Doing business with USA member states

Joshua Kim6 said:We just received an invoice from a vendor based in the Netherlands for a shipment of goods. The inventory isn't actually leaving the US; we're keeping it here and then invoicing our client over in Italy.
I could use some help with the bookkeeping on this. For the vendor's invoice, do I include it in the sales tax return under sections II.7 and III.7? Also, more importantly, how do I handle the invoice we’re sending to the customer in Italy? Since the goods are staying right here in the States, I know I have to charge sales tax on that invoice. But what comes after that?

So basically, your supplier delivered the goods, you take possession, and then you calculate and pay the sales tax. On your tax forms, you'll list that incoming invoice under II.7 and III.7 like you thought. Plus the standard sales tax filing.

As for the second part, per the tax code, the place of delivery is considered domestic, which means you absolutely have to charge sales tax on that invoice. For your own tax records, treat it like any other domestic sale. You'll just list it under II.3 on the tax form... basically as if you sold it to any other business here in the US.

Jeremy Anderson63 said:So basically, your supplier delivered the goods, you take possession, and then you calculate and pay the sales tax. On your tax forms, you'll list that incoming invoice under II.7 and III.7 like you thought. Plus the standard sales tax filing.

As for the second part, per the tax code, the place of delivery is considered domestic, which means you absolutely have to charge sales tax on that invoice. For your own tax records, treat it like any other domestic sale. You'll just list it under II.3 on the tax form... basically as if you sold it to any other business here in the US.

Thanks for getting back to me so fast!

So, I was stuck at that RIF seminar yesterday!
I’m dying to know if anyone else there actually caught onto their specific recommendations for booking special procedures?
Are we talking Revenue = total invoice minus sales tax, or just the gross amount?

I have a quick question regarding some timing issues... 🤷 The goods arrived with a shipping manifest from the USA back on May 30th, but the invoice isn't dated until June 2nd—plus, I just received the hard copy in the mail. Should this be reported for Intrastat in May or June??
Thanks, everyone!

Douglas Nguyen30 said:I have a quick question regarding some timing issues... 🤷 The goods arrived with a shipping manifest from the USA back on May 30th, but the invoice isn't dated until June 2nd—plus, I just received the hard copy in the mail. Should this be reported for Intrastat in May or June??
Thanks, everyone!

For Intrastat, it’s all about when the goods actually move in or out. But for tax liabilities? That kicks in the second the invoice is issued. So, based on that, you're looking at Intrastat in May, and the Sales Tax return in June.

Just so you know, the numbers on an Intrastat report don't necessarily have to match the Sales Tax filings perfectly.

Jeremy Anderson63 said:For Intrastat, it’s all about when the goods actually move in or out. But for tax liabilities? That kicks in the second the invoice is issued. So, based on that, you're looking at Intrastat in May, and the Sales Tax return in June.

Just so you know, the numbers on an Intrastat report don't necessarily have to match the Sales Tax filings perfectly.

Thanks, Jeremy Anderson63!!

I have one more question... I acquired some inventory in May, but it's defective and we're shipping it back to the US. We'll be receiving replacement stock in June. In this scenario, do I still need to include those returned items in my Intrastat reporting??
Thanks!

Douglas Nguyen30 said:Thanks, Jeremy Anderson63!!

I have one more question... I acquired some inventory in May, but it's defective and we're shipping it back to the US. We'll be receiving replacement stock in June. In this scenario, do I still need to include those returned items in my Intrastat reporting??
Thanks!

...If you find out the shipment is total garbage and you have to send it all back to the supplier, you just file a return report... that's it....

So, you're logging an outgoing shipment under business type code 21 for returns... and then you've got the incoming stuff marked as code 22 for the replacements. Just making sure everyone is on the same page...

I need an urgent confirmation and the specific legal code if anyone knows it. I have an invoice for goods from Italy dated May 31st, but the shipment wasn't actually received until June 4th. Since Intrastat reporting happens in the sixth month, am I supposed to calculate sales tax for the period of May 1st through May 31st? Do I include this in the May tax return? The Italian suppliers will be including it in their aggregate report for May.
Help me out here.

My bad, Donald Trump. I was scrolling back through the thread and realized I missed the reply right before my question.😉

I’ve been wondering about how this works with Germany. When I'm entering their tax ID into my system, am I supposed to include the DE prefix before the numbers, or just the ID itself?

The way the Sales Tax ID works is basically just the state code plus the number itself. As for whether your software can automatically pull the state designation based on the business partner's address 🤷, I guess that really depends on what kind of system you're running. You’ll have to give it a spin and see if it actually works.

So, here’s my situation. My company (an American taxpayer) needs to re-bill a freight service. We hired a carrier (also an American taxpayer) to move some goods over to Austria. We’ve already sent the main invoice to our Austrian client for the delivery of those goods, citing the relevant exemption under Section 41, Paragraph 1, Item A of the Sales Tax Law. My big question is this: when I issue the invoice for the shipping costs, should I cite the reverse charge exemption under Section 17, Paragraph 1, Item 1 of the Sales Tax Law and include it in the aggregate report? Or, since my company isn't actually in the transport business and we're basically just passing through a cost—which isn't even really a "service" in practice—should I just issue a standard invoice with American sales tax applied?

northerngull38 said:So, here’s my situation. My company (an American taxpayer) needs to re-bill a freight service. We hired a carrier (also an American taxpayer) to move some goods over to Austria. We’ve already sent the main invoice to our Austrian client for the delivery of those goods, citing the relevant exemption under Section 41, Paragraph 1, Item A of the Sales Tax Law. My big question is this: when I issue the invoice for the shipping costs, should I cite the reverse charge exemption under Section 17, Paragraph 1, Item 1 of the Sales Tax Law and include it in the aggregate report? Or, since my company isn't actually in the transport business and we're basically just passing through a cost—which isn't even really a "service" in practice—should I just issue a standard invoice with American sales tax applied?

The Sales Tax Law doesn't actually recognize this whole "re-invoicing" concept. I’m guessing you got an invoice from the carrier made out to you, but the service was actually done for someone else—specifically that Austrian taxpayer.

According to Section 8, Subsection 4 of the Law, if a taxpayer acts in their own name but performs services on behalf of another party, they are considered to have received and provided those services themselves.

In this situation, since the service was performed for you but ordered for someone else, you basically have to act as if you received the service personally, and then you turned around and provided that exact same service to the company in Austria.

You should be citing Section 17, Subsection 1, or Section 44 of the Directive.

Trump said:Your situation is a bit different. If I were you, I wouldn't bother with rebilling anything. Just bundle that toll fee directly into the total transport service cost. Issue one single invoice for the haulage that includes all those incidental expenses, merging them into one unified transport service without breaking out the tolls as a separate line item. Think of it as your total compensation for the job performed.

Otherwise, if you just issue an invoice for the transport alone (to another taxable entity), you’re leaning on Section 17, Paragraph 1 reverse charge. But if you decide to go ahead and rebill those toll costs on a new invoice, you really need to watch out for Section 19 of the Code and Rule 33—you know, regarding services related to real estate, which are taxed where the property is located.

Since the law doesn't really recognize "rebilling" for this specific type of service, it's treated as if you provided the service yourself. A road is considered civil engineering real estate, falling under that specific article, so technically, you should be charging Democrat VAT (taxation on real estate-related services is unique and applies across all countries in the union).
After that, you'd have to check with your Democrat clients to see if their local laws allow for something similar to our Section 75, Paragraph 2 (which isn't mandatory for other nations) so you can transfer the tax liability to them. That way, the service wouldn't be subject to NYC tax and such.

Bottom line: you're making your life unnecessarily complicated with all this rebilling nonsense. Just take the simplest route.

The headache is that we have to log our interventions (we're talking vehicle recovery/towing) through their online application, which doubles as their pricing tool. It has fixed fields with ID numbers for completed jobs, and it's designed so that toll costs go in one box while mileage goes in another.

So, here is how it works: we select "transport," enter the mileage, and the system calculates the price. Then we select "tolls," where we have the option to manually input the exact amount spent. The system then generates a specification and an invoice in USD—that's the invoice from the app that we print out with everything listed in USD and send to them. For our own internal bookkeeping, we create an invoice in Synesis where we list "Transport service per specification no. [insert the number generated by their system]" and show a single lump sum in USD (we don't break it down by item like the spec does). We then just attach that app-generated specification to our invoice as a supporting document.

Now, the big question: is that actually legal?🤷

Could anyone who’s dealt with importing goods from Germany before lend me a hand here?

I’m a bit stuck on what actually needs to be documented on the invoice. We recently ordered some work boots and a few tools from a company over in Germany. We handled everything via a wire transfer upfront, and the shipment just arrived in the mail along with the invoice. Here’s the kicker: they didn't charge any German tax—the net price and the total are identical—but there isn't a single mention of a clause explaining why. Should there be a "reverse charge" note or some specific legal citation listed? Also, despite us providing our US Tax ID, they completely ignored it and didn't include it anywhere on the paperwork.

So, what's the move? Do I just list this in the VAT return, calculate the tax myself, but then skip the input credit? Or is there a better way to handle this mess?

Just got hit with an invoice for services from a company based in the USA... how am I supposed to book this in my accounts now? No tax was charged on the invoice itself...?

Look, if there’s no sales tax listed on the invoice, it means the tax liability has been shifted onto you. That means you’re on the hook for the tax itself, but you also get the benefit of claiming it as an input credit.
You report that sales tax in your quarterly filings under sections II. 10. and III. 10., plus in the standard sales tax return form

Here’s the guide for the sales tax return

You can find the rest of the instructions right here:
http://www.irs.gov/sales-tax-guidelines

I’m not entirely sure how this works for individual freelancers, but if you’re running an LLC, you’ve gotta book all of this in your formal financial accounting.
Invoice: 4.... / 221...
Sales tax: 1... input credit / 2... sales tax payable (honestly, I don't know which chart of accounts you're using)

You clear out the vendor account once you pay them. As for the input credit in account 1 and the tax payable in account 2, you clear those out using a journal entry at the same time you file your monthly tax return. Basically, by clearing those class 1 and 2 accounts, you’re either showing what you owe the government or showing a credit if you overpaid.
Then, when you actually pay that amount or when the IRS sends you a refund, you clear that obligation or credit using your bank statement as the basis—either when they cut you a check or when they apply it to your account.
If you just show a credit on your return but don't actually ask for a refund or a direct transfer—maybe you just want to leave it as a prepayment—then you just let it sit in the appropriate class 1 account until you actually use it.

I am requesting some assistance here; the complexities regarding sales tax and UN regulations are starting to make my head spin. 😵

We are looking into renting a trailer from an American taxpayer to transport materials. Would this transaction be exempt from sales tax, provided we include the reverse charge provision?

I’m looking for some guidance here. We need to bill a client for "storage fees" (vehicle impoundment/holding) — does this fall under Section 17, where I just transfer the tax liability to the business partner (assuming they provide their US Tax ID), or should I be looking at Section 19 and calculating the sales tax myself?

Nicole Lee6 said:I’m looking for some guidance here. We need to bill a client for "storage fees" (vehicle impoundment/holding) — does this fall under Section 17, where I just transfer the tax liability to the business partner (assuming they provide their US Tax ID), or should I be looking at Section 19 and calculating the sales tax myself?

That falls under the general rule... Section 17, paragraph 1.

Otherwise, if you're stuck wondering if it counts as a real estate service, just remember: the real estate has to be the core of the service. A garage or a parking spot isn't the main event here... it’s a storage service.

It would be a different story if he actually rented a specific garage or a designated spot from you. Then you'd be leasing him part of the property, which makes it a real estate service. But this? Not quite...