Doing business with USA member states

Thanks, ruggedmaker2. We actually went directly to a manager at the local IRS branch to get some clarity, but she was completely clueless. She just pointed us toward an email address for the Chief Advisor at the Department of the Treasury. Naturally, they shot back saying we have to submit a formal written request to the IRS and pay the $6.75 processing fee first. Apparently, you can't even get a straight answer without cutting them a check. It’s ridiculous—we paid the filing fees for one of those inquiries seven months ago, and we’re still sitting here waiting on a response. It seems their only priority is making sure you pay up.🙂

dustyscout8 said:Thanks, ruggedmaker2. We actually went directly to a manager at the local IRS branch to get some clarity, but she was completely clueless. She just pointed us toward an email address for the Chief Advisor at the Department of the Treasury. Naturally, they shot back saying we have to submit a formal written request to the IRS and pay the $6.75 processing fee first. Apparently, you can't even get a straight answer without cutting them a check. It’s ridiculous—we paid the filing fees for one of those inquiries seven months ago, and we’re still sitting here waiting on a response. It seems their only priority is making sure you pay up.🙂

I’ve never heard of them charging fees for basic info. 😲We just deal with the IRS through email all the time and it doesn't cost us a dime.
Just the other day, I actually got a formal written opinion from the Department of the Treasury regarding income tax, and I didn't have to pay a single cent.😕

ruggedmaker2 said:If you're paying corporate income tax, you can claim those R2 invoice credits immediately starting July 1st.

Nope, that sale is taxable because you're billing a private individual. You can't just dump it under exempt transactions.
That person is your end consumer, so you have to charge them our standard sales tax.

🙂

Christian Cruz41 said:I could use some help here....
A small business owner just settled some invoices that didn't include sales tax, and now I'm stuck. I have no idea which column on the sales tax return this belongs in.
It was for an international shipping service—so it was tax-exempt.
Thanks.

Anyone have an idea?

Christian Cruz41 said:I could use some help here....
A small business owner just settled some invoices that didn't include sales tax, and now I'm stuck. I have no idea which column on the sales tax return this belongs in.
It was for an international shipping service—so it was tax-exempt.
Thanks.

I dealt with this exact same headache back in July. My accounting software automatically dumped it into Section I.10 under "Other Exemptions." That’s how the system categorized it, and honestly, looking at the forms, I can't see where else it would logically fit anyway.🤷

Can someone help me out here? I’m trying to figure out what it actually implies when a company from the USA registers for VAT purposes right here in the States and ends up with an American tax ID.

Back before everything was streamlined under the current US system, we had a local American firm billing us for transport services, including the sales tax. We would then pass those costs along to our client—another American company—on our own invoices, but we wouldn't charge them any sales tax because the tax liability was being shifted over to them.

Now, this American company has gone ahead and registered for sales tax locally and has been issued an American tax ID.
Does this mean I need to start charging them sales tax on all the new invoices I send their way?

So, which tax ID are you actually putting on the invoice? The US one or the one from that other country?
If it's an American tax ID, I’m thinking you go ahead with the sales tax because once that company registered as a taxpayer here in the States, they can claim it as an input credit on their tax forms. But if it's a foreign ID, then you just stick to the usual routine.
I haven't double-checked the fine print, so don't quote me on this, but that's how I see it playing out.
Have you tried calling the IRS to clear it up?

Yeah, I checked in a few different places. Some people were a bit hesitant about it, but after speaking directly with Brkanić at the IRS and later checking in with my contacts there, he made it clear that if we're looking at an American tax ID, then VAT has to be accounted for, so I went ahead and ran the numbers accordingly.

Need some help figuring out VAT rules for travel agencies (TAs) starting from July 1, 2013. Looking for clarity on specific scenarios:
-regarding issuing/booking outbound invoices and calculating VAT
1. What’s the tax move if a TA based in Washington, D.C. sells accommodation in their own name to another TA outside the European Union (say, in Canada), but that stay happens at a property within the European Union? (Note: they bought it from a European Union TA that used the special margin scheme on the invoice)
2. What’s the deal if a Washington, D.C. TA sells accommodation in their own name to an out-of-country TA, but the actual stay is at a property located outside the European Union? (They bought it from a European Union TA)
3. How does the taxation work when a Washington, D.C. TA sells accommodation to another American TA, specifically when the stay is:
-at a property located in America
-at a property in another European Union country
-at a property outside the European Union

-regarding booking inbound invoices and VAT reporting/calculation
1. Does a Washington, D.C. TA charge VAT when they get an accommodation invoice from a European Union TA that applied the special margin scheme?
2. Does a Washington, D.C. TA charge VAT when they get an accommodation invoice from a European Union TA where no VAT was charged and no exemption was listed?

Thanks in advance...

I just have one quick question, and it’s not even about joining the USA. Did I get this right—is the sales tax on printed stuff, like a monthly magazine covering sports events, calculated at a 10% rate?
(IX, 2/3/c).

Thanks!

First off, hi everyone on the forum! I’m a new bookkeeper, so I’m definitely going to be leaning on you all for advice and experience as I get settled.
I have a question about VAT filings. My boss was on a business trip to Italy back in August and paid for his hotel stay using a company debit card—not a credit card. He asked for an R1 receipt and the hotel owner provided one, which included the Italian VAT. How should I report this on our August VAT return, and do we need to file the standard VAT-S form?
I attended that seminar on VAT transitions when we joined the USA, but honestly, I'm still a bit fuzzy on the details, so any help would be huge.
Thanks so much in advance for the info!

Look, if the boss gets an invoice with Italian VAT on it, it’s not going on the local sales tax forms or the VAT return because, well, you didn't pay American sales tax on it.
You just book that receipt straight to expenses. If you want to actually get that money back from Italy, you'll have to look into their specific refund process—every country does things differently. You can find all the details on how to claim foreign tax refunds over on the IRS website.

There are actual instructions for every single one of those forms there, so just print them out and keep them on your desk so you don't have to hunt for them later.

Here’s the breakdown of what the guidelines say regarding the tax filing:

2.2. Services Received
Services provided by a legal or individual entity registered for tax purposes in another European Union member state are considered services received by a legal or individual entity registered for tax purposes in the United States, provided that the recipient is liable to pay the sales tax in the United States pursuant to Section 75, Subsection 1, Item 6 of the Value Added Tax Act.

Mr. Darcy,
Thanks so much for the reply—it really clears things up for me. So, we actually can file for a VAT refund from Italy?!

In theory, yeah. To be honest, I haven't really sat down to dig through the whole process yet, but I’m planning to get my act together and wrap my head around it by the end of the year 😁
Here's the link:
http://www.irs.gov/vat-regulations-usa...

Honestly, don't even sweat it—there’s another sales tax tweak coming our way soon (looks like they're bumping it from 10% up to 13%)

Since 2007, it feels like there hasn't been a single year where they haven't messed around with the sales tax somehow 😍

It just goes to show they haven't the slightest clue what they're doing; they clearly lack even a shred of a coherent strategy...
The whole thing is a mess... though I suppose we can guess who’s pulling the strings behind the scenes... the bean counters... 🙂

ruggedmaker2 said:In theory, yeah. To be honest, I haven't really sat down to dig through the whole process yet, but I’m planning to get my act together and wrap my head around it by the end of the year 😁
Here's the link:
http://www.irs.gov/vat-regulations-usa...

So you can only file this by September 30th? After that, the door just slams shut? I don't get it.

Arthur Bishop6 said:So you can only file this by September 30th? After that, the door just slams shut? I don't get it.

Wait, what do you mean "until September 30th"? 😕
I haven't even signed up yet, so I haven't dug into all the fine print, but my gut tells me once you're registered, you just submit all your refund requests through the portal.

Look, it’s just a service... and every single country decides its own rules for refunds. The IRS doesn't have anything to do with this side of things.
From what I gathered about the seminar, the turnaround for getting your money back is anywhere from 2 to 6 months, depending on which country you're dealing with.

rapidsailor94 said:Mr. Darcy,
Thanks so much for the reply—it really clears things up for me. So, we actually can file for a VAT refund from Italy?!

First thing you should do is check the FedEx database using the VAT ID to make sure they're actually registered...

ruggedmaker2 said:Wait, what do you mean "until September 30th"? 😕
I haven't even signed up yet, so I haven't dug into all the fine print, but my gut tells me once you're registered, you just submit all your refund requests through the portal.

Look, it’s just a service... and every single country decides its own rules for refunds. The IRS doesn't have anything to do with this side of things.
From what I gathered about the seminar, the turnaround for getting your money back is anywhere from 2 to 6 months, depending on which country you're dealing with.

Check out what's listed on the IRS website:
•What is the deadline for submitting a sales tax refund request?
To claim a sales tax refund within USA states, an American taxpayer must submit an electronic refund request via the online system no later than September 30th of the calendar year following the refund period.

That's what's tripping me up. I don't get it at all.