Other nations give tax refunds, but getting them can be taxing
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"It's actually much, much bigger than that," said Colleen Cowan, director of North American marketing for Global Refund, a company that helps business and leisure travelers recover the tax money. "It's such a shame Americans don't take advantage of it. It's just one of those cultural things."
Foreign governments in more than 100 countries, including most of Europe, charge a value added tax, or VAT, on most goods. It's similar to the American sales tax, but it can run as high as 22 percent in some countries. Travelers who take purchased items out of the country are entitled to a refund of the tax, but Americans often don't bother or get lost in the bureaucratic shuffle.
The latter happened last year to Robert McMaster of Northampton. Twice McMaster tried to recover taxes he paid, in Canada and Scotland. He came away disappointed each time.
"They make it hard enough so few people will take advantage of it," McMaster said.
Part of the reason is unfamiliarity with the process. In the United States, most taxes are paid by everyone, whether they are from this country or not. In Europe, parts of South America, and Japan, the countries promote tourism and commerce by refunding the value added tax paid on goods taken out of the country. Canada has the same philosophy, but its refundable taxes are called the Goods and Services Tax and the Harmonized Sales Tax.
In most countries, business travelers can recover taxes assessed on both goods and services, while leisure travelers can recover only the taxes on purchased items. Canada makes an exception for short-term accommodations, allowing leisure travelers to recover taxes on stays at hotels and bed-and-breakfasts. Most countries require a minimum purchase level to qualify for a refund.
A little advance planning can make the refund process seem less daunting. For a primer on tax refunds, check out the Web site of Michigan State University's tax policy center at www.traveltax.
msu.edu/vat/vat.htm. Last May, McMaster and his wife stayed at a bed-and-breakfast in Montreal. The proprietor gave them a form to apply for a refund of the taxes they paid. The form, which featured a Canadian maple leaf on the top, was issued by the National Tax Refund Service, which McMaster assumed to be a government agency.
After sending in the form, McMaster said he heard nothing for several months, so he began making inquiries to Canadian Customs. He discovered National Tax Refund Service was a New York-based company that helps travelers get back their refunds. McMaster said the company received a $20 check from the Canadian government, and credited his credit card for only $5.
McMaster has had no success in obtaining an explanation of National Tax's hefty commission. I couldn't find out anything either. The company has no phone number listed on its Web site and is not listed under National Tax with directory assistance. My e-mail inquiries were fruitless.
Although Canada helps visitors get refunds on their own (see www.ccra-adrc.gc.ca/E/pub/tg/
rc4031), it's quite common for travelers to enlist a private company's help. The companies (a list is available at the Michigan State Web site) take a percentage of the refund, and in return handle a lot of the paperwork, track down missing funds, and send you a check in US dollars.
In Europe, Cowan of Global Refund said most travelers have to use a refund company since retailers typically have affiliations with them. Cowan said Global is affiliated with 210,000 shops in 31 countries, including Harrods in London. Its commission is based on a sliding scale, but averages about 3 percent, she said. On a trip to Scotland last August, McMaster completed all the paperwork for purchases he and his wife made at four stores. At the airport, customs officials stamped his forms as required but then told him to put all the forms in one envelope and drop it in a designated Customs mailbox. That was the last he heard of his refund.
Cowan said Scottish officials apparently gave McMaster bad information. She said a refund can often be obtained right at the airport or by mailing the stamped forms to the refund company. It was unclear whether McMaster's forms were all issued by one refund company or several. Cowan offered to help sort out the mess.
McMaster is skeptical of the whole process, but he offers some advice to fellow travelers. "Make sure that when you are in a store that you get the forms and get a full explanation of how this works," he said.
RCI confusion over
The Woburn company that appeared to misrepresent itself in telemarketing solicitations as RCI, the world's leading time share trading company, has promised to change its name and stop promoting RCI time share points conversions.
John Barrows, a spokesman for RCI, said Woburn-based Resort Consultants International responded to a cease and desist letter by agreeing to stop using the misleading tactics. (See Jan. 26 Sensible Traveler.)
Larry Castagneto of Peabody, who attended one of the Woburn presentations, said the sales staff used very shady tactics. "Their primary function as far as I'm concerned was to sell time shares," he said.
Bruce Mohl can be reached by e-mail at mohl@globe.com.
