Can U.S. tourists get a sales tax refund when leaving the country?
by August 5, 2021
I remember traveling in Ireland and a nice shopkeeper reminding me that I could get any VAT I paid as a tourist back before leaving the country. How handy! But that led me to wonder, since the U.S. is so fragmented (what with 46 states and Washington D.C. all administering their own sales tax), does the U.S. do the same thing for tourists when it comes to sales tax?
The short answer is: not really.
But there are some exceptions. Let’s take a look at what tourists from outside the U.S. can expect when it comes to a sales tax refund.
There’s No Federal US Sales Tax
Before we get into the how of sales tax refunds, it is first important to understand the “why.” Unlike Europe, where a nationwide value added tax (VAT) is applied to most transactions, the U.S. allows each state to set their own sales tax rules and laws.
Sales tax is charged at the point of sale and is a percentage of the price of the product. Sales tax is a “consumption tax,” meaning that it is charged for use of the product. That’s why a retailer who is buying a product to resell does not have to pay sales tax while an end user does have to pay sales tax – because they are the one “consuming” the product.
And even if sales tax weren’t a consumption tax, because the U.S’s sales tax is fragmented among the forty-six different states (and Washington D.C.) that all have a sales tax, there’s no easy or commonsense way for a tourist in the U.S. (especially one who has traveled and made purchases in multiple states) to collect any sales tax paid before leaving the country.
Exceptions to the Tourist Sales Tax Refund Rule
According to the Sales Tax Institute, there are a few exceptions which allow international tourists to claim sales tax paid. They are:
- Louisiana tax free shopping program – Individuals traveling in the U.S. for less than 90 days and who hold a foreign passport, US Visitor’s Visa and an international transportation ticket to leave the country can apply for a refund on sales tax paid at a few qualifying retailers. Learn more at the Louisiana Tax Free Shopping Program website.
- Texas private sales tax refunds – Some private companies in Texas will refund the sales tax paid by international visitors who shop at certain stores. This is very limited, and requires the buyer to purchase from a participating store and provide proof such as original receipts, travel documents, flight or transportation numbers and even spend a certain amount of sales tax per store in order to participate.
- Washington non-resident sales tax exemption – The state of Washington provides a sales tax exemption to buyers who make a purchase of an item in Washington but do not intend to use the item in the state of Washington. Learn more about Washington’s non-resident sales tax exemption here.
You can also read more about each program here: “I am visiting from another country. Can I get a refund of sales tax paid?”
Diplomatic Sales Tax Exemptions
Diplomats serving in the U.S., as well as their families and dependents, are not required to pay sales tax. In this case, the diplomat and their contingent are given a sales tax exemption card. According to the U.S. Department of State, “Diplomatic tax exemption cards can generally be used to obtain exemption in person and at point-of-sale from sales taxes and other similarly imposed taxes on purchases of most goods and services, hotel stays, and restaurant meals in the United States.”
These cards must be presented each time the diplomat is required to pay sales tax. The vendor must look up the card’s validity or risk having to pay the unpaid sales tax out of pocket.
You can learn more about the U.S. diplomatic sales tax exemption here.
