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Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 22692
Experience:  Taxes, Immigration, Labor Relations
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Hope I am asking the right lawyer. Has to do with taxes. Are

Resolved Question:

Hope I am asking the right lawyer. Has to do with taxes. Are you the one?
Submitted: 1 year ago.
Category: Tax
Expert:  Richard replied 1 year ago.
Welcome! My goal is to do my very best to understand your situation and to provide a full and complete answer for you.

Good afternoon. If you will tell me your question, I will be happy to answer your question if possible. Thanks!
Customer: replied 1 year ago.

I talked to an accountant ans she told me about the VAT policy where if you go overseas and buy something as a US citizen they give you a slip to fill out and get a refund for your taxes. That I have lived through and understand.


What I dont understand, and she could not answer me fully, was the policy on online shopping as a US citizen buying overseas. She said they should not charge for taxes. But I asked her the name of that law so I can cite it and she didnt know. Please say you know!?

Expert:  Richard replied 1 year ago.
Thanks for following up. I'm not the proper expert for this, but I will get it recategorized in the proper category so an appropriate expert can help you! Thanks for your patience.
Customer: replied 1 year ago.

I thought so. Thanks-what happens now?


 


 

Expert:  Richard replied 1 year ago.
A category moderator will re-categorize it and another expert will pick it up for you! :)
Customer: replied 1 year ago.

Ok

Expert:  Richard replied 1 year ago.
Thanks for your patience!
Customer: replied 1 year ago.

I cant give you a rating until I get the next expert , hang on!

Expert:  Richard replied 1 year ago.
Oh, you don't want to rate me! Wait until someone satisfactorily answers your question for you!
Expert:  Lev replied 1 year ago.
Hi and welcome to Just Answer!
Please allow me to assist.
When you purchase goods from overseas and have these goods shipped to Connecticut - such purchases are subject of so-called "use tax"
Use tax is the tax you pay when Connecticut sales tax is not paid to a retailer. The use tax is complementary to the sales tax. Together, the sales and use taxes act to tax Connecticut purchasers equally, whether they purchase goods and services within or without Connecticut.

If you paid VAT on your purchase in a foreign country - refund is possible - but is based on the law of jurisdiction which collected VAT. Not all jurisdictions have refund policy.
The IRS would not refund taxes paid to foreign jurisdictions.
Generally when goods are shipped out of the jurisdiction - VAT is not charged - and there is no need to claim a refund, but you may contact the seller and ask not to charge VAT.
However because each country has different rules - please verify:
- in which country you purchase goods?
- to which jurisdiction did you pay VAT?
- were goods shipped to the US or you brought then by yourself?
I will verify specific rules related to your situation.
Please be sure to ask for clarification as needed.
Customer: replied 1 year ago.

Hello, Thank you for helping. To answer your questions, I buy in several countries -usually fashion items sold out here in the US. The only time I ever paid VAT was in Barcelona Spain, in person at the store and I failed to carry it to its conclusion ie. didnt finish it. Otherwise goods are always shipped to me. I do pay shipping and customs fees too. Usual countries are Great Britain, Spain, Australia, Italy, China, and it varies. I have been buying products overseas for over a year now! My question is, if on my purchase order it says tax, how do I know if its a VAT or Use Tax?

Expert:  Lev replied 1 year ago.
If you are in business - and goods are purchased for resale - not for consumption - you do not pay use tax. Purchases are subject of use taxes only if purchased for personal consumption.
However - when goods are sold to customers - you might be required to collect sales tax and remit to taxing authorities.
Because you are in Connecticut - when you sell or ship to customers in Connecticut - you are required to collect sales tax. If goods are shipped to customers outside Connecticut - you are not required to collect sales tax for these states as long as you have no nexus if these states - but buyers might be required to pay use taxes.
There is no VAT in the US - only sales and corresponding use taxes - and such taxes are determined by state laws - not federal.

VAT stands for Value Added Tax - all items sold in Europe have VAT component. For goods purchased in Spain include 18% VAT (otherwise known as IVA)
You will find here a procedure how to claim refund in Barcelona - http://www.barcelona-tourist-guide.com/en/shopping/tax-free-shopping.html

When items are shipped outside of the country - there should not be VAT included. If some sellers mistakenly included VAT - you need to contact sellers and ask for correction.
If your invoice reflect charges for "tax" but doesn't specify which type of tax you are charged - you need to contact the seller and verify. There is no other way. We may guess the tax type based on country - but would not know for sure.

If you are looking for a difference between VAT and sales tax - I suggest this article - just scroll down to Comparison with sales tax - http://en.wikipedia.org/wiki/Value_added_tax

Please also be aware that VAT may be very different for different countries may have different names - if you scroll more down - you will see a brief information about VAT in many countries.
It also has a list of countries which do not have VAT.
Customer: replied 1 year ago.

I appreciate your inclusion of info having to do with me as a seller, but lets simplify. I'm just an ordinary CT citizen, and I buy fashion goods on different online out of the country websites dedicated to selling fashion goods. They charge me tax almost every time to the point I dont even question it. If it cant be VAT because you said when they ship to me they cant include it, there is only usage tax left to wonder about. I ask about the usage tax/VAT tax (if its a mistake).


Which brings me to this paragraph:


"Because you are in Connecticut - when you sell or ship to customers in Connecticut - you are required to collect sales tax. If goods are shipped to customers outside Connecticut - you are not required to collect sales tax for these states as long as you have no nexus if these states - but buyers might be required to pay use taxes." I assume here "you " means the other country, and the other country is required to collect sales tax. But I got lost because I dont ship goods to any customers so I think this paragraph doesnt apply to me. If I assumed "you " means the other country, then, you/they are not required to collect sales tax for these states/ME as long as you have no nexus (nexus?) if these states - but buyers might be required to pay use taxes.-the last part made sense kind of... I'm sorry this is not my specialty.. can we give it one more shot?

Expert:  Lev replied 1 year ago.
I will try to explain on simplified examples.
1. if you as a physical person purchase goods for your personal use - from a seller in Connecticut - that seller will charge you Connecticut sales tax - and there is nothing you need to pay.
2. if you as a physical person purchase goods for your personal use - from a seller outside of Connecticut - in another state or another country - and goods are shipped or brought by you to Connecticut - and that seller doesn't charge you Connecticut sales tax - you are required to pay Connecticut use tax.
3. if you do not sell goods - then - you are correct - this paragraph doesn't apply to you - and you do not charge sales tax. Because you are purchasing many products from different countries - my assumption was that you resell these goods - but as my assumption is not correct - please ignore that part.

Please feel free to ask for clarification as needed.
Customer: replied 1 year ago.

Oh, no I am just a designer fashion lover! I follow trends and sometimes the things I want I'm really chasing because they sell out SO quickly. They sell out of US stores and then I'm forced to look online to see who might still have it. Usually I'm so desperate by then that I dont care what country I 'm buying from as long as its the same price as in the US. But I'm aware of the possible customs charges, and the regular shipping which alone is much more, but taxes I was never sure how they justified it because I am not a resident of their country. I never know if I'm paying their countries taxes or US taxes or CT taxes. Thats what all my confusion is about.

Expert:  Lev replied 1 year ago.
Ok - so it is clear that you purchase goods for personal consumption regardless of the reason why you purchase and regardless how these items are used.
Because each country has own tax law and regulations - it is hard to tell what exactly you are charges in general.
But as a general rule - if you purchase an item in store - local VAT or sales tax will be applied. If items are shipped to you from other states or countries - neither VAT or sales tax are charges because the sale transaction is based on when you take a possession on goods.
So if you purchase an item in a store in Barcelona - local tax law will apply and the seller has to charge VAT. If however the items is shipped to your Connecticut location from Barcelona - VAT is not charges.
So the matter not where you are a resident - but where the sale transaction took place.
You always may confirm with the seller what taxes you are charged and to what jurisdiction.
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 22692
Experience: Taxes, Immigration, Labor Relations
Lev and 2 other Tax Specialists are ready to help you
Customer: replied 1 year ago.

Great I'll take it. think i've taken enough of your day. Thanks sir, expect payment shortly!


 

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