Canadian business shipping products from USA,

ask an International  real estate mutual funds immigration income tax expert experts - David Ingram 's CENTA Services in North Vancouver BC Canada AM600 Radio 
Subject:        Canadian business shipping products from USA, taxable?
Expert:         taxman at
Date:           Friday August 20, 2004
Time:           06:33 PM -0700
We are a brand new e-business here in BC selling auto parts, havn't yet began operating, but need to know whether we are liable to pay any taxes to the USA gov't for shipping our products from Blaine,Wa, to our USA customers. We will just have a little storage facility in Blaine that we will be shipping out of 3 times a week. 
I know we will have to pay duty to get these products over the border, but just not sure if we are liable for any taxes annually to the american gov't?  
Get back to me at your earliest convenience. Thank you.
david ingram replies:
You are taxable in the state of Washington and must file an 1120F (assuming you are an incorporated company) US Corporation Federal Income Tax Return.  
YOU MUST have a Washington Business number and be prepared to show every invoice for US sales to the Washington State sales Tax authorities.
"IF" you are selling to a US jobber or reseller who claims a Washington State sales tax exemption, you MUST have an actual physical copy of the CUSTOMER's Sales Tax registration in YOUR records.
If your storage facility is in Blaine, you just "might" be tempted to go down there and wrap your product and take it to the post office.  D O   N O T   G I V E   I N T O   T E M P T A T I O N .
One my clients who was a supplier of auto parts for a specific automobile was led away in handcuffs after the INS caught him running visa cards through an imprinter in his warehouse in Blaine.
If you decide to do a mailing from the US to US customers, you have to have the envelopes sealed and stamped in Canada (with US postage) before you take them across the border to mail.  You cannot leave the flaps unsealed to add something else in across the border.
Anytime you export something to the US, be prepared to pay a $5.00 fee at the border or buy a $100 licence for a year.  If you are intending to "export" something out of the US and have not paid the $100.00 annual fee or a $5.00 fee that trip, be prepared to stop on your way "OUT" of the states and pay the $5.00.
I met a fellow with the initials GS today.  He had not stopped and got caught in a routine inspection exporting a significant commercial item.  (This does not apply to a personal item - just a commercial item for use in a business or for resale).  His penalty was seizure of his vehicle and he has been banned from the US for five years.  
For instance, if you were bringing a car back, you have to fill in the paperwork and leave it at the US border for 72 hours before you can legally take the vehicle out of the US.
GO to and read the November 1999 newsletter for more information about expanding a Canadian business into the USA.
You and your partners need a personal consultation which can be at "my place" or yours (more expensive) BEFORE you end up in the glue innocently.
An hour's consultation would cost you $350 Canadian and get you off to a better start.
And, you are in luck.  George Arora, (an American CPA in my residence office) and I can set up your books so that they conform properly to what we need to file the US AND Canadian returns without undue problems.  Whatever you do, do NOT get one person to do the US and another to do the Canadian side.  You will end up with the two different organizations charging you large sums of money to talk to each other while they figure out what to do next.
Also, if you are making sales calls in the US in person, you must be prepared to file personal US income tax returns.
hope this helps.  If you do want to talk a little for "free"
Answers to this and other similar  questions can be obtained free on Air every Sunday morning.
Every Sunday at 9:00 AM on 600AM in Vancouver, Fred Snyder of Cartier Partners and I will be hosting an INFOMERCIAL but LIVE talk show called "ITS YOUR MONEY"
Those outside of the Lower Mainland will be able to listen on the internet at 
Local phone calls to (604) 280-0600 - Long distance calls to 1-866-778-0600. 
Old shows are archived at the site.
This from ask an income tax immigration planning and bankruptcy expert consultant guru or preparer  from or or Canadian David Ingram deals daily with tax returns dealing with expatriate:
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 David Ingram's US/Canada Services
US/Canada/Mexico Tax Immigration & working Visa Specialists
US / Canada Real Estate Specialists
4466 Prospect Road
North Vancouver,  BC, CANADA, V7N 3L7
Calls accepted from 10 AM to 10 PM 7 days a week
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