AR Sponsor
Posted: 7/25/2005 1:10:03 PM EDT
|
Tried the search function on this one first with no luck... While at the gun store this afternoon, the guy behind the counter said something that got me wondering. He said ATF regulations allow me to build ONE rifle. Anymore than ONE and I would need a Manufacturers Certificate to do so. He went on about all his guns have an 11% Federal Excise Tax on them and to buy lowers and parts kits was Tax Avoidance and dealt with accordingly. I smiled as he went on and asked him just what was taxed. He said "the whole rifle". Hmmmm..... I asked him about complete barreled uppers and he said 'included'. I asked would I pay Excise Tax on a SECOND upper and he said no. My understanding was as long as I purchased stripped lowers FOR MY USE and didn't plan on reselling them, then everything was ok. Furthermore, the only part that could even remotely be considered taxable would be the stripped lower and I doubt the .gov would be interested in 11% of $80 bucks. Was this guy out in left field? Is there some weird rulings on the number you can build? Is this a Tax Avoidance Scheme as he put it and the Feds would/do pursue? Is there specific language that speaks to this? |
|
I believe that the 11% tax is only due if you are building firearms for the sole intention of reselling. I didn't have time to read this: www.access.gpo.gov/nara/cfr/waisidx_03/27cfr53_03.html |
|
I don't think any excise tax is due if you are building your own rifle and have the intent on keeping it for personal use. I have also not seen a number limit of how many personal rifles you can build. A personal rifle would be something that was not build soley to sell at a profit. The excise tax (11%) is an IRS issue and not an ATF issue. It is 11% of the selling price from manufacturer to its dealers. So for example, if ABC Rifle Co. sold a complete rifle to a dealer with a retail of $1150 and a dealer price of $1000, then ABC Rifle Co would have to pay (11% * 1000) $110 to the IRS as an excise tax. The only applies to compete rifles. Manufacturing lower receivers - 07 FFL - BATF issue Manufacturing and selling complete rifles - Excise Tax - IRS issue |
|
Everybody is correct - FET is only for licensed manufacturers "in the business" of selling their product for profit. This is taxable just like any other manufactured product, and justification is probably the interstate commerce clause in the Constitution. However, none of the above means that a) You are limited in the number of guns you build for personal use b) You are prohibited from selling any gun you make, as long as you aren't doing it as a means of generating substantial income. c) You can't make any kind of profit when selling a gun you made for personal use. For example, suppose you buy a bunch of parts and make an AR, then some kind of ban is enacted, making your gun more valuable. There is nothing requiring you to sell it at the old value rather than the current value as a "pre-ban" gun. You would only have a problem if you regularly made guns and sold them, and the sales generated "significant" revenue to you above what an occasional sale would bring. Note that this is exactly the same thing that would apply in selling any gun you own, or even certain other things, like cars. |
AR Sponsor