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Federal Excise Tax On Fishing Tackle

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Hi

I appreciate the Links and I checked them out. But I think each one selling at retail should have it in writing from the IRS. I intend (this time, before I sold strictly to the "Jobbers") to set up an account for retail on the web sales and sell to that account .. would be taxed on what I sell to the Retail Account (it must be in reason) There was one company when it started out that the guy sold to an account at what it cost for him to make it and taxed on that ... then then sold at what ever he wanted to

from the "Sales Company" ... I know he was questioned on this but never know of any outcome. Incidently he sold out and the Company is still in business (a little history .. he sold out in late 70's or early 80's)

JSC

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Bottom line is, you don't want to be contacted by the IRS. It will not be pretty. I personally know of 2 guys that got caught selling to stores without being registered and it just about wiped them out. Best bet is to register, add the 10% to your invoice, and file the tax.

Bill Parry

Hunter Creek Bait

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The IRS representatives who visited me seemed amazed that I knew to contact them as soon as I began selling, even after I explained that I'd been around some aspect of the fishing and lure selling business since I was 10 years old. I had two visits from them which is what they do, and they thoroughly inspected my manufacturing facility; I gave them an exhausting tour of my "fishing room" and my recliner, and they said that that was about par for the course. They were nothing but courteous and helpful throughout, getting my wife set-up on the book-keeping end of it, and urging us to contact them if we ever had a question of any kind--they were there to help.

Because I already was selling in one retail location, I knew they'd contact me, if I didn't contact them. Yeah, it's a pain for a tiny business (in my case), but it sure beats looking over your shoulder constantly, and being investigated some years down the road.

:twocents:

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Dean,

I was stationed at Scott AFB, IL, just east of St. Louis, MO. I know at least 4 or 5 guys that retired form active duty and now work for the IRS. They were just everyday guys like us, in fact, one was a hell of a fisherman as well.

But, when it comes down to business, they are all bisiness. As NCOs, they were teacher and trainers, as well as leaders. BUT, they were also the same guys that folks would have to see when they got into deep :censored:. That was all just part of the job to them.

I guess the point I was trying to make is this... You and the Mrs were smart to ask for assistance and gain the knowledge for free. Your tax payers and these folks work for you. I knew these guys in a past life and wouldn't want them going after me... :yay: they don't play so nice with others if they don't have to.

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I know this is an old post, but thought I would bring it back regarding the constructive sales price as there was some uncertainty regarding this.

I went through my 637 registration the other day and questioned the agent about figuring the tax on retail sales. If you are the manufacturer and sell retail (like on a web site) you should be using a constructive sales price of 60% of the retail price for items you manufacture or re-manufacture. Before you figure the 60% you should subtract from the price; the actual cost of shipping the product and the 10% excise tax. Take 60% of that figure. The federal excise tax is 10% of that price. If you are paying 10% of the actual retail price you are paying too much. She said lots of people are paying too much tax. There are some caveats (such as other items you may subtract from the price before figuring the 60%) and if I had an electronic version of the actual publication I have been using I would post it, so I recommend you get the publication and carefully read it. It helped me a lot to keep from paying too much as almost all my sales are retail or to retailers. I believe a member of this site sent it to me. It is called "Field Directive - Federal excise tax on the importation and manufacture of fishing and archery products" The contact on the publication is Jack Brown (IRS - Excise Tax Specialist 231-932-2057). If you have questions you should call him. He should also be able to provide you with the the publication.

Steve

Edited by Mags
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Thanx for the up date Mags .. these things can get complicated and if you are not covered in writing You are asking for trouble ... All of the Excise Tax people I have had cantact with have been real helpful

JSC

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I think it was about world war 1 that the goverment imposed the exise tax. They said it would be repealed after the war. That was quite a while back I believe. Never let the goverment give you nothing and never believe they will retract anything involving money. Be careful and pay up the feds. will pull up to your door like you were a drug lord. Guns, dark glasses and badges flashing. Am I paranoid , nope. Just experienced.

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I hate paying excise tax but it does go back to fishing. Here is something from this website American Sport Fishing Assoc.

The Sport Fish Restoration Program was established in 1950 by the Dingell-Johnson Act, using a 10 percent excise tax on certain fishing equipment to fund various projects designed to enhance sportfishing in all 50 states. The Recreational Boating Safety Program was established in 1971 to fund boating safety and education programs, and amended in 1980 to draw its funding from taxes on motorboat fuels. These programs were combined in 1984 under the Wallop-Breaux Act.

The Wallop-Breaux amendment expanded the 10 percent excise tax to nearly all sportfishing products and captured over half of the federal motorboat fuel taxes that were paid by boaters and anglers. This combination substantially increased the funds collected by the federal government to be returned to the states for fishing and boating-related projects.

In 2005, the opportunity existed to increase the fuel tax funding source as Congress reauthorized the transfer of motorboat and small engine fuel taxes to the SFRBTF. Until then, only 13.5 cents of the 18.3 cents in federal fuel taxes on each gallon of gasoline used by recreational boats and small engines was being transferred from the Highway Transportation Fund to the SFRBTF. The additional 4.8 cent balance was being directed to the General Treasury. However, the 2005 reauthorization authorized the transfer of the entire federal fuel tax to the SFRBTF. Anglers and boaters paying this tax finally received the full benefit of their tax payment investment.

Since its creation, the Sport Fish Restoration Act has been refined and expanded by Congress. It is unquestionably the most valuable federal legislation for anglers and fishery resources, delivering millions each year to state fishing and boating programs. This is the most important program for boating and angler access and fishery management in each state. It is also the core funding for each state’s sport fish restoration program.

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if we are paying this tax when we buy what we need. fron jenns or hagens or even bass pro do we still need to add the 10% after we make the sale. dont get me wrong i do feel that this is a good thing to pay. it all does come back to the thing we all love

Edited by joeglk
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if we are paying this tax when we buy what we need. fron jenns or hagens or even bass pro do we still need to add the 10% after we make the sale. dont get me wrong i do feel that this is a good thing to pay. it all does come back to the thing we all love

If you do not have an approved Form 637, you can't pay FET.

If you have a F637, when you file your quarterly Form 720, you will deduct FET you paid to other vendors from what you owe.

Example: Sales $100, you owe 10% or $10.

If you bought $50 from Hagens and on the ticket is shows you paid 10%, or $5, then subtract the $5 from the $10 you owe. Don't pay the tax twice.

If you have a Form 637, you will send a copy of this to your vendors and not pay it when you buy components.

there are several threads on here with lots of info on this. Just seach excise tax.

Edited by dlaery
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If you make and sell a bait YOU must pay the tax.

If you buy and sell a bait the tax must already have been paid by the person who made it.

If you buy parts to make a bait and then sell the bait you must pay the tax.

Some items suchs as hooks are complete fishing tackle in and of themselves. The hook maker must pay the tax, but if you then incorprate the hook into a bait you must pay the tax on the whole price you sell the bait for. If you are doing a lot of this then you can send a copy of your exemption letter to the hook maker, and they will not add the tax to the hooks they send to you to be incorporated into a bait.

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On 11/14/2007 at 7:46 PM, reeves said:

It is confusing but my interpretation of the nutshell is that you are obligated to pay the tax if you are manufacturing and completing tackle for sale. Example would be: If I cast 100 spinnerbait bodies and sell them to Mr. Smith and he paints them and turns around and sells them to Mr. Jones who then hangs blades and skirts on them and puts them up for sale, it is Mr. Jones who is liable for paying the 10% tax on those baits.

It is tough to answer Bountiful Waters question in less than an evasive way. First of all, are you registered or just a hobbyist? If you are registered, then YES, you would be obligated to pay the tax. If you are merely a hobbyist and selling some of your buddies some baits here and there, then you are just flying under the radar and should hope they never discover you.

Bottom line! If it were me, I wouldn't worry about it unless I got too big and then I had better get legal real quick. It would hurt to have to pay retroactive taxes and fines, just not worth it. And that's my 2 cents on this issue. Actually my wife has the accounting degree and handles all this type stuff, I think she might even understand some of it. If you have any other questions, I can direct them to her for clarification. :eek:

We would like to talk to your wife about our excise tax, could we have the number to call her, we live in Oregon. e-mail to brtt22@yahoo.com 

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