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Excise tax on fly tying material?


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23 replies to this topic

#1 Shoals

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Posted 02 July 2019 - 09:45 AM

I understand that there is an excise tax on sales of finished lures and flies that I manufacture myself.  Would imported fly tying material such as dubbing and epoxy eyes that is resold (no additional manufacturing done) for use on such lures/flies by others be liable for this tax as well?  Confusing....



#2 mikechell

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Posted 02 July 2019 - 09:52 AM

If you have a legal business, with proper paperwork, then you can buy materials FOR your product tax free.  You then pay the taxes when you sell the finished product.

 

It's not confusing ... it's legalese.  

 

Do the research.  Business is more than just "making money".


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#3 Shoals

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Posted 02 July 2019 - 10:13 AM

Thanks.  I understand that if I use this material to make a final "finished" product such as a lure or fly which I then sell then the excise tax would apply.  IF I just resell fly tying material such as dubbing or eyes (with no value added) would the excise tax apply in this situation? 



#4 flytire

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Posted 02 July 2019 - 10:18 AM

we dont know if you are in the USA or elsewhere

 

you should check out fly tyers dungeon for their dealers program vs importing from outside sources

 

http://www.flytyersd...alerprogram.htm

 

i dont know if this irs publication would help you but its worth reading

 

https://www.irs.gov/...-tips-to-decide


We do it all the time! Get over it!


#5 steeldrifter

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Posted 02 July 2019 - 12:27 PM

It can get a bit confussing when it comes to taxing thats for sure. On every rod I make I pay 10% FET (up to $10 max). Which is good that they lowered it about 10 yrs ago because there use to be no cap on it and some rods like Sage and Winstons I would build/sell I was paying $50-$60 just in FET.

 

FAr as FET in materials. I would take the safe route and pay it if it were me, but there are "loopholes" if you want to chance it. The actual wording in the law is that is is fishing gear....it could be argued that the end user could use the feathers and such for earrings, hair extensions etc etc. I know of rod builders that sell cork and they get off the FET but saying the cork could be used for various other items by the end user.

 

As I said though, if it were me, I'd pay it.


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#6 Mark Knapp

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Posted 02 July 2019 - 12:45 PM

I'm pretty sure these taxes you are talking about are Pitman-Robertson fund taxes. This is a tax that sportsmen and women voted to impose upon themselves to fund wildlife management projects across the U.S. That's why we can proudly say that sportsmen and women have done more for wildlife than any other group. To the tune of billions of dollars.

 

Any retailer of any sporting goods collect these taxes from their customers and pay them to our government. These funds do not go into the general fund, they are earmarked for fish and wildlife management. 

 

So, the answer would be yes, if you have a business of selling sporting goods you must collect those taxes and pay them to the Gov. just like Sportsman's Warehouse or Bass Pro Shops or anybody does for everything they sell (sporting goods) regardless if it is just resale or value added.

 

Now for the disclaimer, I am not a lawyer or an accountant, this is just how I understand it. I have a lawyer and an accountant to help me with these things, you should consult one yourself, there may be details in there somewhere (as steeldrifter mentioned) that I am not aware of. But like him, I would pay it.



#7 steeldrifter

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Posted 02 July 2019 - 04:09 PM

Mark I don't know what the Pitman-Roberston tax is never heard that one before and I've been paying the tax for nearly 20 years so I believe that is something different. Our perhaps it's just called by a different name out there? The one we pay as retailers is the Sport fishing excise tax (aka-720 form).


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#8 redietz

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Posted 02 July 2019 - 04:31 PM

Mark I don't know what the Pitman-Roberston tax is never heard that one before and I've been paying the tax for nearly 20 years so I believe that is something different. Our perhaps it's just called by a different name out there? The one we pay as retailers is the Sport fishing excise tax (aka-720 form).

Two different, but similar, taxes:

 

Pitman-Robertson applies to sporting firearms.

 

Dingell-Johnson applies to fishing equipment.


Bob


#9 mikechell

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Posted 02 July 2019 - 04:59 PM

Researching the definition of "excise tax" doesn't bring up either the "Pitman-Robertson" nor the "Dingell-Johnson" taxes.  These days, there are so many taxes that you truly need a lawyer.  Of course, the laws are written by lawyers to benefit lawyers, so ...

 

Anyway ... Shoals ... if you're truly thinking of going into business, get a lawyer.  There are inexpensive options, even online law firms that won't break the bank prior to starting the business.

 

As the old saying goes ... "The best way to end up with a million dollars running your own business, is to start with 2 million."

 

Something like that.


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#10 steeldrifter

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Posted 02 July 2019 - 05:29 PM

It doesn't need to be made any harder than need be. I wouldn't say to go as far as getting a lawyer IMO. Just do like I do with my business and make sure to fill out your quarterly 720 tax https://www.etax8849...cise-tax-return

 

 

Also keep in mind that even if you don't have anything to pay in for a quarter, you still need to fill out and mail it and just claim zero for that quarter. Or they will come a knocking lol

 

 

Oh BTW- just got a letter in the mail last week from IRS. They have now changed it where starting this quarter you can file online. So now you no longer have to mail by the deadline which will be nice.


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#11 Capt Bob LeMay

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Posted 02 July 2019 - 07:57 PM

Yeah, I got the same letter - and, of course its for their convenience.... Ive been paying excise tax since the late eighties and can almost do that form 720 in my sleep... even though Im no longer a commercial tyer - these Im making jigs and lead heads....
Tight lines Bob LeMay (954) 435-5666

#12 steeldrifter

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Posted 02 July 2019 - 08:10 PM

Actually I find it more convenient for myself  Bob. Saves me having to run out and get printer ink on the last day of the quarter. Can't tell ya how many times I have went to print the form and been out of ink lol


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Better to have a short life that is full of what you like doin, than a long life spent in a miserable way- Alan Watts
 
 
 


#13 Mark Knapp

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Posted 02 July 2019 - 08:38 PM

No, there is no Pittman-Robertson tax, Pittman-Robertson was the name of the bill that created the tax.

 

I didn't know there were two different bills though, one for firearms and one for fishing gear.

 

As far as I know, the taxes are for all sporting goods not just guns and fishing gear. I might need correcting though.



#14 DCGallim

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Posted 02 July 2019 - 08:41 PM

Welcome to America where you get taxed for buying stuff, not buying stuff, making stuff, owning stuff, thinking about stuff, drinking stuff, you get the picture.
Sic semper evello mortem tyrannis

#15 steeldrifter

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Posted 02 July 2019 - 08:46 PM

Yep...Free range humans on a tax farm.


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Better to have a short life that is full of what you like doin, than a long life spent in a miserable way- Alan Watts