If you’re a tourist visiting the USA and want to know how to claim tax refunds in the USA for tourists, then this article will make your day. The USA welcomes around 79 million international tourists every year, including people on B1 and B2 visas.
The US market is perfect for shoppers purchasing accessories, clothes, electronic gadgets, and more. The prices of these products are often lower in the US market than in other countries.
While shopping, tourists pay sales tax just like US citizens do. Some states even provide tourist sales tax refunds, though the process can vary. In this article, we’ll provide all the facts on obtaining tax refunds in the USA as a tourist.
How To Claim Tax Refunds in the USA for Tourists?
Whether you can claim a tax refund on your shopping in the US depends on where you shop. Specific states like Texas often give you a tax refund on your purchases if you are a tourist. However, US tourism websites or the US government don’t have a list that says you’ll claim a sales tax refund when shopping in a specific US state.
Whether you can obtain tax refunds for online purchases is still unclear. You must check with the online store to see if they offer refunds. It all depends on where your products ship and how the seller handles state taxes. Even if you do get a refund, there are a lot of conditions to obtain a decent refund.
State Sales Tax vs. Federal Sales Tax
There is no national-level or Federal Sales Tax in the USA. So, the US Government doesn’t give sales tax refunds to foreign visitors, as US Customs and Border Protection explained.
When you shop in the US, the Local Government or State charges you the State Sales Tax, not the federal government. The US Federal Government typically charges tariffs or customs duty at the federal level, but it’s not something that is charged directly to the average shopper.
When you shop in the US, the sales tax you pay goes straight to the local or state government, not to the federal government. So, if you’re shipping products out of the US, you generally get a refund on the Local Government Sales Tax or State Sales Tax.
Since you’ll likely get a refund on the state tax, it’s smart to check out how much you’ve paid to obtain an estimate. You can spot it right on your purchase receipt. There’s a section labeled Sales Tax, which is just the State Sales Tax.
What Are The Differences between Sales Tax and VAT?
Many people confuse sales tax with VAT (value-added tax). Although you might use those words interchangeably, they’re not identical.
Sales Tax: When you buy something, the store where you make the purchase collects the sales tax. Usually, it’s the retailer you’re buying from. The tax authorities collect this tax, but they only get it when the customer makes their purchase.
VAT: Unlike sales tax, VAT is collected by every seller in the supply chain, from the manufacturers to the delivery companies. Usually, it’s a percentage of the product’s price, but standard VAT rates vary widely between countries.
Tax authorities get the value-added tax at each phase of the supply chain. When claiming tax refunds, it’s for sales tax, not value-added tax.
Does The US Contain A VAT?
The US is one of the countries that don’t impose a VAT (value-added tax). However, most states do have sales taxes that serve a similar purpose. In addition, the US imposes federal excise taxes on specific goods like tobacco, fuel, and alcohol products.
Supporters of implementing a VAT in the United States argue that it would simplify the revenue procedure and reduce tax fraud. However, critics claim that it would diminish states’ control over revenue and burden small businesses with higher administrative costs.
Which U.S. States Give Sales Tax Refunds To Tourists?
Right now, only 3 states in the U.S. give sales tax refunds to tourists. These states are:
- Washington
- Louisiana
- Texas
Below, we will provide more detailed information about each state.
Washington
In Washington state, non-residents can get an exemption on sales tax under specific conditions, especially if they’re using the goods outside of Washington. This exemption applies to digital codes, digital products, and tangible personal property that you can use outside the state under specific conditions.
This exemption works when you buy something in Washington but plan to use it outside the state. For sale to be considered an export sale and not subject to retail sales tax, the items must be sent to another country, given to a carrier for international shipping, or delivered directly to the buyer’s ship.
For local delivery, sales to a buyer’s customs broker outside Washington state don’t count as exempt export sales.
Louisiana
New Orleans, Louisiana, has a tax-free shopping program for tourists who meet specific criteria. This program is for tourists from other countries staying in the U.S. for less than three months.
If you qualify for the tax-free shopping program, you can get a refund on sales tax spent for certain items bought at specific retailers. This refund applies to material movable property that’s taken out of the state permanently but not to food and drinks consumed within Louisiana.
Texas
In Texas, tourists who meet specific requirements can get a refund on the sales tax they paid when shopping. For local delivery, sales to a buyer’s customs broker outside Washington state don’t count as exempt export sales. Some private agencies in Texas offer to refund the sales tax for tourists who shop at specific stores.
However, this option is limited. To qualify, buyers must shop at participating stores and give proof such as travel documents, flight or transportation details, and original receipts. They may also need to pay a specific sales tax for every store to be eligible for the refund.
Moreover, the purchases must be made within thirty days of the tourist’s departure. Texas allows sales tax refunds for tourists under its tax laws concerning imports, exports, and customs brokers.
Requirements To Obtain A Tax Refund In The United States
In the United States, each state has its rules for getting a tax refund when shopping as a tourist. It can be challenging to obtain a decent refund because some states require you to buy a certain amount at one store. The conditions for getting a refund are usually the same whether you’re from another country or a U.S. citizen.
The main difference is where and when you can claim your tax refund. Here is a guide on how to obtain a refund on sales tax.
Submit Actual Receipts
You must submit the actual receipts at the refund counter to get a tax refund. They won’t take photocopies, reprint, or duplicate sales receipts. You have to submit the first printed actual receipt.
They won’t take email or digital receipts, except for products you bought online from a brand store, and only if the receipt shows it’s being delivered to the same state. For online buys, you’ll also require the delivery packing slip.
Meet the Minimum Figure
Different states have different minimum tax amounts required per purchase or receipt from an outlet store or brand store. In Texas, to get a tax refund, you have to spend at least $12 on one receipt or a bunch of receipts from the same store brand.
With an 8.25% sales tax in Texas, you have to buy products worth at least $150 in one brand outlet or single store to qualify for the refund.
Overseas Travel
You’ll only get a refund if you’re going outside the US and buying products that will stay out of the US. They need the original receipt to process the refund because they’re technically sending the product to another country.
It indicates that the sale is over once you buy something in the US. You can’t return it for a refund. You’ll have to show the item you bought for physical inspection at the airport. It has to be unused, brand-new, and still have all its tags on.
Show Flight Tickets
You have to show your foreign flight’s itinerary tickets or departure details. They might also ask for your boarding pass.
Export Purchases
To get a tax refund, the products you claim must leave the US. It’s all about giving tax benefits for exporting goods.
Show Entry Stamp
If you have a foreign passport, you must bring your Passport or Visa and an I-94 with the entry stamp on it.
Shop at Participating Stores
You can only get refunds for purchases made at stores that are part of the state’s tax refund program. These stores are primarily big brands in Texas, with over 6,500 listed. But be careful; not all brands are eligible for refunds. For example, you can’t get a refund for purchases from Abercrombie & Fitch.
Timeframe of Purchase
You must complete your purchase within 30 days of traveling internationally or leaving the US.
Processing Charge
Depending on the state, your tax refund may have a processing fee. If you want instant cash, the fee is 50%. If you want a check or can get a refund to PayPal, the fee is 35% of the tax refund. You may also be charged $4 USD for every single store or brand purchase.
Tax Refund Policies
Tax refund rules can change from state to state, and there isn’t a fixed sales tax rate everywhere. Before shopping, read the tax refund and sales tax rules for the state you are staying in. For example, if you shop in Delaware, you won’t have to pay sales tax so that you won’t get a refund.
Where Can You Request Your Tax Refund In The United States?
All major international airport terminals have a Tax refund desk where tourists can submit tax refund claims. For assistance, you can contact the airport’s central information desk. Remember to arrive a few hours earlier than usual because the inspection might take longer.
Non-US citizens can also submit tax refund claims at certain retail locations within specific states. The state’s website has details on these locations.
Tips For Sales Tax Refund As A Non-Resident In The United States
Getting a tax refund can be great, especially if you’re doing lots of shopping and bringing it home. The only drawback is you need to hand over the original purchase receipt. By planning ahead of time, you might obtain a decent tax refund. Here are a few tips.
- Take a Picture of Original Receipt: Capture a photo of the original receipt. If a warranty place outside of the United States asks for it, you can use the picture to make a duplicate receipt.
- Reprint: When you make your purchase, ask for a duplicate receipt or have the receipt reprinted. You can utilize the duplicate receipt for warranty claims in your home country and abroad.
- Register for Warranty: If you’re purchasing an electronic device and there’s an online warranty registration option, make sure to register when you hold the original receipt.
- Purchase Maximum at One Brand Store: Be sure to choose a few brands and shop at their outlets to fulfill the minimum requirement for a tax refund. Otherwise, you won’t qualify for the refund because you’ll miss the minimum purchase amount. For instance, if your purchase is under $150 per store, you won’t meet the minimum refund amount in Texas.
Conclusion
Hopefully, you now know how to claim tax refunds in the USA for tourists. You can ask for a refund at the airport before heading home. Just reach out to the airport’s main information desk, and they’ll point you in the right direction. It’s a good idea to arrive a few hours earlier because the inspection might take longer.
Sales tax refunds benefit everyone. Tourists can buy more and enjoy refunds, while retailers can provide more goods. More states will likely follow this path. For updates, always check the state’s Department of Revenue site.
