I get the part about the FED Tax on sportfishing products and I totatally agree with it but what about our labor? Example: parts for a rod build cost $100.00 and they are taxed at time of purchase. I don't mark up the parts cost but I add my labor of say $150.00. Do I have to pay excise tax on my labor or is it only on the parts involved in the rod?

It only costs pennies more to be first class

Steve,

The FET is paid only when a rod is sold for the first time. If you sell it for $100.00 or $1,000.00 the FET is still the same - $10.00 - no percentage anymore - $10.00 ea . . . . .period.

You possibly could get an FET exemption certificate, as I did when I was into archery many years ago, and then be exempt form the DEALER, if he chose to sell exempt, but that just means more paperwork and hassles. It's easy - for each rod its $10.00 - a lot better than it used to be for the paperwork.


Charlie

The tax is levied on the completed rod, period. You do not break down the sale into parts and labor. Nor can you deduct what you paid in FET on parts. The article on the online library page spells out why.

Dealers cannot sell tax exempt - they pay the tax when they buy the product and thus it has already been included. The 637 exemption is only honored if you buy direct from the blank/component manufacturer. The 637 exemption also includes a mandatory 2-year IRS audit. Be aware.

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Charlie Armontrout Wrote:
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> If you sell it for $100.00 or
> $1,000.00 the FET is still the same - $10.00 - no
> percentage anymore - $10.00 ea . . . . .period.

Tom's comments are spot on and should be heeded.

In addition, the above quoted statement is inaccurate. The tax due on a $100.00 rod to an end consumer would be $6.00. Read the article in the library ... it answers quite a few questions.

[www.rodbuilding.org]

The biggest thing - PAY THE TAX. If you get caught building rods, reselling them, subsequently not filing the Form 720 and therefore not remitting the taxes due, it won't be pretty.



Edited 1 time(s). Last edit at 02/28/2010 07:05PM by Jim Gamble.

Thanks for the correction Jim and including the article. It refreshed my memory from 7 years ago when I got back into building. I must have gotten swept up in the excitement of our government simplifying something that I missed the fine print.

And when I was in archery, as Tom points out with the FET exemption, I was buying directly from the manufacturer. (EASTON) So in that case that was why I was able to buy FET exempt with minimal hassle as I remember . . .its been so long!

Definitely as Jim states . . .PAY THE TAX - Big Brother IS watching . . .


Charlie

First of all, tthanks to al who replied and most of all TK and Rodbuilder Magazine. I have collected and paid sales tax as well as FET for other items I have bought and sold in the past. I have owned a repair shop for many years and we don't add sales tax or FET into the cost of labor in Colorado. However the SFET being levered down on our labor seems like a load of **** to me. But because it truely does benefit us not only as builders but as fishermen I do and will continue to pay it.
once again thanks to all.

It only costs pennies more to be first class

There is no FET on repair work labor. Repair work is not the same thing as manufacturing.

Remember when you buy a car, or TV set, or whatever, there is no break down on parts and labor. A fishing rod is the same thing - a manufactured item. The customer is not buying parts and labor, he is buying a fishing rod. Period

The FET is levied on rods only, and the custom builder is not charged - the customer is the one paying it. The builder is simply collecting the tax and sending it to the IRS for distribution back to the state game and fish departments.

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