Excise Tax Questions

[bassrecord]

1. If I repaint a lure for a previous customer, or a new customer, is the repaint price I charge either of these customers subject to the 10% Federal Excise Tax?

 

2. For a lure made by me or somebody else, if I sell add ons (paint, hooks, legs, feathers, etc.) to a new or previous customer, is the add on price I charge either of these type customers subject to the 10% Federal Excise Tax?

 

Thank you.

 

John

[dlaery]

in my opinion yes on both questions, you are re-manufacturing or changing the lure in some fashion.

[Hughesy]

I had a little meeting with the IRS at my house over Federal Excise Tax and the repainting of lures. There is no Federal Excise Tax on repainting of lures. They do not consider it further manufacturing and I have a signed letter to prove it. As far as add ons, and especially if you make the lure, I'm pretty sure that would be taxable.

[jawjacker]

Hughesy is correct if you just repaint it  the lure is not subject to the FET tax........ now if you take a piece of wood and build a lure from scratch it is subject to a 10% fet tax.........as well as any component you produce like lips and bodies or weights wires all of that is subject as well..........I have been visited 3 times by Uncle Sam.........

[buzfly]

Here is my scenario:

I purchase hooks in bulk and I pay excise tax(ET).

I purchase Unfinished bodies and do not pay ET.

I paint, hook and package the lures.

Can I deduct the excise tax paid for the hooks from each finished lure?

If I only sell wholesale to shops, my excise tax is based on wholesale price.

If I only sell retail, my excise tax is based on retail price.

Now if I sell to both retail and wholesale what do I uses as my basis for ET?

Only on the lowest price paid for each unit regardless of WS or RT?

Track both WS and RT sales and calculate is based on actual sales?

Also on a side note: Their is a clause that says ET is to be paid on fishing gear that is rated for 150lb or less.

Edited July 24, 2016 by buzfly

[dlaery]

I would have replied sooner but my internet has been down since Monday morn.

I sat in on a meeting at Icast a few years ago and they stressed having established WS and RT prices.

You have to have regular sales at the WS price in order to pay WS ET on RT sales.

[dlaery]

I was told by one of the IRS guys that you could deduct ET that you have paid providing you can show that it was paid on an invoice you received from your vendor.

so when you buy your hooks and it has the ET as a seperate charge on the invoice, you can deduct that amount from what you owe.

If I was bettin man I would say I had the same IRS guy that Hugesy had, they came out of the Springfield office. now they come out of KC

I can see why there is no tax on a repaint. but I never repaint anything usually so I had never thought about it. 

Edited July 27, 2016 by dlaery

[buzfly]

dlaery:  thanks or the reply.  I was told the same, but they said as long as I have WS accounts selling the same items I sell for RT, I could use the WS amount for all the sales.  I just had to make sure the what I offer RT, I offer it also WS.  He also stressed that I have to have a few WS account that are active in the year and can show proof of sales to them and that they have resale certificates.  

 

I what the intent of the Excise Tax is, but I still feel that it hurts the small companies and I am not convinced that all of it goes where it is stated to.  I think is should be collect on a state level and then spent back into that state.  

 

Thanks once more...

Brad