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I have been doing a lot of homework lately and today's topic has been Excise Tax, specifically how it applies to the manufacture AR type rifles. Let's see if I've got everything and got it right. With a little peer review, I hope to use this in my P&P document.
Imposes an excise tax of 10% on handguns and 11% on other firearms and ammunition. This is paid by the manufacturer and is rarely seen by the consumer, unless he is really digging deep or it is on the itemized bill.
grants an exemptions to:
a) Machine guns and short barrelled firearms (because you already paid for an NFA stamp) Question: are suppressors not considered firearms by The Treasury?
b) Sales to the DoD
c) Manufacturers who produce less than 50 units in a calender year. My interpretation would be: 49 guns = no excise tax, 50 guns = excise tax on all 50. This count is separate from that of ammunition, which does not have a corresponding exemption.
27 CFR 53.62 essentially mirrors this.
These sales need to be included on line 8 of form 530026, but can be deducted by listing them on line 9.
lists 5 sales that are "Tax Free":
1) For further manufacture, or to someone who will resell to someone else who will further manufacture.
2) For export or to someone who will export
3) For use by the purchaser as supplies for vessels or aircraft (tragic boating accident anyone?)
4) To a State or local government for the exclusive use of a State or local government. (police sales)
5) To a nonprofit educational organization for its exclusive use (NRA?)
27 CFR 53.131 reiterates this all again.
These sales need to be included on line 8 of form 530026, but can be deducted by listing them on line 10, IF "prior to making a tax-free sale or purchase, file TTB Form 5300.28, in duplicate, executed in accordance with the instructions contained on the reverse of TTB Form 5300.28" see 27 CFR 53.140. Sometime, State and Local LEAs don't have to register, I don't understand who registers; the manufacturer, or the buyer?
Increasing Adjustments: 27 CFR 53.91
If you pass through charges for: tools, dies, warranties, packaging and whatever (e) refers to, as line items separate from what is reported on line 8 of form 530026, they want tax on this as if it were rolled up into the original charge.
Decreasing Adjustments: Please refer to 27 CFR 53.61(b), 53.92, 53.93, 53.100, 53.101, and 53.102
53.92(a) If you have a $1000 rifle and expect to pay $110 in excise tax, you sell it for $1110, which is part of what you reported on line 8 of form 530026, but you don't have to pay tax on tax. You get to write-off the $110.
53.92(b) If delivery was included in the price (ie "free shipping"), these costs can be deducted.
53.93 Allows for reductions due to exchange, warranty replacement and price adjustment (price match?)
53.100 Allows deduction of local advertising (newspaper, magazine, radio, television, billboards and posters) for the direct cost associated with promoting the specific item
53.101 limits advertising and exchange deductions to 5%
This is where I start to loose documentation and rely on what others have said:
Applies only to complete firearms manufactured and sold. Does not apply to stripped lowers, pistol frames or complete firearms sitting on the shelf. The 07FFL that completes the build would pay the excise. There is an exemption for individuals who build a complete firearm from the aforementioned parts. Individuals are warned not to abuse this, by building and selling too much, lest they be considered an unlicensed manufacturer.
Can anyone help me with some backup on this? Is this what is meant by 26 USC S 4221(1)? I am also having trouble finding the exemption for individuals and a warning to not become and unlicensed manufacturer.
Other important notes:
27 CFR 53.61(b) describes kits, so that if a complete kit is packaged and sold, it is the same as a complete firearm. This explains why building an AR from a stripped lower is an a la carte experience.
Imposes an excise tax of 10% on handguns and 11% on other firearms and ammunition. This is paid by the manufacturer and is rarely seen by the consumer, unless he is really digging deep or it is on the itemized bill.
grants an exemptions to:
a) Machine guns and short barrelled firearms (because you already paid for an NFA stamp) Question: are suppressors not considered firearms by The Treasury?
b) Sales to the DoD
c) Manufacturers who produce less than 50 units in a calender year. My interpretation would be: 49 guns = no excise tax, 50 guns = excise tax on all 50. This count is separate from that of ammunition, which does not have a corresponding exemption.
27 CFR 53.62 essentially mirrors this.
These sales need to be included on line 8 of form 530026, but can be deducted by listing them on line 9.
lists 5 sales that are "Tax Free":
1) For further manufacture, or to someone who will resell to someone else who will further manufacture.
2) For export or to someone who will export
3) For use by the purchaser as supplies for vessels or aircraft (tragic boating accident anyone?)
4) To a State or local government for the exclusive use of a State or local government. (police sales)
5) To a nonprofit educational organization for its exclusive use (NRA?)
27 CFR 53.131 reiterates this all again.
These sales need to be included on line 8 of form 530026, but can be deducted by listing them on line 10, IF "prior to making a tax-free sale or purchase, file TTB Form 5300.28, in duplicate, executed in accordance with the instructions contained on the reverse of TTB Form 5300.28" see 27 CFR 53.140. Sometime, State and Local LEAs don't have to register, I don't understand who registers; the manufacturer, or the buyer?
Increasing Adjustments: 27 CFR 53.91
If you pass through charges for: tools, dies, warranties, packaging and whatever (e) refers to, as line items separate from what is reported on line 8 of form 530026, they want tax on this as if it were rolled up into the original charge.
Decreasing Adjustments: Please refer to 27 CFR 53.61(b), 53.92, 53.93, 53.100, 53.101, and 53.102
53.92(a) If you have a $1000 rifle and expect to pay $110 in excise tax, you sell it for $1110, which is part of what you reported on line 8 of form 530026, but you don't have to pay tax on tax. You get to write-off the $110.
53.92(b) If delivery was included in the price (ie "free shipping"), these costs can be deducted.
53.93 Allows for reductions due to exchange, warranty replacement and price adjustment (price match?)
53.100 Allows deduction of local advertising (newspaper, magazine, radio, television, billboards and posters) for the direct cost associated with promoting the specific item
53.101 limits advertising and exchange deductions to 5%
This is where I start to loose documentation and rely on what others have said:
Applies only to complete firearms manufactured and sold. Does not apply to stripped lowers, pistol frames or complete firearms sitting on the shelf. The 07FFL that completes the build would pay the excise. There is an exemption for individuals who build a complete firearm from the aforementioned parts. Individuals are warned not to abuse this, by building and selling too much, lest they be considered an unlicensed manufacturer.
Can anyone help me with some backup on this? Is this what is meant by 26 USC S 4221(1)? I am also having trouble finding the exemption for individuals and a warning to not become and unlicensed manufacturer.
Other important notes:
27 CFR 53.61(b) describes kits, so that if a complete kit is packaged and sold, it is the same as a complete firearm. This explains why building an AR from a stripped lower is an a la carte experience.
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