The World of Computer Software/The World of Computer Software.iso/sbadv64b.zip/F263.SBE

Text File | 1992-12-01 | 9KB | 224 lines

@133 CHAP 7

                ┌───────────────────────────────┐
                │     FEDERAL EXCISE TAXES      │
                └───────────────────────────────┘

          "No man is safe in his bed when the Congress
           is in session." -- Benjamin Franklin


Federal tax laws impose a number of excise taxes on
different types of businesses, products, services and
occupations.  These taxes are usually imposed without any
assessment or notice to the taxpayer.  Thus, it is up to
you to find out if you are subject to any of these taxes
and, if so, to obtain the proper tax return forms and pay
the tax on time.  It is not uncommon for a small business
to operate for several years without the owner ever being
aware of the need to pay federal excise taxes.  Then the
day of reckoning comes when a formal notice is received
from the government demanding immediate payment of several
years' worth of back taxes on some particular item subject
to excise tax, plus interest and penalties for not filing
the returns and not paying the tax.  This can be a
disastrous surprise, especially since the business owner in
such a situation has not factored into the price of his or
her goods or services the cost of paying the excise.

The following is a brief summary of the major federal ex-
cise taxes that a small or medium-sized business may need
to know about.  Some excise taxes, such as those on tele-
phone service, are not discussed below, since they are
passed along or absorbed by the telephone company or other
large institution with which your company may deal and you
have no obligation to file any returns or make any direct
payment to the government of such taxes.

Federal excise taxes you need to know about fall into the
following major categories:

    . MOTOR VEHICLE HIGHWAY USE TAX.  This is the excise
      tax that the largest number of small businesses are
      likely to be subject to.  It is imposed on vehicles
      of more than 55,000 pounds gross weight.  If you
      want information about the highway use tax, you
      should obtain a free copy of IRS Publication 349.

    . RETAILERS--TAXES ON CERTAIN FUELS.  The federal
      gasoline tax is now 14 cents a gallon on gasoline
      and 20 cents on diesel fuel.  In addition, both
      of these taxes are increased by 0.1 cent a gallon
      to create a "Leaking Underground Storage Tank Trust
      Fund."  A reduced tax rate applies to qualified
      methane and ethanol fuel.

    . OTHER RETAIL EXCISE TAXES.  Retail excise taxes
      are now imposed on sales of:

            (a) Heavy trucks and trailers

            (b) Tires and tubes

            (c) Recreation equipment such as bows,
                arrows and fishing rods, reels, lures
                and creels

            (d) Firearms and ammunition

            (e) "Luxury" autos, boats, planes, furs and
                jewelry, at a tax rate of 10% of the
                retail price that exceeds the following
                thresholds (after 1990):

                  .  Aircraft  ----------------  $250,000
                  .  Private boats and yachts -- $100,000
                  .  Automobiles  --------------  $30,000
                  .  Furs and Jewelry  ---------  $10,000

    . TAXES ON AIR TRANSPORTATION.  If you are in the busi-
      ness of transporting people by air, you may have to
      collect an excise tax.

    . COMMUNICATIONS.  Taxes on telephone and teletype
      services.

    . WAGERING TAXES.

    . TAX ON COAL MINED IN THE UNITED STATES.

    . ENVIRONMENTAL TAXES.  On petroleum products, various
      chemicals and hazardous wastes, including a tax on
      ozone-depleting chemicals that was enacted in 1989,
      and expanded in 1990.

    . TAXES ON ALCOHOL, FIREARMS, AMMUNITION AND TOBACCO
      PRODUCTS.

    . MANUFACTURER'S EXCISE TAX ON VACCINES. Since January
      1, 1988, certain vaccines manufactured or imported
      into the U.S. are subject to a new excise tax, in
      order to create a Vaccine Injury Compensation Trust
      Fund, a no-fault program for compensating persons
      who are injured by, or die from, certain vaccines.

    . HARBOR MAINTENANCE TAX.  After 1990, this tax is in-
      creased to 0.125% of the value of commercial cargo
      that is loaded or unloaded at any U.S. port.

Most federal excise taxes are reported on Form 720, Quar-
terly Federal Excise Tax Return, the most common excise
tax form.  Form 2290 must be filed by owners of trucks and
buses subject to the highway use tax.  Environmental taxes
on petroleum and numerous designated chemical substances
must be reported on Form 6627, which is attached to Form
720.

For further information on federal excise taxes, you may
want to get a copy of IRS Publication 510, Excise Taxes.

In addition to federal excise taxes, the various states all
have a number of excise and miscellaneous taxes that apply
to businesses.

@CODE: HI
In Hawaii these include the following major excises:

    . ALCOHOLIC BEVERAGE TAXES.  Sale of alcohol is heav-
      ily regulated and subject to numerous taxes in Hawaii.
      Persons selling such beverages must obtain permits
      from the Dept. of Taxation and from the county liquor
      commissions.  Beverage taxes apply at various tax
      rates to distilled spirits, sparkling wine, still
      wine, beer, and cooler beverages.

    . CIGARETTE AND TOBACCO TAXES.  These generally apply
      to dealers and wholesalers of tobacco products at a
      rate of 40% of the wholesale price.  A license or
      permit must be obtain to sell such products, from
      the Dept. of Taxation.

    . STATE AND LOCAL FUEL TAXES.  The state of Hawaii
      imposes a 16 cents per gallon tax on gasoline, and
      the various counties impose their own taxes at vary-
      ing rates.  Total state and county gasoline tax
      rates range from 24.8 cents a gallon in Hawaii County
      to 32.5 cents a gallon in Honolulu County.  In addi-
      tion, there is a 1 cent per gallon state tax on avi-
      ation gas and other state and county taxes on LPG and
      off-highway fuel uses.

    . TRANSIENT ACCOMMODATIONS TAX.  This is a 5% tax on
      revenues of hotels, motels and other transient ac-
      commodations.  It applies IN ADDITION TO the 4%
      G.E.T., to such revenues.  Taxpayers must register
      with the Dept. of Taxation on Form GEW-TA-3.  Month-
      ly or less frequent returns are required, depending
      on the amount of the annual tax liability.

    . REAL ESTATE CONVEYANCE TAX.  Another important excise
      tax in Hawaii is the tax due on sales of real proper-
      ty, imposed at a rate of 5 cents per $100 of sales
      value.  It also applies to the capitalized values of
      leases with an unexpired term extending more than 5
      years, capitalized at the present value of the ren-
      tals using a discount rate of 6%.

    . COUNTY AND STATE MOTOR VEHICLE TAXES. Vehicle weight
      fees payable to the counties and state.

@CODE:EN
@CODE: CA

                ┌───────────────────────────────┐
                │   CALIFORNIA EXCISE TAXES     │
                └───────────────────────────────┘

Some of the more important excise taxes in California in-
clude the following:

   .  The California gasoline tax rate went from 15 cents
      to 16 cents on January 1, 1992, and increases by an-
      other penny a gallon each January 1 until it reaches
      18 cents a gallon in 1994.

   .  California imposes a cigarette tax of $ .005 per ci-
      garette, or 10 cents per pack of 20 cigarettes.
      There is also a tobacco products tax, based on the
      wholesale cost of tobacco products (other than cigar-
      ettes), which is set at 26.82 percent of the whole-
      sale price for the period from July 1, 1992 to June
      30, 1993.

   .  The California oil and gas severance tax rate for
      1992 is set at 2.5028 cents per barrel of oil for or
      each 10,000 cubic feet of natural gas.  This is a de-
      crease from the 1991 rate of 2.6109 cents.

   .  In addition, California imposes a Hazardous Substan-
      ces Tax. It includes disposal fees on hazardous waste
      disposal sites and an annual assessment on generators
      of hazardous waste.  This tax is set and administered
      by the State Board of Equalization.

@CODE:EN
These usually include taxes on alcoholic beverages, cigar-
ette and tobacco taxes, severance taxes on minerals, gaso-
line and other fuel taxes, special business license taxes
and, frequently, real estate transfer taxes.

@CODE: MT OR AK DE NH
@STATE does not have a sales tax or the equivalent.

@CODE:EN
@CODE: NM
New Mexico also has a "gross receipts tax" which is similar
to a sales tax except that it also applies to most kinds of
receipts from services as well as to the sale of goods.

@CODE:EN
@STATE also has a sales tax, which is not dis-
cussed here.