The Government Accountability Office (GAO) is an independent, nonpartisan government agency that provides congressional oversight, determining whether federal funds are being spent properly while investigating allegations of illegal or improper activities. Widely considered “the congressional watchdog” the GAO recently issued a comprehensive report on the federal excise taxes placed on sport fishing and archery equipment; monies dedicated to fish and wildlife conservation, what we often refer to as Wallop Breaux or Sport Fish Restoration funds.
The Internal Revenue Service (IRS) collects the excise taxes on the sale of sport fishing and archery equipment directly from manufacturers, producers, and importers, to the tune of roughly $206 million a year. Due to the growth of e-commerce, GAO report show U.S. consumers may actually be the importers responsible for paying the piper! “GAO is recommending that Congress consider making U.S. online marketplaces responsible for sport fishing and archery excise taxes on consumer import sales in which they are involved,” the reported stated, suggesting that the IRS make existing excise tax guidance “easily accessible” while developing “guidance for consumers to calculate and pay the taxes.”
In other words, the federal government believes these monies aren’t being collected on a lot of foreign-manufactured fishing tackle purchased on big websites like Amazon, Walmart or eBay for example; overseas web entities like Alibaba and Temu present an even stickier situation in terms of collecting federal excise taxes. One GAO solution in the report is for consumers to pay that tax after purchase. Under current law, IRS and U.S. Treasury officials believe American consumers could be the importer liable for excise tax if those sport fishing purchases are made direct from a foreign seller – including through the American online marketplace – when shipped to the U.S.
“According to IRS officials and stakeholders, such consumer importers may not be aware of their excise tax liability,” the GAO report noted, explaining how their analysis of IRS data shows that few consumer importers, if any, pay these excise taxes. This report sheds light on a complex issue in terms of the online tackle buying public as “consumer importer” who may be unaware of this personal excise tax liability.
The GAO believes the IRS currently doesn’t make it clear enough how “consumer importers” should go about calculating, filing, and ultimately paying the taxes, while IRS officials say the consumers may have to contact a U.S. online marketplace to obtain facts about their purchase to determine if they are the liable importer. The consumer would then need to calculate figures and pay those taxes. Many anglers don’t know this excise tax on fishing equipment even exists, much less whether it has already been paid on the products they purchase or even how to find and submit an IRS Form 720.
In a nutshell, a lot of fishing tackle purchased directly from overseas manufacturers is inexpensive because the excise taxes are not always included in the online purchase. And without that sport fishing excise tax administered during the sale, dedicated U.S. wildlife conservation funding is lost. IRS and Treasury officials have offered a solution in terms of new federal legislation to shift where the taxes are imposed, operating much the same as the tax collection mechanism now allowing states to collect sales tax from remote sellers (based on 2018 Supreme Court decision in South Dakota vs. Wayfair). The GAO believes that the IRS cannot effectively collect excise tax revenue dedicated to conservation in the growing e-commerce world without such legislation.
You can buy a hook and a spool of leader material, but once you connect the two and attempt to sell as a rig, you must pay a dedicated manufacturers’ excise tax; so do overseas manufacturers who sell tackle in the United States. The big question is, if they don’t pay the excise fee, will you and I get stuck with the tax bill?
Buy local!
