knifemaker3 Posted June 11, 2011 Report Share Posted June 11, 2011 Hey all, I have a couple of questions after reading through the posts in the search for excise tax. I understand there are 2 seperate things I need from the I.R.S. One is a 637# and a 720 form to file quarterly. Can someone explain a little better what each of these are? I believe the 637 is an exempt form I give to my suppliers of components to exempt me from having to pay them 10% excise tax. I believe the 720 is the quarterly form to pay the excise tax on all baits I manufactor. Both are required for soft plastics I pour for resell, correct? Also, I have a complete retail location selling fishing and hunting gear, guns, ammo, etc. Will I need to keep seperate files of all the baits I pour and resell in order to do the 720 tax? If so, do any of you have that same situation and how do you handle it? Thanks. I'm sure I'll have more questions as I progress in this. Doing this as a business is lots more difficult than when just doing it for myself like I did when I used to pour several years ago! Quote Link to comment Share on other sites More sharing options...
knifemaker3 Posted June 11, 2011 Author Report Share Posted June 11, 2011 It sounds like you have a pretty good grasp of it. You will need to keep a specific record of the baits that you manufacture yourself and sell for accounting purposes. If you use a cash register with programmable account keys it can be as simple as programming one key for entry of all baits sold with your label. If you are using a POS terminal just add your product lines in as seperate products / items and make sure they are entered correctly. Its not rocket science. More like forced ditch digging. But then as a business owner you already know about doing additional unpaid government mandated work. Anyway, its not as big of a deal as you might think. Just another bit of accounting to keep track of and another tax to pay. On the 637 number, is it really worth getting or should I just go ahead and pay the tax? Right now I'm figuring on less than $1000 per month total sales from my manufactured baits. Will it save me enough for the hassle or just pay it and then also pay the 720 quarterly I collect from my customers? Quote Link to comment Share on other sites More sharing options...
toadfrog Posted June 11, 2011 Report Share Posted June 11, 2011 Get the number unless you just want to pay more. The law says we have to pay it, but it was supposed to be a temporary tax originally, and we still have it. Don't pay one dime more than you have to. Why would you want to add 10% to your cost of materials when competing products don't. You would still have to pay the tax on the products you make from them too. Double taxation. Heck triple or qruadruple when you count sales and use taxes collected, and income and self employment hits. Pay only those taxes you have to. Render unto Ceasar and all that... but if Ceasar want more he can get his fat ass out to his farm and work for a living. AMEN BROTHER , preach it. The man is giving you the gospel . That exise tax was laid on us during WWII the government has been ripping us of ever since . Quote Link to comment Share on other sites More sharing options...
knifemaker3 Posted June 11, 2011 Author Report Share Posted June 11, 2011 Sorry, I got up on my pedstal there, but seriously when people talk sbout our tax rates here I get highly annoyed. The real tax some of us pay to make a living is an order of magnitude higher than people think. Oh come on, your making millions in your bait sells......you have more money than you know what to do with.......at least that's what people think of retail store owners and anyone in the manufactoring business. And if you go broke they think you're just filing bankruptcy to make even more.......... If people really knew what we as store owners and manufactor's have to pay just to stay in business because of some form or another of the government getting into the picture there would be an awful uproar in this country. Sorry, I too get agrivated when this subject comes up. So, if I buy off of say Lurecraft I can send them the 637 and not pay excise tax? I think the only one I've ever seen anything mentioned was with Shorty's hooks. Don't recall seeing anything in Lurecraft, Janns, or Lurepartsonline........probably just missed it though. Thanks for the info. I'll be contacting my CPA on Monday to get me set up as I intend on having baits for sell by the end of next week. Don't want to get into trouble. One other question......Who do you send the 720 to? State or Federal? Thanks! Craig Quote Link to comment Share on other sites More sharing options...
powerworm Posted June 11, 2011 Report Share Posted June 11, 2011 the big brother...the feebs Quote Link to comment Share on other sites More sharing options...
dicknite Posted June 15, 2011 Report Share Posted June 15, 2011 (edited) <snip>... So, if I buy off of say Lurecraft I can send them the 637 and not pay excise tax? I think the only one I've ever seen anything mentioned was with Shorty's hooks. Don't recall seeing anything in Lurecraft, Janns, or Lurepartsonline........probably just missed it though. Thanks for the info. I'll be contacting my CPA on Monday to get me set up as I intend on having baits for sell by the end of next week. Don't want to get into trouble. One other question......Who do you send the 720 to? State or Federal? Thanks! Craig The excise tax is only on products produced for sportfishing - paints, thinners, brushes, glitters and the like do not have it. The only thing you will pay excise tax on without the Form 637 being filed are hooks, swivels, bodies, fishing line, and those sort of things. Getting the 637 filed saves you time and aggravation in the long-run. When you sell your product, you pay the excise tax on the whole thing, since the whole thing is for sportfishing - I believe (Your CPA might know - I am not one, and don't claim to know anything, let alone anything that could get you in trouble!) you can deduct (or file for a refund) the excise tax on the components you already paid it on, but the products themselves become part of the new product, so you still have to pay the 10% on your total sale price... If you have the 637 filed, you don't have to worry about the math and hassle of calculating it out (if you can). I believe the Form 637 is a permanent item - once you have it, you don't have to mess with it again. 720 tax is paid to the IRS. Dick Edited June 15, 2011 by dicknite Quote Link to comment Share on other sites More sharing options...
knifemaker3 Posted June 15, 2011 Author Report Share Posted June 15, 2011 I talked with my CPA about this.....they didn't even know it existed for sportfishing equipment! I am awaiting a call from the regional IRS agency on the proper way to do this. Figured I better go straight to the source to make sure I do it right......I'll post what they tell me. I think I pretty much have it figured out but do have a couple of question to ask them. Thanks guys! Craig Quote Link to comment Share on other sites More sharing options...
