Excise Taxes Are Not a Joke - And To Many Of You May Not Understand

[CNC Molds N Stuff]

This is not legal advise, but I have been doing this for a while now. 

This is aimed at tackle and sporting goods manufacturers in the United States.  Other countries will have different tax structures. 

First let's dispel a huge misinformation some people are spreading. 

An excise tax license number is NOT a federal taxpayer ID number.
An excise tax license number is NOT an EIN number.
An excise tax license number is NOT an employer ID number.

A federal excise tax license number is a federal excise tax license number. You will be required to have an EIN before you can apply for an excise tax license, but they are NOT the same thing. 

The IRS is serious about those who manufacture products for sale which require an excise tax to PAY THE TAX.  This is not an income tax.  You can be losing money on every sale, and you must still pay the tax. 

For fishing tackle the excise tax is a flat rate 10% of what you sell it for.  It doesn't matter if you sell a little or a lot.  The IRS wants their 10% and if you get on their radar they will get it plus penalties, plus late fees, plus...  If you don't have impeccable financial records they will guess and they will never guess in your favor.  So, plus some more. 


There is one small benefit for those who sell both wholesale and retail.  Maybe.  I have not confirmed this as what I sell is not fishing tackle and I am not required to pay excise taxes on molds and tools.  If you sell (have record of sales) both wholesale and retail and have a published price list for all your products with both prices you only pay the excise tax on the wholesale price regardless of whether a sale is wholesale or retail.  You must have a record of having actually sold at both levels on a regular basis.  Your price list does not have to be public, but it must exist and your sales records must line up.  As prices change it is a good idea to keep your old price list in case you get audited.  Many tackle makers have been audited for excise taxes multiple times even if they have shown few or no mistakes. (according to them)

This is not legal advise and I am not telling you what to do.  I'm just telling you what I believe based on my knowledge, my education and my experience and as Paul Harrel might say, "I have no illusions that my thoughts are housed in a mind of greatness." 

If you have more factual knowledge to share please feel free to do so in the comments below.