Sportfishing Excise Tax (effecting tacklemakers?)

[wingsworld]

This topic may have come up before, but does anyone know about a federal excise tax that effects tacklemakers? I was told by someone that if you manufacture tackle for resale you have to collect this excise tax everytime you sell your product, and it's something like 6% of the sales price. Does anyone know if this is fact or fiction? Please enlighten me. If this is true, how do you go about collecting it? Does this effect the little guy who makes and sells a few dozen lures/year?

Thanks!

[Joe]

Any company, large or small, that manufactures lures must pay a 10 % excise tax on lures sold. The Form 637 allows companies to avoid paying excise tax on materials and components used in making lures, but the tax must be collected at the time of the sale and turned in quarterly to the IRS( just sent me fourth quarter to them a few weeks ago) The IRS form 720 is the one used when sending in your tax payment. If you sell a lure for $3.50 divide that amount by1.1 This is the base amount of the lure sold. Then multiply that amount by .1 and that gives you the amount of tax due on that sale. $3.50 divided by 1.1 equals 3.18 multiplied by .1 and the tax due is 32 cents.. If you pay excise tax on the components used in making your lures, you can deduct that amount from the amount owed after the sale of the lure. Some components are exempt from excise tax, such as feathers and beads. Joe

[Glaucus]

When you mentioned 6%, it reminded me of this article:

http://www.rodbuilding.org/library/sportfishingtax.html

The rodbuilders "Constructive Sale Price" "60% rule" exemption might also apply to the "small" lure maker . Might be worth checking out.

[Salty's]

Joe I'm not going to get into the whole thing online but I had researched this extensively last year. You pay excise on the WHOLESALE price of the lure or bait....If you're paying 10% off the top you're paying too much. You should speak with your local IRS rep on this.