Good morning all! I've got a question concerning the collection of the FET. I know you take 60% of the total sell and your tax is based on 10% of that. No problem! Easy enough!

Now,

1. What I was wondering, is do you collect FET on cosmetic repairs? Say a customer brings in a rod and wants it refinished. Your not going to change any componets, your just going to clean, (may or may not) remove the guides, then refinish rod and guides. Do you still charge the FET? You haven't manufactured anything, or is it still considered Sporting Goods and subject to the tax?

2. Or as I have done in the past, someone has a rod that has seen some of my marbled rods and wants nothing more than for me to coverup and recoat the buttwrap/guides in a marble pattern just to dress up and personalize thier rod. Do you collect FET?



Regards......Doug@
TCRds

The excise tax is on manufacturered goods, not rebuilds, repairs, etc. You started with a fishing rod and you ended with a fishing rod. Nothing has changed.

If, however, the item you end up with is different that what you started with, say, guides, reel seats, grips, thread, etc., are combined or modified to make a new a item - a fishing rod, then the tax would be required.

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Thanks Tom.

Regards......Doug@
TCRds

One more... since we're on the subject.... some more gray area scenarios...

1. Say someone brings you a blank that they have purchased as well as guides and reel seat... you assemble their parts for them plus install a grip and butt cap that they did not supply, plus some decorative wrapping. Do you charge FET?

2. Say someone brings you blank with grips installed and wants you to wrap some guides on it (you're selling him the guides). Do you charge FET?

1. Yes, you have created an item that did not previously exist. Doesn't matter who supplies the parts.

2. Probably. You have to deal with the letter of the law as well as the spirit of the law. Once a fishing rod has been created, the tax will be incurred. Some years back one builder was putting together rods but leaving off the butt cap and tip-top, with instructions on how the customer could do that himself. He claimed that since he wasn't actually selling a fully completed fishing rod, he didn't owe any tax. But his intent was pretty clear and the IRS felt he was violating the spirit of the law. He got sacked pretty good.

In the #2 scenario, I suspect the person who brought you the blank and the grips would be liable for the tax as he was in possession of the greater part of the assembly. If he is not selling the rod, then we are indeed back into a grey area (the tax is only due at the first point of sale). This is one of those where you may wish to consult with an IRS excise tax field specialist. It would most likely be a judgement call on the part of the agent.

I did have one agent buck me on the "first point of sale" thing. He claimed that even if you built a rod for yourself you had to pay the tax. He was incorrect. If the rod is not sold, no tax is due. But the grey area still exists here - what he brought you was not yet a fishing rod. Once you install the guides and finish them, it is. And, you charged him for the work.

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Yep... that was pretty much what I was thinking. Good to hear your thoughts on it.

These are real scenarios that I'm sure many of us run into from time to time... so best to think through them ahead of time so that your quotes can be accurate with respect to taxes, etc.

Thanks,

Erik

If in doubt I usually charge.

Regards......Doug@
TCRds