How to Get a Sales Tax Refund When Visiting the U.S.
Posted by Frank Gogol in Taxes | Updated on May 25, 2023
Are there ways that foreigners coming into the U.S. on B1 and B2 visas can claim tax benefits? The U.S. receives around 79 million international tourists every year. They come, they shop, they have fun, and they return to their home country. But when they buy stuff as a foreigner, just like U.S. citizens, they pay a percentage of it as sales tax.
Certain states allow tourists to claim refunds on the sales tax they are subjected to when they purchase certain items, but the process can be tricky. In this article, we’ll go over which states allow you to do that. Additionally, we will also discuss the procedure for making refund claims.
Can Visitors to the U.S. Get a Sales Tax Refund?
The answer to whether or not you can get a sales tax refund in the U.S. really boils down to individual states and their policies. The landscape is not monolithic. Some states have bills in place which facilitate that benefit while others don’t.
But generally speaking, there is no sales tax refund for the items you buy from a vendor. There’s an exception if you are exporting the items outside of the U.S.
In the U.S., a sales tax is imposed every time there’s a transfer of title or possession. So, if you purchase a taxable item and become its owner, you pay a percentage of it to the government. This is non-refundable, and U.S. citizens are not eligible for refunds (unless they are traveling outside of the U.S. within 30 days). But certain states allow tourists to claim refunds on taxable items.
As an international traveler, if you’re shopping in the state of Texas, then you can claim refunds for the items you purchase. You must possess a Texas Sales and Use Tax Permit and meet certain requirements (discussed below). If you do not have a permit, you can ask the seller for a refund of any tax paid in error. Click here to learn more about the Texas sales tax refund.
In Louisiana, there are Louisiana Tax Free Shopping (LTFS) Centers which provide sales tax-free shopping for international tourists. You need to bring your passport or an official ID with your picture, and meet the requirements. Make sure the shop is a member of LTFS or it will not be able to provide the discount. LTFS shops will provide vouchers that can be redeemed at LTFS Refund Centers.
Currently, only Texas and Louisiana provide sales tax refunds for visitors from outside of the U.S. But at the beginning of 2020, Washington State introduced some plans to offer such benefits. They are limited to residents of certain Canadian provinces, U.S. states, or U.S. possessions. Bear in mind that since this is a new initiative that came into effect Jan. 1, 2020, not all stores provide this benefit. There are also a lot of exemptions; visit the Washington Department of Revenue website for complete details.
Sales Tax vs. Value-Added Tax
Many people get confused when it comes to sales tax and value-added tax. You may be using those terms interchangeably, but they are not the same.
Sales tax is collected by the seller at the end of the supply chain, i.e., the merchant who is selling to the end consumer. In most cases, it is the retailer you are shopping with. Tax departments do collect sales tax, but they do not receive it until the final sale is made to the end consumer.
Value-added tax (VAT), on the other hand, is collected by all sellers involved in a supply chain from manufacturers all the way down to delivery agencies. Tax departments receive the respective VAT at each stage of the chain.
When claiming tax refunds, it is the sales tax you are claiming and not the VAT.
Requirements to Get a Tax Refund in the U.S.
Now that you know which states will provide a tax refund, it’s time to learn what procedures you must follow to receive it.
The Original Receipt
Every U.S. store will provide you with a receipt detailing your purchase. You must present these receipts when claiming refunds. You need to submit the original receipts, not digital or e-mail copies unless they are from brand-name stores.
Purchases Need to Meet the Minimum Amount
You need to purchase a certain minimum amount of goods to be eligible for refunds. In Texas, a $12 minimum of sales tax per receipt or combined receipt is required. But technically, with an 8.25% sales tax, the minimum purchase amount should be $150. For Louisiana and Washington, it varies.
Purchases Need to Be Within the Last 30 Days
Your purchases should be made within a 30-day window of your departure to your home country. Purchases made outside this window are invalid for sales tax benefits. Currently, this is the same for all states.
Purchases Must Be Going out of the U.S.
Any items for which you wish to request a sales tax refund must be leaving the U.S. with you upon your departure. If you leave these items with anyone in the U.S., they become ineligible for the benefit. Technically, it is much like exporting. And as you might know, exports are eligible for sales tax benefits under U.S. tax laws.
Submit Purchases for Inspection
The items for which you intend to seek sales tax refunds must be submitted for physical inspection at the airport. They must be in new and unused condition, with all the labels attached. The final decision is made at the authorities’ discretion.
Passport and I-94
These are documents you provide at the airport when leaving the U.S. Your Passport must be valid, and your Form I-94, Arrival/Departure Record should be up to date with entry stamps. But you should be prepared to present other documentation if asked.
You need to show tickets that detail your international flight departure info or flight itinerary. You may also be asked for your boarding pass.
Purchases Must Be From Participating Retailers
Not all stores in the states mentioned above sell products that provide sales tax refund benefits. There’s a list that covers 6,500+ stores, and the majority of them are branded. You should contact store representatives regarding their eligibility.
Where to Request Your Sales Tax Refund in the U.S.
You can claim your refunds at the airport where you’ll be departing for your home country. Get in touch with the airport’s central information desk; they should guide you along the way. But please be advised to arrive at least a few hours earlier than usual since the inspection may take longer.
- Why Was No Federal Income Tax Withheld From My Paycheck?
- Why Do I Owe Taxes?
- Why Do I Owe State Taxes?
- Are You Exempt from Federal Withholding?
- How to File Taxes With No Income
- Can You File Taxes Without a W2?
- H1B Taxes: Everything You Need to Know
The sales tax refund is a win-win for everyone. Merchants get to sell more products, and tourists get to buy more and enjoy the refunds. We can expect more states following suit in the near future. Always check a state’s Department of Revenue website for updates.