Following is the recent amendment to the FET on fishing rods and "poles."

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Paragraph (1) of section 4161(a) (relating to sport fishing equipment) is amended to read as follows:

“(1) Imposition Of Tax.-

“A. In General - There is a hereby imposed on the sale of any article of sport fishing equipment by the manufacturer, producer, or importer a tax equal to 10 percent of the price for which sold.

“B. Limitation On Tax Imposed On Fishing Rods and Poles. - The tax imposed by subparagraph (A) on any fishing rod or pole shall not exceed $10.”.

(b) Conforming Amendemtns. - Section 4161(a)(2) is amended by striking “paragraph (1)” both places it appears and inserting “paragraph (1)(A)”.

(c) Effective Date. - The amendments made by this section shall apply to articles sold by the manufacturer, producer or importer after September 30, 2005.

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Paragraph B is the only one you really need to be concerned with. The tax, as outlined in the article in the online library here, remains unchanged with exception that it is now capped at a maximum of $10. Everything else remains the same - the constuctive sales price which you use when selling rods to the end user, the way you figure the tax, etc., are all unchanged and remain in effect. The article remains sound and up to date, with the exception that now any rod sold to the end user for more than $167 ($166.66 to be exact) or to a reseller for more than $100, will now carry a flat $10 tax. Rods sold for less than those amounts will continue to be figured, levied and collected in the same manner as described in the article.

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When does this go into effect? I know Bush signed it a day or two ago but as with all government things, there's bound to be a lag time, eh?

Scott Kinney
The Longest Cast Fly Rods
[www.thelongestcast.com]

September 30, 2005. Rods sold after that date would be affected and they would be reported for the quarter running from Oct. to Dec. of 2005.

The 720 form will likely be changed just a bit to allow you enter rods selling for less than the flat tax and for those above, but due to many changes in the fuel tax, it will be a couple months before the new form is ready. You wouldn't need it until the end of December anyway.

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Couple of questions -

1) I assume the 60% rule is still in effect for smalls?

2) When is a sale concidered complete? When you receive the money or when you deliver the rod? I always get money up front, but may not deliver the rod for another month. This could be important in September.

The 60% rule is in effect for every sale made direct to the end user - it has nothing to do with the size of your operation.

The sale is made final when money changes hands. Once the customer has paid you, he's bought the rod, even though you may not have delivered it yet. At least this is how the legal system tends to view things.

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Tom,
Thanks, we really appreciate the up-date.

Tom,

Is the sale considered compete when the price is paid in full? I would expect most builders take a percentage down at the onset of the commission and the balance when the rod is delivered.

Dave

I would think the sale is only final when the full amount has changed hands. But you'd better ask your local IRS person about that.

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Tom,

I suspect it depends on how one's "business structure" accounts for cash-in & cash-out, etc.

Certain rules probably apply to any enterprise that has profit as it motive. Though the risk might be small for the rodbuilder that sales /trades a few rods a year, off-hand, there are risks involved with not reporting income on a reqular basis, if a business.

Stan