Sport fishing and archery excise tax

Individuals may be responsible for paying the excise tax and filing an excise tax return if they purchase sport fishing or archery equipment from outside of the United States, including through online purchases directly from foreign manufacturers or sellers. An importer is responsible for paying the excise tax on the sport fishing or archery equipment that it imports into the United States. An individual does not need to be in the business of importing or selling sport fishing or archery equipment to be liable for the excise tax.

This page offers guidance to help an individual understand when the individual is an importer of sport fishing or archery equipment and how to file and pay the sport fishing and archery excise tax.

On this page

• Who qualifies as an importer
• Who must file
• Ways to file
• When to file
• How to file
• Tax liability for sport fishing and archery
• Related

Who qualifies as an importer

An “importer” of sport fishing or archery equipment includes an individual consumer who purchases sport fishing or archery equipment for personal use if the equipment is purchased from outside the United States directly from a foreign manufacturer or seller. An individual does not need to be in the business of importing or selling sport fishing or archery equipment to be liable for the tax.

Who must file

You must file if:

• You were liable for, or responsible for collecting, any of the federal excise taxes listed on Form 720, Quarterly Federal Excise Tax Return, Parts I and II, for a prior quarter and you haven’t filed a final return; or
• You are liable for, or responsible for collecting, any of the federal excise taxes listed on Form 720, Parts I and II, for the current quarter.

Ways to file

You can report your excise tax liability in these ways:

1. File online with Form 720 Modernized E-File (MeF) providers for faster service and confirmation.
2. Mail Form 720 to Department of the Treasury, Internal Revenue Service, Ogden, UT 84201-0009

When to file

You must file a return for each quarter of the calendar year as follows.

For due dates that fall on a Saturday, Sunday or legal holiday, you may file the return on the next business day.

When filing online, your return is considered filed immediately when submitted. If you mail, post it by the due date using the U.S. Postal Service or a designated private delivery service. Penalties and interest will be added if you file or pay after the due date. Late filing and late payment penalties and interest apply after the due date.

How to file

1. Report tax or indicate no tax
   • If you are not reporting a tax you usually report, enter zero on the appropriate line in Part 1 or 2 of Form 720.
   • If you have no tax to report at all, enter “none” on Part 3, Line 3, and sign and date the return.
2. Filing requirements
   • You must have an Employer Identification Number (EIN) to file Form 720.
3. Adjustments for previous quarter
   • If you need to adjust liabilities from previous quarters, use Form 720-X, Amended Quarterly Federal Excise Tax Return—do not enter adjustments on Form 720.
4. Include additional sheets
   • If you attach additional sheets, make sure to include your name and EIN on each page.

Tax liability for sport fishing and archery

See Publication 510, Excise Taxes, for full list of taxable sport fishing equipment.

* Arrow shaft rates change annually. See current Form 720 for rate.

Constructive Sales Price

Manufacturers need to determine the constructive sales price to use when paying the excise tax.

Constructive sale price; background.  The basic sale price rules assume that the manufacturer sells the article in an arm’s length transaction (that is, in a transaction between two unrelated parties) to a wholesale distributor that then sells it to a retailer that resells to consumers. 

However, if an article is sold other than to a wholesale distributor or at less than a fair market arm’s length price, the law requires that the tax calculation be made on a constructive sale price (CSP) rather than the actual sale price. 

Constructive sale price; general rule; Section 4216(b)(1).  If a manufacturer sells an article-

• At retail,
• On consignment, or
• At less than fair market price and in other than an arm’s length transaction, then the tax is to be computed on the highest price for which the article is sold to wholesale distributors, in the ordinary course of trade, by manufacturers as determined by the IRS.  For articles sold at retail, the tax is computed on the lower of the price for which the article is sold or the highest price for which the article is sold to wholesale distributors, in the ordinary course of trade, by manufacturers as determined by the IRS. 

Constructive sale price; special rule; Section 4216(b)(2). There is a special rule for determining the CSP for certain arm’s length sales. If an article is sold at retail or to a retailer, and if-

• The manufacturer regularly sells taxable articles at retail, or to retailers, or to both,
• The manufacturer regularly sells the articles to one or more wholesale distributors in arm’s length transactions and establishes that its prices are determined without regard to any tax benefit to be derived from the sale, and
• The transaction is an arm’s length transaction,

then, the tax is computed on the lower of--

• The actual sale price, or
• The highest price for which the articles are sold by the manufacturer to wholesale distributors.

Constructive sale price; certain sales to affiliates

Sections 4216(b)(3), (4), and (5) provide for constructive sale prices when articles are sold by the manufacturer to a related distributor, who, in turn, sells to independent retailers. However, under those sections, the related parties must be members of an affiliated group as defined in Section 1504(a).

Section 4216(b)(3) provides that if a manufacturer, producer, or importer of a sport fishing or archery equipment regularly sells such article to a related distributor in other than arm's length transactions and at less than fair market price, and such distributor regularly sells such article to one or more independent retailers but does not regularly sell to wholesale distributors, the constructive sale price shall be 90 percent of the lowest price for which the related distributor regularly sells such article in arm's length transactions to such independent dealers.

An exception to this rule is found in Section 4216(b)(4). 

Also see Rev. Rul. 82-211, 1982-2 C.B. 296, for an application of the rules for sales to affiliates.

Related

Excise tax

Excise tax forms and publications