the browser... don't try going through the IRS site... it just kept opening the wrong menus for me. 🙂

Thanks.
The worst part is that I tried pasting the address directly into my browser and nothing happened—it just wouldn't load. Now, suddenly, it’s working perfectly fine using the original link. Typical.
The truth is, they told me they were temporarily unavailable and offered some half-baked apology for the inconvenience. Honestly, I probably just picked the worst possible moment to show up. Then again, that’s kind of my specialty. 🥳

The Atlantic server is down for a bit.

Sorry about the hassle. We know it’s a pain.

Maybe it’s finally time to head home. Even the wind seems to be turning against me. 🤔

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?

Benjamin Palmer80 said:Hopefully this is the last time I have to talk about reverse charge, but only regarding goods. Today—for the hundredth time—I called the IRS to ask for a little clarification on why we use or don't use reverse charge on invoices for the USA, and the agent just politely told me, "Ma'am, I don't know what you're struggling with." Look, you can't transfer tax liability if you have an exemption under Section 41 or 45. If there's an exemption, there's simply no tax to transfer! You only shift the tax obligation to the buyer if you actually have a tax liability to begin with (like with certain services), and even then, for physical goods, it's usually limited to specific three-party transactions. 😕

The headache is that the IRS in other parts of the USA doesn't always play by the same rules—they don't always view these exemptions the exact same way—take the Dutch tax authorities, for example, where they actually demand "reverse charge" to show up on the invoice.

Nicole Lee6 said: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?

Wait, can't you just optionally cite Council Directive 2006/112/EC?

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?

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?