I read the article on this site regarding excise tax and have already read a few other guides including the IRS Publication 510. In regards to sports fishing equipment manufacturing I know of someone who uses stainless steel cable wiring in their rigs and leaders. They believe these items to be non taxable and calculate their excise tax removing the cable wiring portion of the product.

My question for this forum is whether or not anyone here uses stainless steel cable wiring in their products and if so do they consider it taxable or nontaxable as it relates to excise tax.

Having trouble getting in touch with the proper authority and this type of cabling is not listed on the IRS listing for taxable and nontaxable items for further manufacturing.

Thanks much!

The tax is levied upon the end product, not the parts used to make it, so he's not allowed to remove any portion of the component parts. He's not selling cable wiring, he's selling rigs and leaders.

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Where did you find this artical you read? I have been looking for more informaiton about this. I did a quick search for Excise Tax and only came up with this post.

Never mind. I figured out how to do the search correctly lol. Only had it clicked for the last 30days

Tom:

Check this article out. I can't seem to get my hands on the revenue ruling they list but according to this guide you can separate the non taxable portion of an item if you can come up with a separate price for each item in the build.

[primedigital.us]

I still think the item in question, stainless steel cable, is taxable. I just haven't been able to confirm it.

Going to call the Taxpayer Advocate shortly.

EDIT: I just realized the guide I posted that page from was written by an IRS Excise Tax Specialist. I may just give them a call.



Edited 1 time(s). Last edit at 06/03/2014 09:40AM by Timothy Cook.

Timothy,
If you have a tax question, call the IRS.
Whether you get the right or wrong answer it is the "official" answer given you by the representative of the taxing organization.

It it he JOB of the IRS to answer every and any question that an individual may have about a tax issue.

Good luck

One question to apply ... Do you sell the stainless cable as a separate item? If not, it is absolutely part of the finished product and it is subject to excise tax.

Jim:

It is part of the finished product. However the IRS document from their excise tax specialist which I posted a link to above tells me a different story.

If this were the case, then you'd be able to deduct things like cork rings, epoxy and thread from the tax charged on custom rods, which you can't do. Singly, none of those items are taxable under the sportsfishing FET.

And make sure you get the name of the IRS agent you speak to. Record it for future reference. One of their Sportfishing FET agents recently advised a component importer that there was no such thing as the "constructive sale price" (60% rule) on a custom rod. That agent was wrong.

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Tom:

I am going to have to call them back and record the name. They did confirm that the steel cable is exempt because its not listed as taxable on Publication 510. I didn't ask the important question because they told me that due to budget cuts they could only refer me back to the publication (which doesn't speak of the ability to do what I am suggested is possible.)

I realize you are most likely correct. I just want to be sure. I will contact them again tomorrow and see if I don't get someone who isn't afraid to answer my questions.

Thanks for all of your help in this matter.

Cork grips aren't taxable when sold as stand alone items?

Cork grips are indeed taxable as they are fishing rod specific. Cork rings, on the other hand, are not subject to the Sportfishing FET as they are a generic product not specific to use on fishing rods.

Which leads back to the original question - since cork rings are a non taxable item, that would make cork grips non taxable as you'd be able to deduct the non taxable cork rings from the equation. But cork grips are, in fact, taxable.

The thing Timothy is likely to run into, however, is that two different agents may tell him two different things. Ultimately I'd do what I was told, but I'd make sure to have somebody's name and department listing in case a question from the IRS ever came up as to how I was doing things. They' re not always up to speed on their own rulings.
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Right on point Tom. Tomorrow I will be making this call and will be sure to log everything. I will let you know the results.


Tom Kirkman Wrote:
-------------------------------------------------------

> The thing Timothy is likely to run into, however,
> is that two different agents may tell him two
> different things. Ultimately I'd do what I was
> told, but I'd make sure to have somebody's name
> and department listing in case a question from the
> IRS ever came up as to how I was doing things.
> They' re not always up to speed on their own
> rulings.
> ................

The results of the call and question are as follows:

"The IRS no longer has live help to answers these types of questions. If you cannot find the answer to your question on the website or the publication then you must seek the advice of a tax specialist."

Awesome.

Going with Tom's advice.

Thanks for all of your help. This board is great.