Bait Costs and Pricing

[ghostbaits]

If you have your excise tax number, let your supplier know. They will or may remove that 10% since you are going to pay it.

Jim

[Jason]

There are 2 different ways to handle the excise tax.

1:  Figure it into the cost of the product and the distributor/consumer will not even know you are charing it.

2:  Clearly state the charge on your invoice and let the distributor/consumer know that they are paying a mandated Federal Tax.

I have a couple of manufactors I purchase from that have the 10% excise tax charge right in their billing process so that you know you are being charged the tax.  Others don't but I know they are hiding it in the amount charged for the product.

It's really important to know who is charging the tax.  It can be charged at any point along the distribution chain once no more modifications are being made to the product.  As a reseller you can be exempt with the proper paperwork, but would still need to charge the consumer.  In the case where some aren't charging you, they may be expecting you to collect it from the consumer.  In the case where you are paying it, I don't believe you are responsible for charging it again, or if you are, it's only on the markup of from what you paid for it.  This area is a little fuzzy to me, I would definitely hit up a very qualified accountant.  It explains who is responsible on the IRS site, but it's as clear as mud...

End of the day, someone needs to collect it.  You don't want to not do it, but you also don't want to add it twice and run the price up.

Jason

[ghostbaits]

Exactly!!!! If you don't pay it because you were already charged, you need to keep super good records.

For me, it seems easiest to have it all one way or the other. As far as I know, you are correct in saying that once you are charged, you are only responsible for 10%your on the portion you mark it up.

Jim

[BassDetective]

It would seem that if I am selling the baits already in a package ready to hang on the rack that the buck stops here.  I have never been charged for this at the retail level so I suspect that no retailer is going to add it to the sales ticket and get the consumer to pay.  I will probably line item it in the invoice so it is clear when it was collected and for how much.  Really good discussion.

[romeo d]

BassDetective,
I'm in California and I pay the quarterly excise tax as a "manufacturer".  I even got the luxury of a visit from the IRS.  It was a pleasant visit and he just wanted to make sure I knew they were available if I had any questions or concerns. 
Romeo D

[ghostbaits]

Many say to go ahead and call your local IRS office to talk about it. They are good to explain and then they don't come bug you.

Our local office is great!!!

Jim