Doing business with USA member states

Another question. I was browsing the IRS website and came across the following section, which got me thinking: how much weight does this note actually carry? I received an invoice yesterday dated April 24, 2016, so it belongs in the Q2 sales tax filings. Registration is already processed. But tell me, if the books ever face an audit, does this specific certification on the invoice even matter?
SELLER
from another European Union member state

BUYER in the US

BUYER'S TAX OBLIGATIONS

REGISTRATION DOCUMENTS
Taxpayer

Taxpayer

- 25% Sales Tax upon acquisition

Reported in:
Form Sales Tax-S
Form Sales Tax

- a note printed on the invoice or other acquisition document for said vehicle, or a special sheet of paper certified by an IRS seal stating: "The acquirer is required to report the acquisition on Form Sales Tax-S and calculate the sales tax on Form Sales Tax"

Does one have to account for both the sales tax and the obligation, or just the obligation itself? This is my first time importing a vehicle from the European Union.

Since we’re talking about a commercial truck here, yeah, absolutely.
If this were just some personal vehicle you were driving around, it would be nothing more than an expense—no way to claim those input tax credits unless you hit one of those rare legal loopholes.

Seeking some guidance here.... We recently picked up a used van to handle passenger transport for our lodging business .... It was purchased from a company based in Germany with a valid VAT ID, and we are also registered for VAT. The invoice is for $8,000. I need to report this for the fourth quarter, but I’m stuck waiting on Customs to finalize the excise tax calculation... I'm unsure how to file; should I enter the $8,000 into the system under input tax and liability using the exchange rate from the invoice date, or do I increase the tax base by the amount of the excise tax?......

I’ve got a contractor friend who files his sales tax quarterly.
He’s looking to get a sales tax ID so he can pick up some tires for his van in Canada without paying the extra tax.
If he uses that ID, does he automatically have to switch to monthly filings?

slycobra7 said:I’ve got a contractor friend who files his sales tax quarterly.
He’s looking to get a sales tax ID so he can pick up some tires for his van in Canada without paying the extra tax.
If he uses that ID, does he automatically have to switch to monthly filings?

Yep.

Edit: And those tires aren't actually "tax-free." You still deal with a 25% tax rate, you just get to claim the input credit immediately. It all ends up on the tax return anyway.
Plus, there's the whole registration process for the new status to handle.

Hey there, I’ve probably missed the answer somewhere already, but I can't seem to track it down.
So, imagine a small business owner who isn't registered for sales tax. If they go over to Italy to pick up some food supplies, how does that work? Do they just buy it as a local vendor, pay the VAT included in the price, and then just write the whole thing off as an expense?

Good evening, everyone.
I’m looking for some expert advice or maybe just a sanity check from anyone who’s dealt with something similar. We recently had a supplier over in Germany require an upfront deposit as a condition for registering on their website and getting access to their databases—basically their product catalogs. Because our US tax ID didn't trigger the automatic system recognition, the vendor sent over instructions to pay the entire annual subscription fee upfront in USD, including a 25% sales tax markup. Since we don't typically deal with international vendors, this is my first time navigating this kind of mess, and I'm feeling a bit lost. What's the move here? Does this situation trigger a self-assessment requirement for state sales tax, and how would we actually calculate that 25%? To make things more confusing, we haven't even received a formal invoice yet—just those payment instructions. We went ahead and sent the funds in USD to get access, and now we finally have entry to the site and the catalogs we need for our operations. I’ve been digging through tax regulations to try and make sense of it, since I've never run into this before, and I stumbled upon a note suggesting that if a deposit is paid before the actual acquisition occurs, the obligation to account for tax might not kick in yet.

I’d really appreciate any guidance or pointers you can throw my way. Thanks in advance for the help.

Look, it’s pretty obvious. The supplier probably hit that sales threshold here in the States and had to go ahead and register for a state tax ID. You should probably double-check their tax identification number. What was the specific number they gave you?

Does anyone know the best way to handle the bookkeeping here? I've got an entrepreneur who isn't part of the standard sales tax system, but they do have a Tax ID and end up paying sales tax in the US.
Usually, if a business is fully registered for sales tax, it looks like this:

/2210
to the inventory account/
14022/
/24022

The tax gets offset.

Since this specific person is actually paying the tax, it should go under the 24022 payment code.
But I can't double-entry the same account twice, and I definitely need a matching credit entry.
My brain is totally fried!😵

ruggedmaker2 said:Look, it’s pretty obvious. The supplier probably hit that sales threshold here in the States and had to go ahead and register for a state tax ID. You should probably double-check their tax identification number. What was the specific number they gave you?

All I see on the advance payment instructions is a German VAT number.

Just hang tight until they send over the invoice, then take a good look at what's actually on there.

Jonathan Garcia said:Hey there, I’ve probably missed the answer somewhere already, but I can't seem to track it down.
So, imagine a small business owner who isn't registered for sales tax. If they go over to Italy to pick up some food supplies, how does that work? Do they just buy it as a local vendor, pay the VAT included in the price, and then just write the whole thing off as an expense?

Sorry to bug you guys, but I'm stuck on what to tell him. He needs an answer ASAP.
:confused

Hey everyone,
Are you guys including details about intra-state services and reverse charge acquisitions on Section B of your sales tax returns?
At my old firm, we had an audit right before filing the year-end paperwork, and I was forced to disclose everything for the entire year.
Now I’m at a much larger company—double the size, actually. They just finished an audit and a state tax inspection last month, and they’ve never once reported those details. Not a single person flagged it. When I brought it up, they looked at me like I was from another planet.

On another note, I just received signed delivery receipts from April, and I'm only just now invoicing the goods.
Is anyone going to come after me for that?

That extra attachment on the sales tax return? It’s basically just pure statistics at this point. Honestly, I don't even think the IRS knows what they want us to do with it.
I always fill it out, but neither my auditors nor the tax man have ever breathed a word about it because, let's be real, it doesn't change a thing for the actual tax liability.

And look, those shipping logs from April—even if you're billing them now—don't sweat it.
It all falls within the same fiscal year, so they aren't going to come sniffing around looking for tiny discrepancies like that. Especially since both you and the client will be reporting everything in the same period anyway.

ruggedmaker2 said:That extra attachment on the sales tax return? It’s basically just pure statistics at this point. Honestly, I don't even think the IRS knows what they want us to do with it.
I always fill it out, but neither my auditors nor the tax man have ever breathed a word about it because, let's be real, it doesn't change a thing for the actual tax liability.

And look, those shipping logs from April—even if you're billing them now—don't sweat it.
It all falls within the same fiscal year, so they aren't going to come sniffing around looking for tiny discrepancies like that. Especially since both you and the client will be reporting everything in the same period anyway.

Grandma wrote to me in my records saying I hadn't reported services on side B during the year. 🤦
Why can't they just see everything on side A?
Or maybe they just don't know how to read.

I tell myself: don't worry about it. Just keep doing exactly what everyone else has been doing up until now.
Thanks, ruggedmaker2😉

Ethan Bailey18 said:Grandma wrote to me in my records saying I hadn't reported services on side B during the year. 🤦
Why can't they just see everything on side A?
Or maybe they just don't know how to read.

I tell myself: don't worry about it. Just keep doing exactly what everyone else has been doing up until now.
Thanks, ruggedmaker2😉

Exactly. We figured this out ages ago—every single IRS agent and every local tax office operates on its own wavelength. It all just depends on whatever mood they happen to be in that day.
Don't let it get to you.
As long as the government isn't being cheated out of their cut by some shady character... you're fine.

I'm about to issue my very first invoice here in the USA, so I could really use some guidance. It's for a service provided by a small business that isn't registered for sales tax. On the invoice, should I explicitly state that the business is exempt from collecting sales tax under specific tax code sections? Besides the standard required info, do I need to include any specific legal clauses or maybe something in English if the client is out of state? Also, regarding paperwork—do I just file a summary report at the end of the period, or is there more to it? Thanks so much for the help!

ruggedmaker2 said:Of course they aren't getting busted—they're registered sales tax entities. They report what they owe one minute and claim their input credits the next. But you? You clearly aren't in that club.

You aren't a legitimate business entity for tax purposes; you've just hit that specific revenue threshold that forces you onto the radar. (I'm assuming that's the case since you didn't mention how much gear you bought).

Basically, you've been forced to register because you crossed the line, even though you aren't a "real" taxable business. That means you have to cough up the sales tax here in the States, but you don't get any of those sweet tax credits back.

That limit of $26 you're talking about? That applies to stuff you buy overseas—like if you were buying it in Spain and paying their local taxes. Once you blow past that amount, the grace period is over. You'll have to pay the tax here in America and register to do it, but you still won't be able to claim any credits because you aren't a full-blown taxpayer.

Anyway, let me get back to my own situation.

I bought some goods worth 25 $0.00.

I got an invoice that didn't show any sales tax and didn't even have a "REVERSE CHARGE" note on it.

Since I'm not part of the regular sales tax system—I'm just running a small business—I have a tax ID that I applied for because the folks at the IRS told me I needed one if I wanted to do business with other US states.

JPMorgan Chase gave me one answer, then some tax inspectors told me I didn't need to pay, while other tax inspectors told me I definitely did.

Does anyone in this country actually KNOW if I need to pay?

And what specific document is used to make that call?

What would have happened if I hadn't gotten that tax ID? Would I even have been allowed to buy the goods in the first place?

Laura Castillo6 said:Anyway, let me get back to my own situation.

I bought some goods worth 25 $0.00.

I got an invoice that didn't show any sales tax and didn't even have a "REVERSE CHARGE" note on it.

Since I'm not part of the regular sales tax system—I'm just running a small business—I have a tax ID that I applied for because the folks at the IRS told me I needed one if I wanted to do business with other US states.

JPMorgan Chase gave me one answer, then some tax inspectors told me I didn't need to pay, while other tax inspectors told me I definitely did.

Does anyone in this country actually KNOW if I need to pay?

And what specific document is used to make that call?

What would have happened if I hadn't gotten that tax ID? Would I even have been allowed to buy the goods in the first place?

You have to. It's a given.

Quincy:

And what specific regulation determines that?

The Sales Tax Law covers it.

Quincy:

What would happen if I hadn't grabbed a tax ID? Could I even buy the goods?

They’d just tack their sales tax straight onto the invoice. You'd end up paying it anyway, just directly to the vendor instead of handling it through your own tax filings.