Doing business with USA member states

I reckon the specific regulation that would actually set out the rules for this
hasn't even been drafted yet, so we’re basically stuck in limbo for now.

If you look at the IRS instructions for filing the sales tax returns back in 2013 on their website, it says:
"II.14. This section is for recording the value of imported goods and the sales tax calculated upon import under Section 76, Subsection 8. However, please note that no data should be entered here because the official VAT payment regulation regarding these provisions has not yet been established to categorize them for calculation purposes."

Thanks, ruggedmaker2. Honestly, the ladies over at the IRS I spoke to seemed completely clueless about what Article 76, Section 8 actually entails... they just kept politely passing the buck from one desk to another.
In March, we have an import coming in from Mexico that's going to trigger a significant VAT bill. It made me wonder if I’d missed some detail in the recent regulation—the one that was supposedly finalized within four months of joining the USA (according to a local precinct ruling back in July 2013).

Honestly, you probably should've checked in with U.S. Customs and Border Protection instead of the IRS. 😉
That's way more their lane, anyway.

Ethan Bailey18 said:Thanks, ruggedmaker2. Honestly, the ladies over at the IRS I spoke to seemed completely clueless about what Article 76, Section 8 actually entails... they just kept politely passing the buck from one desk to another.
In March, we have an import coming in from Mexico that's going to trigger a significant VAT bill. It made me wonder if I’d missed some detail in the recent regulation—the one that was supposedly finalized within four months of joining the USA (according to a local precinct ruling back in July 2013).

A bit of advice for anyone doing business within the European Union who finds themselves stuck on VAT issues: talk to the local authorities. In my opinion, every single company should probably have a dedicated expert on hand for these matters, but at the end of the day, whatever the official department tells you is your safest bet.
I’ve already received some incorrect information here on this forum regarding the European Union and VAT. Thank goodness I hadn't actually calculated the tax and excise figures yet, or the numbers would have been absolutely disastrous...

I’m talking about imports from a non-EU country where customs calculates the sales tax. A third-country carrier handles the transport, but the shipping service itself isn't part of the taxable base... am I supposed to apply 25% to the portion of the trip from the border to the delivery point? Plus the business's own service fees and
before July 2013?
Should I just ask the IRS?
I don't recall ever getting a straight answer. The best anyone ever told me was that they'd have to request an official opinion from the central office.

jadenomad24 said:A bit of advice for anyone doing business within the European Union who finds themselves stuck on VAT issues: talk to the local authorities. In my opinion, every single company should probably have a dedicated expert on hand for these matters, but at the end of the day, whatever the official department tells you is your safest bet.
I’ve already received some incorrect information here on this forum regarding the European Union and VAT. Thank goodness I hadn't actually calculated the tax and excise figures yet, or the numbers would have been absolutely disastrous...

Could you please quote exactly what kind of bad advice you received? It'd be good to clear it up so nobody else falls into the same trap.

I’m not really looking to start a whole debate over Q&A here, I was just wondering about VAT implications for forestry services when invoicing an international client. It's specifically for woodcutting services—not something that happens every day, but it might come in handy for someone else.
It’s true that you don't list VAT on the invoice itself, but you do need to include the "reverse charge" notation.
Under the current tax regulations, certain services provided to foreign entities are exempt from the standard taxation principles—much like services tied to specific property—as outlined in the law. For everything else, the standard rules apply.

P.S. I didn't mean to sound condescending or imply anyone doesn't know their stuff. That wasn't my intention at all. This space is meant for sharing perspectives and advice, though I suppose it’s always wise to double-check things with multiple sources.

I don't think anyone’s actually offended here, so don't sweat it. 🙂
But honestly, you’re never going to get a straight answer if the question itself is fuzzy.
We need specifics: who’s dealing with whom? Is it a service or a physical product? Are we talking about someone inside the sales tax system or outside of it? Is the entity even registered for sales tax in a different state? You know, all that stuff.

When questions are this vague, neither the IRS nor U.S. Customs and Border Protection are going to give you a definitive "yes" or "no." Everything depends on a dozen different variables that can swing the whole thing either way. 😁
Oh well, we're young—we'll figure it out eventually. 😁

Back in the day, I used to fax actual, hard-copy documents over to my tax advisor just so she could look at the nitty-gritty details—exact business IDs, headquarters locations, the whole nine yards. Only after she squinted at those papers would she finally shoot me an answer via email.

What can I even say? It’s hard to expect the Police Department to have all the answers, honestly. I’ve come across so many conflicting takes on this—some people swear by one thing, others say the exact opposite, and frankly, I’m just lost myself. It’s pretty pathetic that we’re stuck navigating this bureaucratic nightmare instead of having things actually streamlined and simplified to make our lives easier.

So, if I'm picking up services from a company that isn't even registered for sales tax back in their home country—you know, they aren't a tax entity over there—does that invoice I just got actually need to show up on my sales tax filings or the reverse charge forms?

We finally got the approval on March 10, 2014, for some goods from Italy that we actually brought in back in April 2013 (we weren't even part of the USA at the time). Does this need to show up on my sales tax returns or the VAT report? I’m leaning towards no, since the tax was already handled through Customs back then. Also, how should I record this approval in QuickBooks? Should I list it under imports or as an acquisition? Every time I try to book it, it keeps pulling into my tax forms.

Greetings to everyone.

I run a small business under a simplified tax structure (not registered for sales tax). I started this year, focusing primarily on software programming. So far, I’ve sent out several invoices that have already been settled. My clients are based in India, the United Kingdom, and Estonia. However, following advice from my local Chamber of Commerce, I didn't register for a sales tax ID, nor have I listed one on my invoices. No one has requested that number from me yet.

Reading through some of the posts here, it seems like I might be doing things incorrectly. Is that actually the case? I was under the impression that registering for a tax ID and filing those specific reports only applied when purchasing from companies within the USA. What should I do if I've been handling this the wrong way?

Naturally, I plan to contact the IRS, but I would love to hear some opinions alongside theirs.

vividranger8 said:So, if I'm picking up services from a company that isn't even registered for sales tax back in their home country—you know, they aren't a tax entity over there—does that invoice I just got actually need to show up on my sales tax filings or the reverse charge forms?

I've been wondering about this myself. The folks at the IRS haven't given me a straight answer, and I can't seem to get a hold of any top-tier tax consultants lately...

I'm totally stuck here! Does the invoice go out with a zero if there hasn't been a delivery yet?

If the shipment hasn't actually landed, there's no point in sending over the invoice.

ruggedmaker2 said:If the shipment hasn't actually landed, there's no point in sending over the invoice.

Thanks, 😁

I really need some help here. My sales tax filing deadline is tomorrow, and I’m stuck on one specific invoice. It’s a B2B lodging service—an Austrian company billed my firm because an employee was away on a business trip. They charged their local VAT at both 10% and 20%. I’m trying to record this under imported services from the European Union and file the appropriate paperwork, but the bookkeeping part is tripping me up. When I enter the data, should I be using the net amount or the total gross amount? Also, how am I supposed to input their VAT rates when my accounting software only has fields set up for our standard US tax brackets, like 5%, 13%, and 25%? To make matters even more confusing, there's also a local occupancy tax they included that isn't even taxable. Any advice?

Look, if the invoice already includes and covers the Austrian VAT, you don't have an acquisition tax obligation because there's nothing left for you to calculate. The Austrian company already handled it.
The Austrian just rolls it straight into their own VAT filings.
If you're looking to claw back any of that paid VAT, you’d have to go through a service like this:

Bottom line? Your VAT and VAT-S filings should only include invoices where you actually bear the tax burden and have the right to claim input tax credits at the same time.

Man, this is such a headache. I actually called the IRS today, and the lady on the line told me I just need to log everything in my sales tax records and make sure to include it under the acquisition of goods from the European Union. Since I still have those two cash receipts from IKEA in Austria where their local tax was already calculated and paid—even though they were cash transactions—I have to account for them. As for that lodging bill, we ended up paying that later via online banking.

Look, you can't just toss Austrian or Canadian or Canadian tax info into our US sales tax forms. That’s not how it works.
The hotel stay happened in Austria, so that’s where the tax hit stays. Period.
And yeah, you could have dodged that Austrian tax at IKEA, but only if you showed up as an American tax registrant and proved the goods were heading straight back to the States.
But hey, if you're really dead set on getting those taxes back, you could probably try clawing it all back through one of those VAT refund services.
There's a whole other thread dedicated to the mess that is sales tax if you want to dive deeper.