Thursday, April 09, 2009

Taxability of Foreign Sales

Recently, for whatever reason, I have had more than a couple of people ask me about foreign sales and their taxability. Remember the golden rule that shipments out of the state are not taxable in that state whether they're going to Pennsylvania or Peru.

Now, it’s relatively easy to figure out what to do in the destination state, but what the rules are in that other country? Have fun with that one. I’m outta that discussion! US taxes are hard enough.

One thing to keep in mind though, when you’re shipping out of the country, is if it stops in a port at a freight forwarder. You could have an issue with whether or not the shipment has "come to rest" and you are now using the TPP in that state. It’s not a big worry though, because it’s been my experience that most states that actually have a port, will also have rules about use tax not being imposed if the shipment really is in transit. There’s going to be paperwork and t’s and I’s that need to be crossed and dotted, so make sure you do your research.

Sales Tax Guy

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Anonymous said...

If my business is incorporated in the state of Wisconsin, and contracts with a manufacturing plant in Missouri to produce and ship my products to Aruba, what are the sales tax consequences? Do I pay/charge Wisconsin or Missouri sales tax? Do I pay a tax to Aruba? Any information would be helpful, thank you.

Jim Frazier said...

Always ask where the delivery point is. Since it's not in WI or MO, then neither state should be relevant. As for Aruba, can't help you.

Get a second to a sales tax consultant.

Anonymous said...

What are the sales tax implications when selling to casinos in the same state and out of state? What if they are located on Indian territory?

Jim Frazier said...

Depends on the state. I haven't seen many exemptions for sales to casinos, but then I haven't looked very hard - it's not a question that usually comes up. And if the casino is owned by a tribe, they are probably going to be exempt, not because they're a casino, but because of rules involving sales to tribes.

Good question. I may have to make this a blog entry. Gold Star for you.

Anonymous said...

okkkk...I was looking for a more definite answer. It's great that you like my question, but probably's and gold stars aren't much help. I'm sorry for the bitter response, but with a title like "The Sales Tax Guy" I would expect a little informative answer.

Jim Frazier said...

My job is training and education...I leave the topic specific research to you folks, or hired consultants. Research costs money.

And if you were expecting more detail, you haven't read the blog enough. ;-)

Jim Frazier said...

And, expecting a definitive take-it-to-the-bank answer about sales tax, or any legal topic, from a blog, regardless of the name, is asking for trouble.

Anonymous said...

Jim - I appreciate your commentary and have to say that anyone who offers feedback like this guy on advice offered for FREE (especially under cover of anonymity) can be safely categorized as a huge butthole (sorry for getting too technical)

Jim Frazier said...


Thanks for your support.