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Dear Tax Talk,
A few friends of mine visited Las Vegas recently
and bought lots of stuff at the outlet mall. We
are being told to claim the goods and services
tax at our country of origin. We got a different
story when we returned to our country (the U.S.
officer told us we should claim it from the U.S.
side). We are now confused, and want to know what
the chances are of getting these taxes due back
to us?
-- Rider
Dear Rider,
You traveled a long way to be taken for a ride, but unfortunately you were misinformed. While shoppers in many foreign countries can apply for a refund of the value added tax at the airport when leaving that country, the U.S. does not have a similar system.
The U.S. does not have a value added tax either. Value added tax in many foreign countries is 18 percent to 21 percent and makes purchases unattractive for visitors. With the refund system, the purchases seem more reasonable, and therefore spurs spending by visitors.
Tax in the U.S. on purchases is
imposed by state and local governments in the
form of sales tax. Sales tax on merchandise is
typically less than 10 percent. While rules vary
by state, generally sales tax is rarely waived
for retail purchases at the point of purchase,
even though the purchaser holds a foreign passport
and a return ticket home. When researching this
article, I did come across Louisiana and Texas
as states that offer foreign visitors sales tax
refunds.
Another exception exists for purchases
made at duty-free stores on the day of the passenger's
return to his home country. These purchases are
exempt from sales tax, as they are clearly for
export. There was never a chance for you to get
the sales tax back and now that you're home there's
definitely no chance. I hope your luck in Vegas
was better.
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