Cream of the Crop 1/Cream of the Crop 1.iso/BUSINESS/SBA62.ARJ/FSBA.EXE/F263.SBE

Text File | 1992-04-30 | 8KB | 172 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 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 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 business 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 increased 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, 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 sub-
stances 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 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 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.  In addition,
      there is a 1 cent per gallon state tax on aviation 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 accommodations.  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.  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 this tax, which is due on sales of real property 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
      rentals using a discount rate of 6%.

    . COUNTY AND STATE MOTOR VEHICLE TAXES.  Vehicle weight fees pay-
      able to the counties and state.

@CODE:EN
These usually include taxes on alcoholic beverages, cigarette and
tobacco taxes, severance taxes on minerals, gasoline 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 discussed here.

@CODE: CA
The California gasoline tax rate goes from 15 cents to 16 cents on
January 1, 1992, and increases by another penny a gallon each January 1
until it reaches 18 cents a gallon in 1994.

In addition, California imposes a Hazardous Substances 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.