Federal Sportfishing Excise Tax

[DaBehr]

It might help to understand how the funds are being spent. Chances are if you launched a boat on a public boat ramp...you've benefited from the fund. If you have ever fished on a dock or handicapped fishing dock...you have probably benefited from the fund. Many of the big reservoir habit programs were funded by this tax.

 

I've written many grant applications over the years for habitat and access areas for many of the places that I fish.

 

It is charged on the final product...not on components.

 

Funds for the permanently appropriated States sport fish program are apportioned on a formula basis for paying up to 75 percent of the cost of approved projects which include acquisition and improvement of sport fish habitat, stocking of fish, research into fishery resource problems, surveys and inventories of sport fish populations, and acquisition and development of access facilities for public use. Funds for the remaining programs under the Act must be authorized to be appropriated from the Sport Fish Restoration Account by Congress.

 

https://www.fws.gov/laws/lawsdigest/FASPORT.HTML

[token12]

Thanks for making a post on this.  You never know what direction you will go in when your lure starts getting into the hands of others then expands into something awsome.  

[JBarlow]

I am not sure you guys are supposed to be paying this tax unless you import or manufacturer the original components yourself. 

If you buy the components from me then the taxes have already been paid on the components before they get into your hands. 

But I do know that we pay the tax and calculate it into the cost of the components.

By definition you have already paid the tax when you pay me.

 

Of course this is way out of my league...that is for the accounts to figure.

[dlaery]

I am not sure you guys are supposed to be paying this tax unless you import or manufacturer the original components yourself. 

If you buy the components from me then the taxes have already been paid on the components before they get into your hands. 

But I do know that we pay the tax and calculate it into the cost of the components.

By definition you have already paid the tax when you pay me.

 

Of course this is way out of my league...that is for the accounts to figure.

If I buy spinner baits, swivels, split rings, skirts and blades from you, assemble them and sell them as a spinner bait I owe 10% of the total selling price, just like sales tax, you add it to the total selling price. If the IRS comes to me and I tell him the tax has been paid on the items I purchased, that won't make a difference, I still owe 10% of the total selling price. Now if I am going to assemble/manufacture to resell I won't buy from a supplier that has the tax figured in because that is what the Form 637 Registration is for it to buy without the FET because I am going to collect/pay it when I sell it.

Edited March 8, 2015 by dlaery

[Salty's]

And there lies the problem. You're paying the taxes for the guy doing it under the table. 2 years ago I split the excise out of all my components/lures and charge people what I'm required to pay for the tax for each item as a separate line item. Now everyone pays the excise for me. I was paying excise for guys who were selling cash. I said why pay someone elses taxes...the amount out there doing it is astronomical. People would send in orders for one item for $400 or more. Well beyond personal use. And excise out of my pocket not theirs. 

 

When you purchase components for resale you are supposed to present a 637 form and not pay the excise. You can't buy components and deduct the excise off the total amount you are required to pay on the final sale either. It's against the law. You either have to buy tax exempt and pay the tax on the item or lure when it's sold, or you pay the excise twice with no recourse, once when you buy the components and again when you sell a finished lure or item containing the components. 

 

The tax isn't just for components though it's all fishing products. The definition is on the irs website. If you buy components then sell a finished product the excise first has to be on the finished price or constructive sale price, or if you resell the components it's on the component because it's something to manufacture or increase the effectiveness of an actual lure. 

 

 

 

 

I am not sure you guys are supposed to be paying this tax unless you import or manufacturer the original components yourself. 

If you buy the components from me then the taxes have already been paid on the components before they get into your hands. 

But I do know that we pay the tax and calculate it into the cost of the components.

By definition you have already paid the tax when you pay me.

 

Of course this is way out of my league...that is for the accounts to figure.

[llokkii]

Very informative thread.  I had assumed after reading that documentation that a 10% tax would be owed on anything I made.  Seems I was right.  Now to make sure I get everything all in a row all legal like.  Can't fish from jail. 

[Uncle Jay]

Ok. It seems I have opened a can of worms here. I am not running a business. I just wanted to sell some of my lures to pay for my materials that I buy when I make them. This is just a hobby...pastime...something to do in my spare time...because I enjoy it...or whatever! I really don't need a reason to want to carve fishing lures. If the IRS is going to tax me 10% for selling a few lures here and there, I just won't sell them. I already have a fulltime job. I don't make lures to make extra money as a source of income for food or household bills and I already pay my fair share of taxes. If the day ever comes that I decide to make lures and sell them as a business, then I will register with IRS form 637 and use form 720 to pay the taxes quarterly. Until then, I will just make more room in my shop for lure bins.