Software Club 210: Light Red/Club_Software_210_Light_Red_Micro_Star_1997.iso/sba/f263.sbe

Text File | 1997-02-04 | 14KB | 404 lines

@133 CHAP 7

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

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 excise
taxes that a small or medium-sized business may need to
know about.  Some excise taxes, such as those on telephone
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 18.3 cents a gallon on gasoline
      and 24.3 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, at a tax rate of 10% of
                the retail price that exceeds the threshold
                price of $30,000 (after 1990).  The $30,000
                threshold is indexed for inflation, having
                risen to $32,000 in 1994 and 1995, to
                $34,000 in 1996, and to $36,000 in 1997.
                This tax is being phased out, and the rate
                dropped to 9% for the rest of 1996, effective
                as of August 27, 1996, and to 8% on January
                1, 1997.  The tax rate will continue to drop
                by 1% each January 1, until it reaches 3%
                in 2002, and is completely repealed by 2003.

                Other luxury taxes on boats, planes, furs and
                jewelry, which also went into effect after
                1990, were repealed by the 1993 tax act,
                retroactive to January 1, 1993.  If you paid
                a luxury tax on any such item in 1993, you
                should be able to get your money back from
                the retailer (NOT from the IRS).

    . TAXES ON AIR TRANSPORTATION.  If you are in the
      business of transporting people by air, you may have
      to collect a 10% excise tax.  (This tax expired on
      January 1, 1996, but went into effect again on August
      27, 1996, for the rest of 1996.  It will expire again,
      unless reauthorized, on January 1, 1997.)

    . COMMUNICATIONS.  Taxes on telephone and teletype
      services.

    . WAGERING TAXES.  These include both taxes on
      gambling and occupational license taxes on gaming.

    . 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.
      [This tax was to have terminated, at least temporarily,
      as of January 1, 1993, but has been extended,
      permanently.]

    . HARBOR MAINTENANCE TAX.  This tax is imposed at the
      rate of 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,
Quarterly 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 heavily
      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 other
      than cigarettes at a rate of 40% of the wholesale
      price.  The tax on cigarettes is 3 cents per cigarette.
      A license or permit must be obtained to sell such
      products, from the Hawaii Department 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 varying
      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 (26 cents in
      Kauai; 29 cents in Maui).  In addition, there is a 1
      cent per gallon state tax on aviation gas and other
      state and county taxes on LPG and various off-highway
      fuel uses.

    . TRANSIENT ACCOMMODATIONS TAX.  This is a 6% tax
      on revenues of hotels, motels and other transient
      accommodations.  It applies IN ADDITION TO the 4%
      G.E.T., to such revenues.  Taxpayers subject to this
      tax must register with the Department of Taxation, on
      Form GEW-TA-RV-3.  Monthly 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 property,
      imposed at a rate of 10 cents (formerly 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