AR Sponsor
Posted: 9/7/2006 4:52:40 AM EDT
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I've been looking into getting an upper from CMMG with a nice FF handguard. I sent an email asking about prices and such and come to find out about an 11% EXCISE tax because I am not buying a complete rifle... WTF? I have never heard of this, is this something all manufacturers charge? I assume so... So any lower or upper I buy is going to cost me 11% more than the advertised price, that doesn't make an sense to me. Can someone explain that? Thanks Phil |
I want to make sure there is no misunderstanding. When ordering a complete upper and lower we must collect 11% excise tax. We are not responsible for collecting excise tax if just and upper or just a lower is ordered by itself. Check the ATF website for further clarification. Sorry if there was any misunderstanding. |
never heard of such. go to Sherluk Marketing on the net, great uppers with wilson barrels, all shapes. about 425 with bolt group and lower parts kit which you can sell to recoup around 60 bucks. i have one, it is the most accurate of the 3 AR's i own, one of which is a XM15E2S HBAR 20" bushy. check 'em out.... Sherluk.
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That sounds fishy because there is a less than 50 exemption from the excise tax. So as long as you don't build, or manufacture more than 50 AR-15s for yourself this year, you shouldn't have any issues. Then again, that for personal use thing brings on a whole other set of gray areas that can be enforced by the BATF. What I would tell them is I am replacing my upper that Kaboomed because the Manufacturer of the upper and the ammo company are fighting over who is liable. ETA: Check HERE for the FET. |
*cough cough* So what you are saying is place two orders. *cough cough* ETA: My CMMG parts order is expected to arrive today  . I ordered from CMMG because they had everything I wanted in stock, and I have had good results with their products in the past.
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Any licensed manufacturer that is making more than 49 complete weapons per year is responsible for passing onto the Treasury Department side of ATFE an 11% excise tax on the original sale price of the weapon in question. Whether it ships as a complete rifle, an upper half and lower half, or a complete kit with all necessary parts to build a rifle (legally known as "knockdown condition"), it is a rifle by ATFE's definition. An individual is not responsible for paying excise tax on a weapon built for personal use and never entering into interstate commerce, nor or small volume manufacturers (under a law that crept in quietly last year) as long as they are licensed as manufacturers and stay under the 49 (if they hit fifty, they owe excise on all of them). Complete rifles (or the various configurations that equal a full rifle under the law), sold by a larger scale manufacturer are excised at the 11% rate. Handguns and ammunition are excised at 10% from the original manufacturer. This comes up almost weekly in some forum or another here. Normally it is someone questioning why a complete rifle costs more than the sum or the upper half, lower half, and mag, manual etc...from the same manufacturer. Voila. Excise tax paid by the manufacturer on the value of the complete weapon as sold to the dealer/distributor. Dealers don't normally see it on ther invoices because, in most cases, the tax is built into the delaer price. Steve/RRA |
Nothing fishy, just the Feds at work. |
Exactly
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That was what I am going to do anyway - i can't afford both right now, so I am just going to order the upper. then in a month i can get a lower - this would allow me to avoid the tax, yes? |
Correct. You will avoid the tax by ordering seperately. I found out about the FET a few months ago when I tried to buy a complete POF rifle. Screwed up, ain't it? Oh well.....at least you know how to get around it. Sean |
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CMMG, and probably any other large company, is taking the tack that if you buy an upper and a lower at the same time, you plan to put them together, so you're just buying a custom rifle, NOT separate parts. I'll bet the Treasury Department thinks likewise. When I bought my RRA middie, I bought the upper from one vendor and the lower from another-which happened to have the table next to the guy I bought the upper from. While I'll bet these two different companies each sell more than 49 complete rifles every year, MY purchase was a part from each, so there was no excise tax to collect. What I did with those parts, neither vendor had a need to ask in their official capacity. So (cough, cough) to avoid a large additional charge, you might think to order an additional lower in September, and then later get a wild hair and decide you need a new upper in October...You know how those black rifle folks get when the play with different uppers...
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My friend refused to order anything but a complete rifle. "Umm, trust me on this... just order the upper and the lower seperately, you won't have to pay the excise tax they have to charge for a complete rifle." "But I don't want to have to deal with any assembly!" "Umm... if you order a complete upper and a complete lower... there's less assembly than when you have to clean it!" He still ordered a complete rifle... 
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Assembly?  He clearly deserves to pay extra.
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Yeah, its interesting. Just look on Bushmaster's site: Complete 16" M4 A2 with birdcage = $1125 M4 A2 upper = $575 + M4 lower = $360 = $935 Thats $190 diffference! Consider you don't get the case ($20), mag ($10), sling ($5) or instruction manual ($4), and would have to pay ($15) additional shipping. So subtract $54, and you still get it $135 cheaper, by ordering it seperately! 11% of the complete rifle cost is right near that discount, so it is obvious that the excise tax is directly passed along. A loop hole that will surely be closed someday.  But surely they would have changed it by now (like adding $125 excise tax to all lower reciever sales) if they could or wanted to.
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Loop holes are for hangings!!! It is the law and it is being followed as it is written. 
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