Table of Contents
The following discussion of manufacturers taxes applies to the tax on:
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Sport fishing equipment;
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Fishing rods and fishing poles;
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Electric outboard motors;
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Fishing tackle boxes;
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Bows, quivers, broadheads, and points;
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Arrow shafts;
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Coal;
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Taxable tires;
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Gas guzzler automobiles; and
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Vaccines.
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Include both the following charges in the price.
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Any charge for coverings or containers (regardless of their nature).
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Any charge incident to placing the article in a condition packed ready for shipment.
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Exclude all the following amounts from the price.
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The manufacturers excise tax, whether or not it is stated as a separate charge.
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The transportation charges pursuant to the sale. The cost of transportation of goods to a warehouse before their bona fide sale is not excludable.
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Delivery, insurance, installation, retail dealer preparation charges, and other charges you incur in placing the article in the hands of the purchaser under a bona fide sale.
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Discounts, rebates, and similar allowances actually granted to the purchaser.
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Local advertising charges. A charge made separately when the article is sold and that qualifies as a charge for “local advertising” may, within certain limits, be excluded from the sale price.
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Charges for warranty paid at the purchaser's option. However, a charge for a warranty of an article that the manufacturer requires the purchaser to pay to obtain the article is included in the sale price on which the tax is figured.
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Example.
A manufacturer sells a quantity of taxable articles and gives the purchaser certain nontaxable articles as a bonus. The sale price of the shipment is $1,500. The normal sale price is $2,000: $1,500 for the taxable articles and $500 for the nontaxable articles. Since the taxable items represent 75% of the normal sale price, the tax is based on 75% of the actual sale price, or $1,125 (75% of $1,500). The remaining $375 is allocated to the nontaxable articles.
Tax attaches when the title to the article sold passes from the manufacturer to the buyer. When the title passes depends on the intention of the parties as gathered from the contract of sale. In the absence of expressed intention, the legal rules of presumption followed in the jurisdiction where the sale occurs determine when title passes.
If the taxable article is used by the manufacturer, the tax attaches at the time use begins.
The manufacturer is liable for the tax.
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Leased,
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Sold conditionally,
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Sold on installment with chattel mortgage, or
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Sold on installment with title to pass in the future.
The following sales by the manufacturer are exempt from the manufacturers tax.
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Sale of an article to a state or local government for the exclusive use of the state or local government. This exemption does not apply to the taxes on coal, gas guzzlers, and vaccines. State is defined in Definitions under Fuel Taxes, in chapter 1.
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Sale of an article to a nonprofit educational organization for its exclusive use. This exemption does not apply to the taxes on coal, gas guzzlers, and vaccines. Nonprofit educational organization is defined under Communications Tax in chapter 4.
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Sale of an article to a qualified blood collector organization. This exemption does not apply to gas guzzlers, recreational equipment, and vaccines. Qualified blood collector organizations are defined under Communications Tax in chapter 4.
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Sale of an article for use by the purchaser as supplies for vessels. This exemption does not apply to the taxes on coal and vaccines. Supplies for vessels means ships' stores, sea stores, or legitimate equipment on vessels of war of the United States or any foreign nation, vessels employed in the fisheries or whaling business, or vessels actually engaged in foreign trade.
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Sale of an article for use by the purchaser for further manufacture, or for resale by the purchaser to a second purchaser for use by the second purchaser for further manufacture. This exemption does not apply to the tax on coal and tires. Use for further manufacture means use in the manufacture or production of an article subject to the manufacturers excise taxes. If you buy articles tax free and resell or use them other than in the manufacture of another article, you are liable for the tax on their resale or use just as if you had manufactured and sold them.
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Sale of an article for export or for resale by the purchaser to a second purchaser for export. The article may be exported to a foreign country or to a possession of the United States. A vaccine shipped to a possession of the United States is not considered to be exported. If an article is sold tax free for export and the manufacturer does not receive proof of export, described later, the manufacturer is liable for the tax.
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Sales of articles of native Indian handicraft, such as bows and arrow shafts, manufactured by Indians on reservations, in Indian schools, or under U.S. jurisdiction in Alaska.
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For tire exemptions, see Internal Revenue Code section 4221(e)(2).
The following requirements must be met for a sale to be exempt from the manufacturers tax.
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State or local governments,
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Foreign purchasers of articles sold or resold for export,
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The United States, or
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Parties to a sale of supplies for vessels and aircraft.
The manufacturer may be eligible to obtain a credit or refund of the manufacturers tax for certain uses, sales, exports, and price readjustments. The claim must set forth in detail the facts upon which the claim is based.
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Exported,
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Used or sold for use as supplies for vessels (except for coal and vaccines),
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Sold to a state or local government for its exclusive use (except for coal, gas guzzlers, and vaccines),
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Sold to a nonprofit educational organization for its exclusive use (except for coal, gas guzzlers, and vaccines),
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Sold to a qualified blood collector organization for its exclusive use (except for gas guzzlers, recreational equipment, and vaccines), or
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Used for further manufacture of another article subject to the manufacturers taxes (except for coal).
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The claimant sold the article at a tax-excluded price.
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The person has repaid, or agreed to repay, the tax to the ultimate vendor of the article.
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The person has obtained the written consent of the ultimate vendor to make the claim.
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The name and address of the manufacturer and the date of payment.
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An identification of the article for which the credit or refund is claimed.
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The amount of tax paid on the article and the date on which it was paid.
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Information indicating that the article was used as material in the manufacture or production of, or as a component part of, a second article manufactured or produced by the manufacturer, or was sold on or in connection with, or with the sale of a second article manufactured or produced by the manufacturer.
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An identification of the second article.
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A description of the circumstances that gave rise to the price readjustment.
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An identification of the article whose price was readjusted.
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The price at which the article was sold.
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The amount of tax paid on the article and the date on which it was paid.
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The name and address of the purchaser.
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The amount repaid to the purchaser or credited to the purchaser's account.
A tax of 10% of the sale price is imposed on many articles of sport fishing equipment sold by the manufacturer. This includes any parts or accessories sold on or in connection with the sale of those articles.
Pay this tax with Form 720. No tax deposits are required.
Sport fishing equipment includes all the following items.
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Fishing rods and poles (and component parts), fishing reels, fly fishing lines, and other fishing lines not over 130 pounds test, fishing spears, spear guns, and spear tips.
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Items of terminal tackle, including leaders, artificial lures, artificial baits, artificial flies, fishing hooks, bobbers, sinkers, snaps, drayles, and swivels (but not including natural bait or any item of terminal tackle designed for use and ordinarily used on fishing lines not described in (1)).
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The following items of fishing supplies and accessories: fish stringers, creels, bags, baskets, and other containers designed to hold fish, portable bait containers, fishing vests, landing nets, gaff hooks, fishing hook disgorgers, and dressing for fishing lines and artificial flies.
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Fishing tip-ups and tilts.
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Fishing rod belts, fishing rodholders, fishing harnesses, fish fighting chairs, fishing outriggers, and fishing downriggers.
See Revenue Ruling 88-52 in Cumulative Bulletin 1988-1 for a more complete description of the items of taxable equipment.
The tax on bows is 11% (.11) of the sales price. The tax is paid by the manufacturer, producer, or importer. It applies to bows having a peak draw weight of 30 pounds or more. The tax is also imposed on the sale of any part or accessory suitable for inclusion in or attachment to a taxable bow and any quiver, broadhead, or point suitable for use with arrows described below.
Pay this tax with Form 720. No tax deposits are required.
The tax on arrow shafts is $.43 per arrow shaft beginning January 1, 2008. The tax is paid by the manufacturer, producer, or importer of any arrow shaft (whether sold separately or incorporated as part of a finished or unfinished product) of a type used in the manufacture of any arrow which after its assembly meets either of the following conditions.
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It measures 18 inches or more in overall length.
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It measures less than 18 inches in overall length but is suitable for use with a taxable bow, described earlier.
Pay this tax with Form 720. No tax deposits are required.
A tax is imposed on the first sale of coal mined in the United States. The producer of the coal is liable for the tax. The producer is the person who has vested ownership of the coal under state law immediately after the coal is severed from the ground. Determine vested ownership without regard to any contractual arrangement for the sale or other disposition of the coal or the payment of any royalties between the producer and third parties. A producer includes any person who extracts coal from coal waste refuse piles (or from the silt waste product that results from the wet washing of coal).
The tax is not imposed on coal extracted from a riverbed by dredging if it can be shown that the coal has been taxed previously.
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$1.10 a ton, or
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4.4% of the sale price.
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55 cents a ton, or
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4.4% of the sale price.
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The coal is loaded on an export vessel and title is transferred from the producer to a foreign purchaser, or
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The producer sells the coal to an export broker in the United States under terms of a contract showing that the coal is to be shipped to a foreign country.
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A copy of the export bill of lading issued by the delivering carrier.
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A certificate signed by the export carrier's agent or representative showing actual exportation of the coal.
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A certificate of lading signed by a customs officer of the foreign country to which the coal is exported.
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If the foreign country does not have a customs administrator, a statement of the foreign consignee showing receipt of the coal.
Taxable tires are divided into three categories for reporting and figuring the tax as described below.
A tax is imposed on taxable tires sold by the manufacturer, producer, or importer at the rate of $.0945 ($.04725 in the case of a biasply tire or super single tire) for each 10 pounds of the maximum rated load capacity over 3,500 pounds. The three categories for reporting the tax and the tax rate are listed below.
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Taxable tires other than biasply or super single tires at $.0945.
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Taxable tires, biasply or super single tires (other than super single tires designed for steering) at $.04725.
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Taxable tires, super single tires designed for steering at $.0945.
A taxable tire is any tire of the type used on highway vehicles if wholly or partially made of rubber and if marked according to federal regulations for highway use. A biasply tire is a pneumatic tire on which the ply cords that extend to the beads are laid at alternate angles substantially less than 90 degrees to the centerline of the tread. A super single tire is a tire greater than 13 inches in cross section width designed to replace 2 tires in a dual fitment.
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Recapped or retreaded tires if the tires have been sold previously in the United States and were taxable tires at the time of sale.
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Tire carcasses not suitable for commercial use.
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Tires for use on qualifying intercity, local, and school buses. For tax-free treatment, the registration requirements discussed earlier under Requirements for Exempt Sales apply.
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Tires sold for the exclusive use of the Department of Defense or the Coast Guard.
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Tires of a type used exclusively on mobile machinery.
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Exported;
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Sold to a state or local government for its exclusive use;
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Sold to a nonprofit educational organization for its exclusive use (as defined under Communications Tax in chapter 4);
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Sold to a qualified blood collector organization (as defined under Communications Tax in chapter 4) for its exclusive use in connection with a vehicle the organization certifies will be primarily used in the collection, storage, or transportation of blood;
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Used or sold for use as supplies for vessels; or
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Sold in connection with qualified intercity, local, or school buses.
Tax is imposed on the sale by the manufacturer of automobiles of a model type that has a fuel economy standard as measured by the Environmental Protection Agency (EPA) of less than 22.5 miles per gallon. If you import an automobile for personal use, you may be liable for this tax. Figure the tax on Form 6197, as discussed later. The tax rate is based on fuel economy rating. The tax rates for the gas guzzler tax are shown on Form 6197.
A person that lengthens an existing automobile is the manufacturer of an automobile.
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Rated at an unloaded gross vehicle weight of 6,000 pounds or less,
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Propelled by an engine powered by gasoline or diesel fuel, and
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Intended for use mainly on public streets, roads, and highways.
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Limousines with a gross unloaded vehicle weight of more than 6,000 pounds.
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Vehicles operated exclusively on a rail or rails.
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Vehicles sold for use and used primarily:
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As ambulances or combination ambulance-hearses,
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For police or other law enforcement purposes by federal, state, or local governments, or
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For firefighting purposes.
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Vehicles treated under 49 USC 32901 (1978) as non-passenger automobiles. This includes limousines manufactured primarily to transport more than 10 persons.
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Converted by installation of emission controls to conform in all material respects to an automobile already certified for sale in the United States, or
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Modified by installation of emission control components and individually tested to demonstrate emission compliance.
Tax is imposed on certain vaccines sold by the manufacturer in the United States. A taxable vaccine means any of the following vaccines.
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Any vaccine containing diphtheria toxoid.
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Any vaccine containing tetanus toxoid.
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Any vaccine containing pertussis bacteria, extracted or partial cell bacteria, or specific pertussis antigens.
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Any vaccine containing polio virus.
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Any vaccine against measles.
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Any vaccine against mumps.
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Any vaccine against rubella.
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Any vaccine against hepatitis A.
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Any vaccine against hepatitis B.
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Any vaccine against chicken pox.
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Any vaccine against rotavirus gastroenteritis.
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Any HIB vaccine.
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Any conjugate vaccine against streptococcus pneumoniae.
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Any trivalent vaccine against influenza.
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Any meningococcal vaccine.
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Any vaccine against the human papillomavirus.
The tax is $.75 per dose of each taxable vaccine. The tax per dose on a vaccine that contains more than one taxable vaccine is $.75 times the number of taxable vaccines.
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