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Posts: 910
Location: Hastings, mn, 55033 | With everything I've been reading with guys complaining about paying the FET I got to thinking, would the FET still be owed if baits were sold as "folk art" WITHOUT hooks attached? If so a guy could just ship or package hooks separate to be added by customer.
Edited by castmaster 1/31/2008 7:34 AM
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Posts: 169
| You're free to try anything. I, myself, would rather not screw with the IRS.
Brad |
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Location: Land of the Musky | Good luck on that one. I sell a huge trolling lure I could try that with. Not as big as the Rapala but big. Not sure Ken my IRS FET contact would let that one slide.  Fines for not paying your FET are HUGE!!! Much higher than my profit margin on a Q by Q basis. As I told my wife, I am happy to pay my FET each Q and as it gets bigger I am more happy to pay as that means I sold more lures. I only wish the FET I pay would go towards muskie stocking programs since that is by far my main customer focus. |
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| It gets you thinking?????????? Greg Nimmer ( Nimmer Swimmer ) calls his " Functional Art".................Makes one wonder.
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Location: Hastings, mn, 55033 | DOUG!!!!!! Where you been? Shoot me a pm.
I dont have a problem paying the FET (at least it goes to some sort of outdoors funding) just with all the griping I hear about it it kind of got me wondering, I mean you hear guys writing off boats, trips etc for being used as "R&D" or product testing. For me the couple hundred a year I owe in FET is nothing worth digging into it over.
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Posts: 1270
| Are they actually sold for fishing? Then you shuold be paying the FET tax on it. Anything else is cheating and dis-honest. All the other makers of baits have to pay this tax why should one guy not have to because he get's creative in his marketing? I also have a feeling that the IRS would eventually catch up to you and then you could be in a world of hurt! |
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Posts: 190
| Reelman, Please understand that I am in no way implying that Greg is not handling his affairs in the correct manner. I know Greg very well, He is an amazing bait designer and he owns a very well run business so please do not take my statement out of context..
What I was trying to convey it that this creative statement makes you wonder if there is a loophole. As stated this is probably not something one would want to challenge but as we all know loopholes are found by lawyers every day.
Correct me if I am wrong but does it say ( for recreational use ) leading on to believe that baits made and stated for professional or tournament use only or as not intended for recreational use. Creativity is what helps things to progress and somtimes it bites us in the Bass but it is progression none the less.....Light bulbs are coming on somwhere,........Doug |
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Location: Hastings, mn, 55033 | What I was thinking is more the baits that are sold 90% to collectors and are built with the collector market in mind. The majority of these baits are never going to see water which are why many are looked at as "folk art".
Reelman,
What would the difference between this be, and say the larger companies(or even guys like Tackle Booty/Grunt) who have tax attorneys and accountants to help them maximize their deductions and minimize taxable earnings as compared to the small basement guy who barely sells enough baits to break even let alone hire professional tax folks to protect his $$. Do you consider that fair? |
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Location: Land of the Musky | Actually I pay my FET Q by Q and my CPA just double checks at the end of the year to make sure I did it right and then does my taxes. Easy for me though as all my products right now in this business are subject to FET. I do have some head lamps but to make it easy I also pay FET on those. I figure it cost me an extra $30 a year and would cost me more in time to remove that income from my FET calculation.
Are the new FET PDFs out yet? Those are nice as you can fill everything out in Adobe and then print off a nice clean copy. If/when I find it I will post the link.
castmaster,
You make me sound like a huge business. Thanks!!
PSS-This will be the first year I used a CPA. Prior I used TurboTax. Great program and it actually asks as many or more questions than a CPA!!
Edited by tacklebooty 1/31/2008 6:16 PM
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Posts: 1270
| One could also then look at a extreme high quality gun that is engraved and gol inlaid. Some of these guns sell for tens of thousand of dollars yet they still have to pay PR taxes on them.
I was not inteneding ot accuse anyone of anything just pointing out some things.
This does make me wonder though if Rapala pays FET on there great big baits that are for decoration. |
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Location: Hastings, mn, 55033 | Reelman,
Or it could be compared somewhat to the custom collector cars and motorcycles that are sold without some small but essential piece of equipment so that at time of delivery they ar3ent functioning cars/cycles and therefore not subject to emissions requirements, licensing requirements etc and bear a disclaimer that its up to the buyer to determine the legality of making it a functional vehicle in a particular location.
Or since you mention guns, its would be no different than the gun "kits" which are sold without firing pins or some similar small but essential piece and are then able to circumvent certain regulations that apply to functioning firearms, since as sold they are not a firearm.
Or switchblade style knives that are sold without the spring in place so they are technically not a functioning automatic knife until the owner inserts the spring. That way they can get around federal laws regarding the sale of automatic knives across state lines.
Edited by castmaster 2/1/2008 7:28 PM
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Location: lansing, il | i would not recommend trying to skate around the FET. i pay the FET and had a screw up on their end claiming i did not pay them what i owed them. i had a copy of the check i sent them that they deposited/cashed and it was still quite the probbing without the jar of vasaline! then on top of all of that after i proved i paid them and they cashed my check, it still took 2 months for them to remove the fines that they claimed i owed them. i can only imagine what they would be like if they really caught someone not paying or following the rules. i am sure it would not be fun!!! DONT MESS WITH THE IRS! |
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Location: Land of the Musky | Can I ask what your fines totaled you got. |
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Location: Hastings, mn, 55033 | Heres another question. I've been paying the FET on the value of lures I donate for different things(not all are tax deductible charities, and ones are I still dont take the deduction on income taxes). Since I am giving those lures away and not selling them do I need to keep paying FET on them? For the small amount of $$ it is I've just been paying it in a "better safe than sorry" sort of thing, but I dont really want to apy more than I have to as the govt certainly doesnt need any extra donations from me! |
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Location: Land of the Musky | No is the answer. I asked the same question to my IRS guy about donations. Your FET is calculated off the sale of the lure. $0 sales times the FET = $0.....
I do strongly suggest finding the phone number to your FET IRS contact in your area and talking with them. I learned so much talking with my IRS agent. Who else better to call than the one who will be coming to your home to fine you and take your lures away! I point blank asked him about 10 differnent ways I wanted to calculate the FET (some legit and some sneaky things I thought might work). His reply would either be "You would be busted and fined" or "that would be ok".
James |
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Location: lansing, il | james, i believe the fines or "intrest" as they called them were 4-5% of the quarterly amount that was due. and they accumulate it every month unit they decide the case is closed...they ended up wiping the slate clean but just the fact that it took the from oct til jan to figure out yes they did indeed receive and cash my check. it is just somthing that i didnt like hanging out there.
yes i agree call your local agent or representative they on the other hand are very easy to talk and can answer most of your questions for you...i always get a kick out of how they always ask me if i know anyone else in the same line of work that they could get in touch with..hahahha they are always looking! |
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Location: Land of the Musky | muskihntr, I think all the IRS would have to do is visit eBay and they would find a bunch of guys to "visit". Never seen so many sellers on eBay and I am sure many have no clue what an FET number is let alone have one I am sure they are watching. Hard to compete sometimes when you play by the book against others who do not... |
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Location: lansing, il | i agree 100% james! some people just plain dont know about the FET others just choose to ignore it! to me the risks just are not worth taking! |
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Location: Hastings, mn, 55033 | "Hard to compete sometimes when you play by the book against others who do not..."
C'mon now...I dont like others not paying what they owe any more than the next guy, but if that $2,$3,$4 or even $5 difference in FET paid is going to decide how you compete with others rather than the quality of product you produce you probably werent gonna make a go of it anyway.
I just dont understand why some see this as such a big obstacle. Its 10% that can be added in to the price you need to get for the bait.
You know how I find it harder to "compete" (I really dont compete with anyone rather build baits from myself and friends and occasionally sell a few and donate some)with are the guys who can purchase materials in wholesale quantities thus reducing the cost of materials signifcantly!
Edited by castmaster 2/17/2008 10:15 AM
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Location: Land of the Musky | castmaster-Good point but if you know my selling style $.50 makes a huge difference to me. I may sell a swimbait for 1/3 to 1/2 the retail value and (IMO) mine is the same or better quality and I have just as much or more into my COGS as the other guy. Every penny counts in my business model or I go belly up real fast. So, I need to play on a level field or I can't play... Plus paying the FET is the right thing to do if it goes back into natural resources. LOL I am sure it just goes to paying for a B1 bomber....
James |
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Location: lansing, il | look at it this way...on a retail instate sale...that makes the seller/manufactorer responsible for 15-18% in combined fet and sales taxes..while yes you do have to tack it on i dont see this being a small chunk of change at the end of the quarter when you do alot of volume and have to cut those checks! its always easy for the guys who dont pay to say its no big deal, but to those of us who do pay it is another big bill that we have to fork over moeny for. |
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Location: Hastings, mn, 55033 | Muskihntr,
so you collect that sales tax on the purchase, what you should get to keep it? It wasnt "your" money to begin with.
Edited by castmaster 2/17/2008 11:57 AM
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Location: lansing, il | no you dont get to keep it. it is tax money it goes to the govt.
why do i try to even offer input on here.
Edited by muskihntr 2/17/2008 12:02 PM
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| Don't forget that the FET goes toward fish and water quality issues. If you are not collecting and paying it then you must not care that much about our resources. |
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Location: Land of the Musky | I must care a lot then! LOL Each check of mine the last few Qs has been 4 figures. No 5 figure checks coming for me for a long while but I hope the day comes when I "get" to write a $10k FET check.
James
Edited by tacklebooty 2/17/2008 12:14 PM
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Posts: 910
Location: Hastings, mn, 55033 | "no you dont get to keep it. it is tax money it goes to the govt. "
Thats what I was getting at. All you did was collected the states sales tax, you arent paying it out of your pocket because it was never yours to begin with!
It would be no different than back in the day kids delivering newspapers made the subscription collections. What I should have looked at it as a hit to me when I had to turn that $$ over to the newspaper company, jsut because it had been in my possession for a little while? |
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Location: lansing, il | i still have to pay it out quarterly, all the money comes in at differnt times but it all gets paid out at once. so even though i take it in i still have to cut one big fat check! it is not my money you are correct however it passes thru my hands and i am responsible for paying it out when it is due, so it still has to be paid by me.
i guess some people just dont get it! |
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Location: Hastings, mn, 55033 | Try and look at the upside to it then Muskihntr, you get to earn all that interest while their money sits in your account 
Believe me I "get it". Been self employed for years so I think I know what its like to cut the govt a check!
Edited by castmaster 2/17/2008 4:52 PM
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Location: Mauston, Wisconsin | If you think you can find a loop hole - you are probably fooling yourself and will eventually take a hard fall. Sometimes, I think we (Zalt NAD) should just round up the Sale price + tax to an even $ number, i.e., tax included.. Folks at the shows don't understand the complexities of doing business legally. They look at us kinda funny when we say we have to charge WI sales tax and the final sales price of a $22 lure is $23.22.
Never mind that they can't understand why the price is higher than what a large sports retail store charges for a Rapala. As a small business we can't forget about what we already pay for international shipping , freight forwarding fees + import duties on each lure. Those have to be recovered to stay in business- wow such a unique concept, i.e., try to break even or make a profit.
Yeah, I know buy American! But, no one here makes a similar product. Is American made that much better? Yeah, sometimes, but not always. Even if you sell American, you better not try & short the IRS!
Al
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Location: Hastings, mn, 55033 | Heck you guys wanna see people give you funny looks, try running a bar once. Pay your liquor taxes, property taxes, payroll taxes etc, insurance, maintenance, electricity, cable etc etc etc and then listen to people tell you how they could have bought a 6 pack for what you just charged them for 2 beers! |
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Location: Hastings, mn, 55033 | Hey guys,
I want to apologize somewhat. I sometimes forget that there are a wide range of motivations here for why we are building baits. For me I started because for years I've had an admiration for the lures built by Frenchy Lamay, and have collected and fished hand crafted topwater baits for from him as well as the builders who carry on his tradition. Because of that I decided I'd like to try my hand at making those types of lures(creepers, toppers, globes etc) in that same traditional style. I have given away far more baits to family/friends and donations than whats sold for $$. And that being my motivation when the day comes that I am stressing or aggravated over taxes and other BS is the day I quit making baits.
For those whose primary motivation is as a business to turn a profit I can see where one gets frustrated from time to time. Just try and remember its the same for anyone who chooses to work for themselves, no matter the field. And if the day comes you arent making an amount of $$ you feel is commensurate with the work you put into it, then its probably time to shut things down. |
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FET loop hole?