Publication 510 - Excise Taxes For 2005 - Department Of Treasury (Page 21 of 47) in pdf

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Leased,

Manufacturers Taxes

1. Include both the following charges in the

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price.

Sold conditionally,

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The following discussion of manufacturers taxes

a. Any charge for coverings or containers

Sold on installment with chattel mortgage,

applies to the tax on the following items.

(regardless of their nature).

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Sport fishing equipment.

b. Any charge incident to placing the arti-

Sold on installment with title to pass in the

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cle in a condition packed ready for ship-

future.

Bows, quivers, broadheads, and points.

ment.

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To figure the tax, multiply the partial payment by

Arrow components, effective before April

1, 2005.

the tax rate in effect at the time of the payment.

2. Exclude all the following amounts from the

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price.

Arrow shafts, effective after March 31,

Exemptions

2005.

a. The manufacturers excise tax, whether

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Coal.

or not it is stated as a separate charge.

The following sales by the manufacturer are

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exempt from the manufacturers tax.

Taxable tires.

b. The transportation charges pursuant to

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the sale. (The cost of transportation of

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Gas guzzler automobiles.

Sale of an article to a state or local gov-

goods to a warehouse before their bona

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ernment for the exclusive use of the state

Vaccines.

fide sale is not excludable.)

or local government. (This exemption does

c. Delivery, insurance, installation, retail

not apply to the taxes on coal, gas guz-

Manufacturer. The term “manufacturer” in-

dealer preparation charges, and other

zlers, and vaccines.) State is defined in

cludes a producer or importer. A manufacturer is

charges you incur in placing the article

Definitions under Fuel Taxes, earlier.

any person who produces a taxable article from

in the hands of the purchaser under a

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new or raw material, or from scrap, salvage, or

Sale of an article to a nonprofit educa-

bona fide sale.

junk material, by processing or changing the

tional organization for its exclusive use.

d. Discounts, rebates, and similar al-

form of an article or by combining or assembling

(This exemption does not apply to the

lowances actually granted to the pur-

two or more articles. If you furnish the materials

taxes on coal, gas guzzlers, and vac-

chaser.

and keep title to those materials and to the

cines.) Nonprofit educational organization

finished article, you are considered the manu-

e. Local advertising charges. A charge

is defined under Communications Tax.

facturer even though another person actually

made separately when the article is

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Sale of an article for use by the purchaser

manufactures the taxable article.

sold and that qualifies as a charge for

A manufacturer who sells a taxable article in

as supplies for vessels. (This exemption

“local advertising” may, within certain

knockdown (unassembled) condition is liable for

does not apply to the taxes on coal and

limits, be excluded from the sale price.

the tax. The person who buys these component

vaccines.) Supplies for vessels means

f. Charges for warranty paid at the

parts and assembles a taxable article may also

ships’ stores, sea stores, or legitimate

purchaser’s option. However, a charge

be liable for tax as a further manufacturer de-

equipment on vessels of war of the United

for a warranty of an article that the man-

pending on the labor, material, and overhead

States or any foreign nation, vessels em-

ufacturer requires the purchaser to pay

required to assemble the completed article if the

ployed in the fisheries or whaling busi-

to obtain the article is included in the

article is assembled for business use.

ness, or vessels actually engaged in

sale price on which the tax is figured.

Importer. An importer is a person who

foreign trade.

brings a taxable article into the United States, or

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Sale of an article for use by the purchaser

Bonus goods. Allocate the sale price if you

withdraws a taxable article from a customs

give free nontaxable goods with the purchase of

for further manufacture, or for resale by

bonded warehouse for sale or use in the United

taxable merchandise. Figure the tax only on the

the purchaser to a second purchaser for

States.

sale price attributable to the taxable articles.

use by the second purchaser for further

Sale. A sale is the transfer of the title to, or the

manufacture. (This exemption does not

substantial incidents of ownership in, an article

Example. A manufacturer sells a quantity of

apply to the tax on coal.) Use for further

to a buyer for consideration which may consist of

taxable articles and gives the purchaser certain

manufacture means use in the manufac-

money, services, or other things.

nontaxable articles as a bonus. The sale price of

ture or production of an article subject to

the shipment is $1,500. The normal sale price is

Use considered sale. A manufacturer who

the manufacturers excise taxes. If you buy

$2,000: $1,500 for the taxable articles and $500

uses a taxable article is liable for the tax in the

articles tax free and resell or use them

for the nontaxable articles. Since the taxable

same manner as if it were sold.

other than in the manufacture of another

items represent 75% of the normal sale price,

Lease considered sale. The lease of an

article, you are liable for the tax on their

the tax is based on 75% of the actual sale price,

article (including any renewal or extension of the

or $1,125 (75% of $1,500). The remaining $375

resale or use just as if you had manufac-

lease) by the manufacturer is generally consid-

is allocated to the nontaxable articles.

tured and sold them.

ered a taxable sale. However, for the gas guz-

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Sale of an article for export or for resale by

zler tax, only the first lease (excluding any

Taxable Event

the purchaser to a second purchaser for

renewal or extension) of the automobile by the

export. The article may be exported to a

manufacturer is considered a sale.

Tax attaches when the title to the article sold

foreign country or to a possession of the

passes from the manufacturer to the buyer.

Manufacturers taxes based on sales price.

United States. (A vaccine shipped to a

When the title passes depends on the intention

The manufacturers taxes imposed on the sale of

possession of the United States is not

of the parties as gathered from the contract of

sport fishing equipment, electric outboard mo-

considered to be exported.) If an article is

sale. In the absence of expressed intention, the

tors, and bows are based on the sale price of the

legal rules of presumption followed in the juris-

sold tax free for export and the manufac-

article. The taxes imposed on coal are based

diction where the sale occurs determine when

either on the sale price or the weight.

turer does not receive proof of export, de-

title passes.

The price for which an article is sold includes

scribed later, the manufacturer is liable for

the total consideration paid for the article,

If the taxable article is used by the manufac-

the tax.

whether that consideration is in the form of

turer, the tax attaches at the time use begins.

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Sales of articles of native Indian handi-

money, services, or other things. However, you

The manufacturer is liable for the tax.

craft, such as bows and arrow shafts,

include certain charges made when a taxable

manufactured by Indians on reservations,

article is sold and you exclude others. To figure

Partial payments. The tax applies to each

in Indian schools, or under U.S. jurisdic-

the price on which you base the tax, use the

partial payment received when taxable articles

following rules.

are:

tion in Alaska.

Page 21

Publication 510 - Excise Taxes For 2005 - Department Of Treasury Page 21

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