Excise tax

I was reading that anyone who makes and sells jigs or sinkers was required to pay a 10% excise tax, That seems crazy but I guess it's true. Any thoughts? Did a search and came up with this:







Yes, hobbyists who produce and sell fishing jigs are generally required to pay federal excise tax (FET) in the United States, as the IRS considers them manufacturers.

Under IRC Section 4161(a)(1), a 10% excise tax is imposed on the sale of sport fishing equipment—including artificial lures and jigs—by the manufacturer, producer, or importer.

Here is a breakdown of the requirements for hobby jig makers:

• Who is a Manufacturer? If you create jigs from raw materials (hooks, lead, paint, skirts) and sell them, you are considered a manufacturer, even if it is a small, part-time hobby business.
• Tax Calculation: The 10% tax applies to the sale price of the jigs. If you sell at retail, you may be able to use a special, lower constructive sale price formula, often 60% of the actual retail price, according to IRS guidance.
• How to Pay: Manufacturers must file Form 720, Quarterly Federal Excise Tax Return, and pay the tax quarterly.

I could understand for a business but a small part-time hobby business seems excessive. I would give them away and just require the person pay "shipping" cost. :biggrin

Yeh...seems crazy. I like your idea.

If you make lure and sell it you owe 10% of the sale price in Federal Excise Tax. No minimum. If you put a piece of plastic on a jig head you just made a lure. You can apply for 637 series federal tax number that allows you to buy the components to make lures without paying FET. The IRS is not playing. Believe me.

Quarterly too, and dont be late

Yes, I pay Excise tax each and every quarter. Trust, they don't care about you being small at all. Excise tax is one of the oldest taxes in our country.

I pay the excise tax every Quarter we’ve been paying it for quite some time, . not many people know that are selling on the Internet . don’t get caught .

One thing has confused me about the tax. If you pay the tax on everything you buy to make the item to sell does the tax have to be paid again? I have gotten conflicting information from what I would think were reliable sources.

Quote:

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Originally Posted by fish_4_any

One thing has confused me about the tax. If you pay the tax on everything you buy to make the item to sell does the tax have to be paid again? I have gotten conflicting information from what I would think were reliable sources.

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Yes. Any alteration of a lure and resold requires tax. Only exception is if you are selling to a place that is going to sell them again without alterations, ie you selling to a bait shop. The final sale is taxed in that case.

Now you know how the government makes money. They tax the same dollar two, three even four times.