SarWestShows.comThe Gun That Made the 20s Roar! Coming soon!

Legally Armed: V20N7

By Teresa G. Ficaretta, Esq. & Johanna Reeves, Esq.

Firearms and Ammunition Excise Tax: The Basics-Part I

Manufacturers and importers of firearms and ammunition incur liability for excise tax under the Internal Revenue Code (IRC) when they sell or use their products. This article will provide an overview of the articles subject to tax, who is the manufacturer or importer, and exemptions from tax. Part II of this article, to be published in the next edition of Small Arms Review, will address how to determine the taxable sale price, exclusions from the sale price, and tax-free sales.

I. Statutory and Regulatory Background

The manufacturer’s excise tax on firearms, pistols, revolvers, shells and cartridges was first imposed by the Revenue Act of 1918 (codified in the IRC at 26 U.S.C. Subtitle D, Chapter 32 (26 U.S.C. §§ 4181-4219). Implementing regulations are in Title 27 of the Code of Federal Regulations, Part 53. The Internal Revenue Service administered the tax until 1991, when the authority was transferred to the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), which was then part of the Treasury Department. ATF administered the tax until the agency was transferred to the Department of Justice in 2003. Consequently, since 2003 the Treasury Department’s Tax and Trade Bureau (TTB) has administered the tax.

26 U.S.C. § 4181 imposes a tax on the sale by the manufacturer, producer, or importer of pistols, revolvers, firearms, shells, and cartridges. The tax is ten percent of the sale price for pistols and revolvers and eleven percent of the sale price for all other firearms and shells and cartridges. The IRC also imposes excise tax on the lease of a taxable article by a manufacturer or importer (26 U.S.C. § 4217) and use of a taxable article by a manufacturer or importer (26 U.S.C. § 4218).

Pursuant to the 1937 Federal Aid in Wildlife Restoration Act (often called the Pittman-Robertson Act), taxes paid into the United States Treasury under Chapter 32 go into a trust fund. The funds may only be used for wildlife restoration and hunter safety training programs.

II. What is a “Firearm” for Purposes of Excise...


Comments have not been generated for this article.