When visitors from foreign countries make purchases and buy certain services while traveling in the United States, many pay sales tax on almost every bought item. Of course, you might think these pesky taxes are refundable when you leave the United States, especially if you have received refunds for value added taxes (VAT) and goods and services taxes (GST) when you visited and shopped in other international destinations. However, few states in the U.S. let foreign tourists claim refunds for sales taxes they have paid during their visit.
U.S. Sales Taxes Vs. VAT/GST
The value added tax system in Europe, Canada and various other regions in the world are nationally imposed taxes that apply to specific purchases made by residents and visitors. In the U.S., each of the 50 states, Washington, D.C., and U.S. possessions decide their statewide sales tax rate or whether to have a sales tax rate at all. These taxes are not uniform throughout the United States. The rates not only vary from one state to another, but they also vary based on the item being taxed.
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Washington, D.C., and 45 states in the U.S. have statewide taxes, leaving just five that have no state sales taxes. Additionally, 38 states have laws that add local sales taxes to all purchased goods and services.
Even in the states that have no state sales tax, cities and counties often add sales taxes to your purchase. Notably, most cities in the U.S. require hotels, restaurants, gas stations, parking lots, car rental companies and other establishments to collect taxes on your expenditures with them. This tax system makes it difficult to breakout just the state or local sales taxes from other travel expenses, like you can with countrywide VAT or GST.
Tax Refunds for Foreign Visitors
Currently, Louisiana and Texas are the only states that provide sales tax refunds to all foreign visitors or nonresidents. Beginning in 2020, the state of Washington plans to refund some sales taxes to some Canadian visitors and U.S. residents who live in certain qualifying states or U.S. possessions.
The refund process and requirements for each of these states is different. You need the correct forms, required documentation and complete records to successfully claim your refund. Within each state, you have more than one option for locations that you can visit to request your refund before leaving the U.S. or the specific state.
None of these refunds apply to state sales tax on services such as hotels, car rentals and restaurants. Texas and Louisiana rules differ slightly, but both states let you apply at airports and shopping malls.
Louisiana Sales Tax Refund Process
Foreign visitors to Louisiana can easily qualify for sales tax refunds by shopping at designated Louisiana tax-free shopping locations throughout the state. Eligible stores include more than 1,000 participating retailers in many major cities. They range from nationally known department stores to manufacturer outlet malls, warehouse clubs and specialty shops.
You must present a photo ID at the time of purchase in each store to receive a refund voucher for the sales tax on your selections. To process your refund, you will take your passport, refund vouchers, purchase receipts and a return international airline ticket to a refund center. In addition to the New Orleans airport, you can submit refund requests at banks and some shopping malls in larger cities, including New Orleans. You can receive cash if your total refund is $500 or less; Louisiana pays larger amounts by check.
Texas Sales Tax Refund Procedures
Foreign shoppers in Texas also have airport and mall options for sales tax refunds. Eligible purchases include items you bought at participating tax-free Texas retailers no more than 30 days before your scheduled departure. The registered retailers include stores that sell jewelry, electronics, fashion, cosmetics and food in all price ranges. You can find some located in malls and outlets, department stores or larger discount merchandisers. In Texas, no membership warehouses currently participate in the program.
Eligible items must be unused and unworn, and you must present them when you apply for your refund. You will need to show original retail receipts that total a minimum of $12 in sales taxes per store location.
Visit one of many "Texas Tax Back" offices to get refunds before you leave the state. Refunds require your passport and a photo ID, along with a valid tourist visa if applicable. Your international travel itinerary, a boarding pass or I-94 if you drove to Texas from somewhere else in the country.
Texas issues refunds through PayPal, checks or cash. The daily cash refund limit is $1,000. Texas deducts processing fees from your refund. These fees vary based on your payment choice and store locations. Application locations include major airports in major cities, outlet malls and many large shopping centers.
Proposed Washington State Refunds
Until 2019, the state of Washington had a limited sales tax exemption program. It became a refund program in mid-2019. The only visitors eligible to receive these refunds are Canadian and U.S. residents of any state or possession that either has no sales tax or charges less than 3 percent sales tax. For Canadians, residents must live in a province that has less than 3 percent sales tax or no VAT or GST on retail goods and services. As of 2019, Washington still offers a sales tax exemption for foreign diplomats at the time of their purchases.
The primary requirement in Washington is that the requestor will remove the purchased item from the state. Washington sales tax refund applicants also need to prove residency in one of the eligible states, territories or Canadian provinces. The minimum refund request amount is $25 in sales tax, and you can only request one refund per calendar year.
This refund process went into effect in July 2019, so beginning Jan. 1, 2020, applicants can submit copies of relevant receipts dated from July 1, 2019 to the last day of December 2019. Washington will announce complete procedures and locations in 2020.