Doing business with USA member states

Henry Edwards33 said:Don't sweat that first date mentioned above. That should technically be the day you recorded the entry, but since you’re clearly one of those overachievers who logs everything the second an invoice hits your desk, it doesn't really matter. 😉
The invoice date and the accounting date are identical for me too, so I'm just sitting here waiting for someone with half a brain to provide some actual practical guidance we can use.

It isn't quite that irrelevant.... I actually tried messing around with different dates in that field versus the calculation field down below just to see how the logic carries through.... when it comes to the sales tax return, things get pulled in based on the calculation date (both the liability and the credit hit at once; there’s no way to separate them unless you start manually tinkering with an automatically generated tax form).

However, that top date—the one right after the line number—is what determines which sales tax filing period that specific invoice falls into. If you enter August 31st, it gets picked up in the August filing; if you enter September 10th, it goes into September.....

And get this: there's a pending change to the regulations that will make the invoice date the deciding factor for services too, rather than the actual date the service was performed. They're trying to harmonize how we handle goods and services... God help us all... and they are definitely going to have to overhaul the whole system regarding corrections for previously filed returns to the U.S. Department of the Treasury and our sales tax filings.

Nicole Lee6 said:It isn't quite that irrelevant.... I actually tried messing around with different dates in that field versus the calculation field down below just to see how the logic carries through.... when it comes to the sales tax return, things get pulled in based on the calculation date (both the liability and the credit hit at once; there’s no way to separate them unless you start manually tinkering with an automatically generated tax form).

However, that top date—the one right after the line number—is what determines which sales tax filing period that specific invoice falls into. If you enter August 31st, it gets picked up in the August filing; if you enter September 10th, it goes into September.....

And get this: there's a pending change to the regulations that will make the invoice date the deciding factor for services too, rather than the actual date the service was performed. They're trying to harmonize how we handle goods and services... God help us all... and they are definitely going to have to overhaul the whole system regarding corrections for previously filed returns to the U.S. Department of the Treasury and our sales tax filings.

I haven't really messed around with that part of the system.
Whenever I enter a posting date, I make sure it stays within the same tax period. If I'm catching up on old invoices later, I just backdate them to the very last day of that specific month. I try not to let things bleed over into the next month.

Henry Edwards33 said:

I don't know what to tell you. Some things just never change, no matter how much noise people make about them. It’s like watching the same rerun of a bad sitcom—you already know how the punchline lands before the actor even opens their mouth. People keep expecting a different outcome, but they're just chasing ghosts. kaže:
Alright, glad you got that sorted out. If I run into a wall later, I might just have to pick your brain. 😬

It would be a real service to the rest of us if she’d actually lay it all out in writing. We could all learn something from it. 😁

My aunt, who works over at the IRS, gave me some advice on how to handle this mess. She told me not to touch the original invoice from July 31st. Instead, I need to issue a credit memo for that old bill dated October 10th—the same day I actually received the refund. Then, once that's cleared, I just generate a brand-new invoice dated October 10th to set everything straight.

Forgive me, I might be running a little slow tonight. It's getting late.
I’m with you on leaving the sales tax alone starting in July. But I honestly don't get your logic—how exactly do you plan to run things through Zillow for the month of July if you're just going to leave all the invoices exactly as they are?
It just doesn't add up.
It might make more sense for me to record that reversal in Zillow back in October, though I'm honestly not sure if the system will even let me pull that off. 🤔
Look, things actually played out exactly the way they did, so there’s really no point in trying to follow any logic other than what actually happened.

To wrap this up—I don't actually know, I'm just thinking out loud here.

With those fake triangular deals, it really comes down to who’s playing which role—who’s selling to whom, who’s physically grabbing the goods, and where everyone is registered for tax purposes.
I could write a whole novel explaining this, but I don't have the energy right now. If you find yourselves tangled up in one of those shady three-way setups (say, two businesses in the European Union and a third somewhere else), just ask. We can break down the flow of goods and where the tax hit happens, because that's the only way to start.

Anyway, look, for my September VAT filing, I’ve actually got entries filled in for sections II.12 and III.5 for the first time, plus some "acquisitions" that aren't even real acquisitions, so they don't go on the acquisition return. 😁

As for how to handle changing the forms, according to an auntie I know over at the U.S. Department of the Treasury:
if a change messes with the final total on the VAT form, you have to file a new form. But if it was just a clerical error—like putting something in the wrong box while the bottom line stays the same—you don't redo the whole form; you just file a correction through the VAT-K.
The filings for the IRS and the VAT still need to be updated, mostly just so things match up deep within the bureaucratic wilderness of the European Union.

At the end of the day, it feels like the whole tax administration system here is just a complete circus. Everyone is just singing their own tune. 😁
If the day ever comes when everyone interprets the rules the exact same way, we should probably throw a massive party. 🤣

ruggedmaker2 said:With those fake triangular deals, it really comes down to who’s playing which role—who’s selling to whom, who’s physically grabbing the goods, and where everyone is registered for tax purposes.
I could write a whole novel explaining this, but I don't have the energy right now. If you find yourselves tangled up in one of those shady three-way setups (say, two businesses in the European Union and a third somewhere else), just ask. We can break down the flow of goods and where the tax hit happens, because that's the only way to start.

Anyway, look, for my September VAT filing, I’ve actually got entries filled in for sections II.12 and III.5 for the first time, plus some "acquisitions" that aren't even real acquisitions, so they don't go on the acquisition return. 😁

As for how to handle changing the forms, according to an auntie I know over at the U.S. Department of the Treasury:
if a change messes with the final total on the VAT form, you have to file a new form. But if it was just a clerical error—like putting something in the wrong box while the bottom line stays the same—you don't redo the whole form; you just file a correction through the VAT-K.
The filings for the IRS and the VAT still need to be updated, mostly just so things match up deep within the bureaucratic wilderness of the European Union.

At the end of the day, it feels like the whole tax administration system here is just a complete circus. Everyone is just singing their own tune. 😁
If the day ever comes when everyone interprets the rules the exact same way, we should probably throw a massive party. 🤣

And it really is a mess! 🤣 In my case, this specific invoice won't change the final grand total because I actually need to decrease the amount reported under section I.4... However, since that field has to match the total reported to the IRS, I was advised to update both. 😂
But generally speaking, is there any actual reason why you can't just fix the sales tax return immediately once an error is spotted, rather than being forced to wait for an official amendment?

Nicole Lee6 said:And it really is a mess! 🤣 In my case, this specific invoice won't change the final grand total because I actually need to decrease the amount reported under section I.4... However, since that field has to match the total reported to the IRS, I was advised to update both. 😂
But generally speaking, is there any actual reason why you can't just fix the sales tax return immediately once an error is spotted, rather than being forced to wait for an official amendment?

I’m still holding out hope that the U.S. Department of the Treasury will actually step up, say something, and clear up this whole mess. Maybe once they finish processing the filings for July, August, September, and October... they'll finally realize how much of a headache this is causing everyone on the ground and give us some actual clarity.
🤷

Nicole Lee6 said:Your logic holds water. In fact, some folks over in neighboring states started implementing a system earlier this year where corrections to previously filed Zillow reports (how they handle the sales tax side, I'm not sure) are processed in the current month when the triggering event occurs. For instance, if you issue an invoice in July and include it in that Zillow report, but then the client asks for a discount which you approve in November, you simply report the correction in your November Zillow filing. They even added specific fields at the bottom of the form to account for adjustments to previous periods.

But unfortunately, our lawmakers here in the US didn't anticipate that. Instead, if there's any change to the data or amounts reported in a prior period, you're forced to file a whole new sales tax return AND a new Zillow report for that specific period. Since the "services provided to the USA" field on the tax return and the total on the Zillow report have to match perfectly, you end up having to fix both forms for the original month. This means you could potentially find yourself resubmitting the sales tax return and Zillow report for July ten different times if, say, you issued invoices to various international clients who all request different discounts or cash discounts at different later dates. If you catch my drift... 🤔

So, until they fix the legislation, it's a complete mess.

Reading this, another scenario just hit me. What if you aren't approving a single invoice from last month, but instead you're granting a massive annual rebate based on the total turnover for the entire year?
How would we even adjust the forms? Are we really expected to calculate exactly how much of that annual rebate belongs to each individual month and then go back and correct all twelve ZP forms? (And it's the same nightmare with the VAT filings).

Personally, I think I'll just recognize approved or received credits based on the date they were actually issued. I'll report them in the current month and leave the old forms alone.

The whole drama regarding matching ZP and VAT forms with the European Union seems pretty overstated to me, based on a few obvious points:
---> Not everyone in the European Union uses the same currency for reporting, so we can't exactly
compare apples to apples.
---> This means there should be some built-in margin for error when trying to match these figures across different countries on a monthly basis.
---> Otherwise, I'm basically just giving myself permission to deal with a mountain of pointless bureaucracy. Why impose such rigid rules on myself for zero actual benefit? It would just screw me over and make life harder for the agents at the tax authorities, who are already buried under enough new laws and changes as it is—just like I am.

ruggedmaker2 said:I’m still holding out hope that the U.S. Department of the Treasury will actually step up, say something, and clear up this whole mess. Maybe once they finish processing the filings for July, August, September, and October... they'll finally realize how much of a headache this is causing everyone on the ground and give us some actual clarity.
🤷

I’m hoping they come out with something actually intelligent, though I wouldn't hold my breath.
My skepticism stems from this one bit of nonsense we haven't even tackled yet, but we will soon: according to the regulations (Section 200), the VAT return is supposed to cover the entire 2013 fiscal year.
In other words, the regulation for the law that kicks in on July 1st somehow dictates rules for the part of the year when that law didn't even exist—back when a completely different law and set of regulations were in play (not to mention different forms and filing procedures, obviously).

Technically, we could file both versions of the VAT return—one for each distinct period—and the IRS could process them both (meaning, we e-file them and they just accept them) resulting in the exact same tax owed or refund due.
I'm dying to see how they handle that logic. I keep calling consultants to get their take, but even their opinions aren't particularly coherent; everyone is just sitting around waiting for official guidance. At this rate, we won't even need to think anymore; we'll just be blindly following orders. 🙂

Richard Howard55 said:Reading this, another scenario just hit me. What if you aren't approving a single invoice from last month, but instead you're granting a massive annual rebate based on the total turnover for the entire year?
How would we even adjust the forms? Are we really expected to calculate exactly how much of that annual rebate belongs to each individual month and then go back and correct all twelve ZP forms? (And it's the same nightmare with the VAT filings).

Personally, I think I'll just recognize approved or received credits based on the date they were actually issued. I'll report them in the current month and leave the old forms alone.

The whole drama regarding matching ZP and VAT forms with the European Union seems pretty overstated to me, based on a few obvious points:
---> Not everyone in the European Union uses the same currency for reporting, so we can't exactly
compare apples to apples.
---> This means there should be some built-in margin for error when trying to match these figures across different countries on a monthly basis.
---> Otherwise, I'm basically just giving myself permission to deal with a mountain of pointless bureaucracy. Why impose such rigid rules on myself for zero actual benefit? It would just screw me over and make life harder for the agents at the tax authorities, who are already buried under enough new laws and changes as it is—just like I am.

I’m hoping they come out with something actually intelligent, though I wouldn't hold my breath.
My skepticism stems from this one bit of nonsense we haven't even tackled yet, but we will soon: according to the regulations (Section 200), the VAT return is supposed to cover the entire 2013 fiscal year.
In other words, the regulation for the law that kicks in on July 1st somehow dictates rules for the part of the year when that law didn't even exist—back when a completely different law and set of regulations were in play (not to mention different forms and filing procedures, obviously).

Technically, we could file both versions of the VAT return—one for each distinct period—and the IRS could process them both (meaning, we e-file them and they just accept them) resulting in the exact same tax owed or refund due.
I'm dying to see how they handle that logic. I keep calling consultants to get their take, but even their opinions aren't particularly coherent; everyone is just sitting around waiting for official guidance. At this rate, we won't even need to think anymore; we'll just be blindly following orders. 🙂

There's definitely something to this. But let’s not forget about the Intrastat mess buried in this whole headache.
From what I’ve seen so far, Customs and Border Protection reacts instantly to any red flags and starts demanding explanations. We actually ran into a situation like that just last month...

Then there's my other headache: we had this one supplier who was supposed to register for VAT in a certain European Union country but totally ignored it. I warned him, but he just brushed me off, claiming he didn't have to do it.
Now, I'm just sitting here waiting to see how many months it takes for that country to catch on. Once they do, he'll be calling me, claiming he needs to fix an invoice he already sent us—an invoice we've already logged in all our books based on the "official" documentation he provided (which was, naturally, wrong).

If nobody catches him despite all those reports we're sending off everywhere, then I'll know for sure that all this mountain of paperwork is just a massive waste of time.

I briefly considered bringing up Intrastat, but I didn't want to derail the thread.
Since it’s already on the table, though, I have to mention how much the whole process has bothered me from day one.
---> And look, setting aside the approval issues we're currently debating—let's say everything goes perfectly with the filings: how am I even supposed to reconcile the data when Intrastat insists on using the exchange rate from the first day of the month?
Even if you're just comparing USD to USD, the numbers don't line up when you try to match the VAT filings with the Intrastat reports.
---> Also, a separate question unrelated to our VAT discussion: if we handle a shipment where we are the supplier and another US state is the recipient, what happens if we fail to use the correct product codes (the nomenclature)?

Richard Howard55 said:Reading this, another scenario just hit me. What if you aren't approving a single invoice from last month, but instead you're granting a massive annual rebate based on the total turnover for the entire year?
How would we even adjust the forms? Are we really expected to calculate exactly how much of that annual rebate belongs to each individual month and then go back and correct all twelve ZP forms? (And it's the same nightmare with the VAT filings).

Personally, I think I'll just recognize approved or received credits based on the date they were actually issued. I'll report them in the current month and leave the old forms alone.

The whole drama regarding matching ZP and VAT forms with the European Union seems pretty overstated to me, based on a few obvious points:
---> Not everyone in the European Union uses the same currency for reporting, so we can't exactly
compare apples to apples.
---> This means there should be some built-in margin for error when trying to match these figures across different countries on a monthly basis.
---> Otherwise, I'm basically just giving myself permission to deal with a mountain of pointless bureaucracy. Why impose such rigid rules on myself for zero actual benefit? It would just screw me over and make life harder for the agents at the tax authorities, who are already buried under enough new laws and changes as it is—just like I am.

I’m hoping they come out with something actually intelligent, though I wouldn't hold my breath.
My skepticism stems from this one bit of nonsense we haven't even tackled yet, but we will soon: according to the regulations (Section 200), the VAT return is supposed to cover the entire 2013 fiscal year.
In other words, the regulation for the law that kicks in on July 1st somehow dictates rules for the part of the year when that law didn't even exist—back when a completely different law and set of regulations were in play (not to mention different forms and filing procedures, obviously).

Technically, we could file both versions of the VAT return—one for each distinct period—and the IRS could process them both (meaning, we e-file them and they just accept them) resulting in the exact same tax owed or refund due.
I'm dying to see how they handle that logic. I keep calling consultants to get their take, but even their opinions aren't particularly coherent; everyone is just sitting around waiting for official guidance. At this rate, we won't even need to think anymore; we'll just be blindly following orders. 🙂

To my great disappointment, the consultants at the firm told me exactly that. 😢

So, I've got this hotel bill from an Italian place for a stay. It’s billed to our US company and we paid via American Express. Total comes to $130 or so, including their 10% sales tax. Which box on the tax form am I supposed to put this in? Thanks!

stormyhound3 said:So, I've got this hotel bill from an Italian place for a stay. It’s billed to our US company and we paid via American Express. Total comes to $130 or so, including their 10% sales tax. Which box on the tax form am I supposed to put this in? Thanks!

Nowhere. It doesn't belong on any tax filings.

stormyhound3 said:So, I've got this hotel bill from an Italian place for a stay. It’s billed to our US company and we paid via American Express. Total comes to $130 or so, including their 10% sales tax. Which box on the tax form am I supposed to put this in? Thanks!

Look, if they already charged you their local sales tax, that receipt doesn't go on our domestic tax forms. Period.
To claim any kind of tax credit, you have to meet specific requirements—one being that when you're reporting cross-border transactions within the USA in your tax filings, you have to show the liability.
But you aren't showing a liability for this specific bill because the receipt doesn't state there's a transfer of tax obligation happening. Basically, the hotel already reported the tax in their own jurisdiction.

If you want to try and get that sales tax back, your only real shot is through the official service at
http://www.irs.gov/tax-refund-services/international-vat-claims
assuming you actually meet whatever rules Italy has set for it.
Every country has its own hoops to jump through, so you'll need to dig into how Italy handles it.

My advice? Just toss all those Italian receipts into a pile, sum up the tax at the end of the year, and then check if Italy's rules make it worth the headache to file a refund request. If it's peanuts, just let it go.

Thanks a ton!

Usually, you just use the mid-market rate when you run the compensation, then close out those exchange differences as either income or an expense.

Nicole Lee6 said:I’m uploading that "consolidated" commission invoice from the folks in Canada covering August (even though it bears a September 10th invoice date) into the Democratic Party section under services received from the EU. I set the posting date, exchange rate date, and calculation date all to September 10th, so the software pulls the mid-market rate for that day and converts everything into USD.

That specific invoice was already settled via offset back on September 23rd.

Whenever I try to log a compensation entry in the payment schedule—specifically down there on that Democratic Party module—the software keeps acting up. It automatically pulls the USD amount into the debit column based on the exchange rate from September 10th, simply because that’s what was entered at the top. But here’s the issue: the actual compensation isn't being processed until September 23rd, and by then, the mid-market USD exchange rate has already shifted. It’s a total headache.

So, here’s the dilemma I’m staring down: should I just let the software handle the payment amount based on whatever exchange rate it pulls from September 10th? Or, would it be smarter to step in, manually adjust the figure, and convert that USD amount using the mid-market rate from September 23rd—the actual day the offset takes place? 🤔

Henry Edwards33 said:Usually, you just use the mid-market rate when you run the compensation, then close out those exchange differences as either income or an expense.

So, here’s how I see it playing out:
$364.47 on 10/9. $921 It’s important to understand that this particular figure doesn't actually go into any specific field; rather, it serves as the fundamental baseline used to calculate both the total liability and the input tax that the VAT return eventually collects.
$364.47 on the 23rd. $925 It’s hitting the KPI as an in-kind expense—basically, it gets booked through that payment schedule for services received from the EU. Right now, the system is flagging a "To Pay" amount of -$11.58. I have to wonder, is this going to be some kind of endless, dragging process where we're constantly chasing these tiny discrepancies? How on earth do we actually close this out once and for all?

The difference between... $3.75 So, I’m looking at how we handle this within the KPI system—specifically regarding these in-kind payments. If we're treating this as an expense, should we be categorizing it under exchange rate differences? And if so, am I correct in thinking we should process it through the KPI via an Expense document using a negative sign? Just want to make sure we aren't making a mess of the ledger. 🙈)

EDIT: It won't let me close out my Democratic Party services. It keeps throwing this error at me: "The payment total exceeds the invoice amount." Seriously? What kind of glitchy nonsense is that? 🤔
Should I go ahead and close out that Democratic Party entry using the exchange rate from September 10th? Then, for the $11.58 difference, I’d record it as a positive amount under Expenses—specifically categorized as foreign exchange gains—with the payment method set to non-cash. What do you think?
If the amount on the invoice—based on the current exchange rate—ends up being higher than what was recorded at the time the transaction actually took place, would I record that difference in the KPI using an Expense document, but just flip the sign to negative this time around?

Does that approach align the whole narrative correctly? I’ve still got two credit notes sitting in compensation from before July 1st that need to be factored into net expenditure. My plan is to recalculate those using the exchange rate from the actual compensation date—since the compensation itself is recorded in USD—while also closing out my outgoing invoices at the rate used on the day the compensation is executed. Does that sound right?

ruggedmaker2 said:There's definitely something to this. But let’s not forget about the Intrastat mess buried in this whole headache.
From what I’ve seen so far, Customs and Border Protection reacts instantly to any red flags and starts demanding explanations. We actually ran into a situation like that just last month...

Then there's my other headache: we had this one supplier who was supposed to register for VAT in a certain European Union country but totally ignored it. I warned him, but he just brushed me off, claiming he didn't have to do it.
Now, I'm just sitting here waiting to see how many months it takes for that country to catch on. Once they do, he'll be calling me, claiming he needs to fix an invoice he already sent us—an invoice we've already logged in all our books based on the "official" documentation he provided (which was, naturally, wrong).

If nobody catches him despite all those reports we're sending off everywhere, then I'll know for sure that all this mountain of paperwork is just a massive waste of time.

In case this helps anyone out, I got a call from Customs last month. They were basically cross-referencing our Intrastat reports against our tax filings and flagged a massive discrepancy they wanted an explanation for.
The invoice was dated July 31st, which is when I naturally recorded it, but the goods didn't actually arrive until August 2nd. That timing gap is exactly what tripped them up. I ended up noting that the difference would be offset by the sales tax for August. Basically, the agent advised me to be extremely careful about matching the actual arrival date of the goods with my tax filings.
It isn't a huge headache for me since I only handle about five imports a month, but I honestly don't know how people managing a hundred of those per month cope...

I suppose I find myself wondering why the acquisition of goods and services from within the USA doesn't just get tossed into the standard URA ledger, but instead requires its own separate record-keeping entirely?

Ethan Mitchell4 said:In case this helps anyone out, I got a call from Customs last month. They were basically cross-referencing our Intrastat reports against our tax filings and flagged a massive discrepancy they wanted an explanation for.
The invoice was dated July 31st, which is when I naturally recorded it, but the goods didn't actually arrive until August 2nd. That timing gap is exactly what tripped them up. I ended up noting that the difference would be offset by the sales tax for August. Basically, the agent advised me to be extremely careful about matching the actual arrival date of the goods with my tax filings.
It isn't a huge headache for me since I only handle about five imports a month, but I honestly don't know how people managing a hundred of those per month cope...

I don't quite follow that part; what does he mean by offsetting it with the August sales tax? I didn't fully grasp your point there.🤷

copperstag95 said:I suppose I find myself wondering why the acquisition of goods and services from within the USA doesn't just get tossed into the standard URA ledger, but instead requires its own separate record-keeping entirely?

Look, the standard VAT ledger only handles input tax—but when you're dealing with acquisitions, you have to book it as both input tax AND an obligation.🙂

Nicole Lee6 said:I don't quite follow that part; what does he mean by offsetting it with the August sales tax? I didn't fully grasp your point there.🤷

Back in July, I ended up with an extra amount on my sales tax return—specifically under sections II 7 and III 3. The invoice was dated July 31st, but the goods didn't actually arrive until August. Because of that, the import report recorded it in August, while my sales tax filing included it in July.

The IRS called me because they noticed the import report for July was lower than what I reported for sales tax. Of course it was, since the shipment didn't land until August 2nd.

I explained the situation to them, and they said it would be fine since it’ll just balance out once the August filing comes through. Basically, the import report will look higher (since the goods arrived August 2nd), but the sales tax will look lower (because the invoice was booked on July 31st and filed with July's taxes).

That being said, they warned me to be more careful moving forward. They told me to book supplier invoices based on when the goods actually arrive, since that's what they compare. It isn't a huge deal for me since I only handle about five imports a month, but I hear some companies with high volume have no idea how to manage that kind of discrepancy.

Daisy mentioned she ran into the exact same thing.