Doing business with USA member states

Carol Price4 said:Nicole Lee6—wait, I’m still a bit lost on that part—who actually sent you those bills back after four months?

As far as I can tell, it's crystal clear—it just falls under the tax liability transfer law, Article 17, Section 1...

That’s my take on it too.

Nicole Lee6, don't waste your breath digging through trade magazines; just call a VAT specialist at the IRS.
Since everything is happening within the same fiscal year (the same tax period), I doubt there'll be any headache if you need to void an invoice or fix things later. But seriously, run it by the tax authorities first. At the end of the day, they’re the ones auditing your VAT, ZP, and income tax for the year anyway.
You wouldn't believe the "official opinions" these bureaucrats hold onto—stuff they never bother to publish anywhere, leaving us totally in the dark.

If your tax advisor is half as good as mine, 🙏 she'll probably just email you her formal opinion so everything is black and white.

I need some advice and a second opinion here. We’re invoicing services to a client in the USA, specifically for production work. The actual shoot took place over in California since that's where they filmed the commercial. On top of our production fee, we’re also pass-through invoicing all the various expenses incurred there. In this scenario, should I be citing the exemption under Section 17?

ruggedmaker2 said:That’s my take on it too.

Nicole Lee6, don't waste your breath digging through trade magazines; just call a VAT specialist at the IRS.
Since everything is happening within the same fiscal year (the same tax period), I doubt there'll be any headache if you need to void an invoice or fix things later. But seriously, run it by the tax authorities first. At the end of the day, they’re the ones auditing your VAT, ZP, and income tax for the year anyway.
You wouldn't believe the "official opinions" these bureaucrats hold onto—stuff they never bother to publish anywhere, leaving us totally in the dark.

If your tax advisor is half as good as mine, 🙏 she'll probably just email you her formal opinion so everything is black and white.

I’ve been trying to track down my contact in Seattle for days now, but she isn't picking up, and neither is the office in Washington, D.C. 😢

The company purchased goods from Italy, but the invoice lists a Swiss address since that's where their headquarters are located. How should we handle the sales tax filing for this?

James Parker6 said:The company purchased goods from Italy, but the invoice lists a Swiss address since that's where their headquarters are located. How should we handle the sales tax filing for this?

A VAT return is mandatory. Use the company's VAT number as listed on the invoice and verified via the IRS database, since you are the end consumer.😛

I can't believe I'm even typing this out—it's absolutely infuriating! Honestly, how many times do we have to go over this? It’s like people just refuse to listen to common sense anymore. You see these ridiculous arguments popping up everywhere, and it makes my blood boil. Every single time I think we've reached a peak of absurdity, someone comes along and raises the bar even higher. It's exhausting! And don't even get me started on what Drew Rogers6 was saying earlier. Seriously? Are we really supposed to take that seriously? Give me a break! It’s pure nonsense, plain and simple. People need to wake up and actually look at the facts instead of just shouting whatever half-baked opinion crosses their minds. It’s driving me insane! kaže:
Sales tax is mandatory—period. You use the business Tax ID listed right there on the invoice, which you better have verified through the IRS database, because at the end of the day, you're the one footing the bill!😛

But if we’re talking about Switzerland, then we’re talking about an import—not an acquisition! Seriously!

Hey everyone.

I'm currently setting up production for Germany. I've got some questions regarding sales tax. I’m planning on forming an LLC, and they're telling me I need to register for sales tax right away. From what I’ve read, if I'm invoicing clients within the USA, I don't charge sales tax. So, here's the scenario:

1. I buy materials for $67 including sales tax.
2. The total value of the job is $33. (Do I need to add sales tax to this amount?)

How am I supposed to invoice this?
Can I deduct the sales tax paid on the materials?
Am I actually entitled to a refund on the sales tax I spent on those materials?

The main thing is just figuring out how to put a quote together properly.

Thanks in advance.

Hey everyone, I need a quick gut check on something. I’ve got a service provider based in Mexico invoicing me for a job that's VAT-exempt under their local tax laws—basically, they qualify as a small business taxpayer over there, which is pretty much the same thing as our Section 90 rules back home. Given that, how should I handle the entry? Do I record it with VAT so I can claim the credit, or should I book it as exempt since it doesn't apply? To put it simply: am I required to report any VAT here in the States? Thanks! 😁

Gerald Allen31 said:Hey everyone.

I'm currently setting up production for Germany. I've got some questions regarding sales tax. I’m planning on forming an LLC, and they're telling me I need to register for sales tax right away. From what I’ve read, if I'm invoicing clients within the USA, I don't charge sales tax. So, here's the scenario:

1. I buy materials for $67 including sales tax.
2. The total value of the job is $33. (Do I need to add sales tax to this amount?)

How am I supposed to invoice this?
Can I deduct the sales tax paid on the materials?
Am I actually entitled to a refund on the sales tax I spent on those materials?

The main thing is just figuring out how to put a quote together properly.

Thanks in advance.

If you register for sales tax, you can claim credits for everything you buy—plus, when you invoice overseas, you don't charge them (just make sure to get their Tax ID from the IRS) and you essentially pass the tax burden to the German company.

Basically, you calculate your material costs without the tax—since you'll be getting that back anyway—add your labor costs, tack on a margin, and that's your invoice.

If they are your only client, you'll always end up with a tax refund if you're buying supplies locally but invoicing tax-free... you'll just have to file for the refund with the IRS, keep your books ready for an audit, and wait for the check to clear. 🙂

Drew Rogers6 said:

I can't believe I'm even typing this out—it's absolutely infuriating! Honestly, how many times do we have to go over this? It’s like people just refuse to listen to common sense anymore. You see these ridiculous arguments popping up everywhere, and it makes my blood boil. Every single time I think we've reached a peak of absurdity, someone comes along and raises the bar even higher. It's exhausting! And don't even get me started on what Drew Rogers6 was saying earlier. Seriously? Are we really supposed to take that seriously? Give me a break! It’s pure nonsense, plain and simple. People need to wake up and actually look at the facts instead of just shouting whatever half-baked opinion crosses their minds. It’s driving me insane! kaže:
Sales tax is mandatory—period. You use the business Tax ID listed right there on the invoice, which you better have verified through the IRS database, because at the end of the day, you're the one footing the bill!😛

But if we’re talking about Switzerland, then we’re talking about an import—not an acquisition! Seriously!

In that case, you'll receive a Swiss invoice along with the JCD showing the sales tax calculated at the border, which you have to settle within ten days. Naturally, you don't include sales tax on the standard form; you just plug it into column III.14.
Someone has to pay the tax eventually...👍

Nicole Wells38 said:Hey everyone, I need a quick gut check on something. I’ve got a service provider based in Mexico invoicing me for a job that's VAT-exempt under their local tax laws—basically, they qualify as a small business taxpayer over there, which is pretty much the same thing as our Section 90 rules back home. Given that, how should I handle the entry? Do I record it with VAT so I can claim the credit, or should I book it as exempt since it doesn't apply? To put it simply: am I required to report any VAT here in the States? Thanks! 😁

It all comes down to where the service is actually performed:
if it happens on US soil and our regulations say it's taxable, you have to report the VAT.
if it's done in the US and it's non-taxable, you don't.
if it takes place in a third country where it isn't taxable, then you don't either.
In my book, you just apply the "place of supply" principle, though you might want to run it by a pro to be certain.😛

Ethan Bailey18 said:It all comes down to where the service is actually performed:
if it happens on US soil and our regulations say it's taxable, you have to report the VAT.
if it's done in the US and it's non-taxable, you don't.
if it takes place in a third country where it isn't taxable, then you don't either.
In my book, you just apply the "place of supply" principle, though you might want to run it by a pro to be certain.😛

Thanks so much, that's incredibly helpful. Since this service was performed locally, we're looking at the standard B2B principle—meaning the place of service is where the recipient is based (which is us). So, I need to account for the sales tax, basically recording both the tax liability and the input credit. That was pretty much how I was picturing it. 😉

Nicole Wells38 said:Thanks so much, that's incredibly helpful. Since this service was performed locally, we're looking at the standard B2B principle—meaning the place of service is where the recipient is based (which is us). So, I need to account for the sales tax, basically recording both the tax liability and the input credit. That was pretty much how I was picturing it. 😉

Just make sure you double-check if this specific type of service is actually taxable under our local laws.😛

Ethan Bailey18 said:Just make sure you double-check if this specific type of service is actually taxable under our local laws.😛

So, here’s the latest interpretation: we’re calculating the foreign services ourselves, listing them under both Section II and Section III. The only catch is that there's no actual payment required. Honestly, even I’m a bit baffled by this one. I could use some clarity here.

Ethan Bailey18 said:So, here’s the latest interpretation: we’re calculating the foreign services ourselves, listing them under both Section II and Section III. The only catch is that there's no actual payment required. Honestly, even I’m a bit baffled by this one. I could use some clarity here.

I’m actually dealing with the exact same thing. I just report the liability and the withholding tax, but since there's no cash changing hands, it ends up being zero. Haha. I'm home for the evening right now, but once I get back into the office tomorrow, I'll double-check the books. My gut feeling is that the service is taxable here because it falls under production services.

Nicole Wells38 said:I’m actually dealing with the exact same thing. I just report the liability and the withholding tax, but since there's no cash changing hands, it ends up being zero. Haha. I'm home for the evening right now, but once I get back into the office tomorrow, I'll double-check the books. My gut feeling is that the service is taxable here because it falls under production services.

Believe me, I'm checking my numbers tomorrow too. I spoke to three different advisors and got three different stories. Our current conclusion seems solid, though, provided we confirm if production services fall under those specific exemptions.

🙂

So, I’m dealing with a situation where an American company has set up shop in both the US and within the UN. They essentially operate as two entirely separate entities, paying taxes wherever the actual work happens, and they barely even interact outside of sending over some staff members...

The catch is that we frequently run into cases where expenses are paid out by the US branch—things like materials being shipped over to the UN entity or various freight costs—and then the US side asks for reimbursement from its counterpart in the UN. /Basically, you calculate the total amount (cost plus sales tax) and then handle it as a VAT-exempt transaction?

What I’m really struggling with is how to properly book this kind of income (and the corresponding expense)
Should this income be recorded under the standard revenue accounts like any other typical income, or should it be handled as a transitional item—essentially just a receivable—to avoid artificially bloating both the expense and revenue lines??

And if I do end up booking it as revenue on the 7-series accounts, does it need to be reported on the sales tax return as an exempt transaction, or is that unnecessary?

Please, save me from my own confusion... If anyone could point me toward a specific section of the tax code, I’d appreciate it. I’ve been calling around all day, but honestly, I’m just getting conflicting answers from everyone I talk to...😵

Feel free to just send a private message if that's easier...

I need some guidance here. My company just picked up a heavy-duty truck from West Germany, and I’m staring at a mountain of paperwork. How exactly does one book this entry? Does this even show up on the sales tax filings, and if so, where? Also, am I required to pull a specific tax ID number for this transaction?

Betty King7 said:I need some guidance here. My company just picked up a heavy-duty truck from West Germany, and I’m staring at a mountain of paperwork. How exactly does one book this entry? Does this even show up on the sales tax filings, and if so, where? Also, am I required to pull a specific tax ID number for this transaction?

Look, you’re basically reporting an asset acquisition. If you aren't registered in the VAT database (tax ID), I highly doubt that German outfit is going to write you an invoice without tax included—so yeah, go ahead and get that tax ID. Use the exchange rate from the Federal Reserve on the invoice date. You report the acquisition through your tax filings and the standard forms; the liability and the credit offset each other, so there shouldn't be any actual cash out of pocket. You’ll also need to talk to a clerk at the IRS to have them verify the invoice and provide a confirmation stating that the taxpayer is committing to report the vehicle acquisition via the appropriate forms and calculate the tax accordingly. Honestly, without that verification, the DMV isn't going to let you register the truck.😉

Use sections II.7. and III.7. of the tax form.

Drew Rogers6 said:Look, you’re basically reporting an asset acquisition. If you aren't registered in the VAT database (tax ID), I highly doubt that German outfit is going to write you an invoice without tax included—so yeah, go ahead and get that tax ID. Use the exchange rate from the Federal Reserve on the invoice date. You report the acquisition through your tax filings and the standard forms; the liability and the credit offset each other, so there shouldn't be any actual cash out of pocket. You’ll also need to talk to a clerk at the IRS to have them verify the invoice and provide a confirmation stating that the taxpayer is committing to report the vehicle acquisition via the appropriate forms and calculate the tax accordingly. Honestly, without that verification, the DMV isn't going to let you register the truck.😉

Use sections II.7. and III.7. of the tax form.

Thank you so much, but here is the reality of the situation: I received the invoice. The vehicle was purchased under the company name, yet the invoice was issued without sales tax, despite there being no mention of a tax liability transfer. The invoice was dated in October; it clearly lists the tax IDs for both parties, and the seller is definitely a registered entity in the system. However, our firm hasn't submitted the application for our own federal tax ID yet.
The vehicle is already running, registered, and all fees are paid. What am I supposed to do now? Does anyone actually take these invoices down to the IRS?
I will certainly file the application for the tax ID, but the approval won't come until November. Can I not include this car purchase in the October sales tax filing? Is this madness? Please... I need advice...