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IMPORTANT REMINDER TO FIREARMS AND AMMUNITION EXCISE TAXPAYERS REGARDING THE TRANSPORTATION (FREIGHT) EXCLUSION
Title 27, Code of Federal Regulations, Section 53.91 - Charges to be included in sale price - provides – in pertinent part - (a) In General - The "price" for which an article is sold includes the total consideration paid for the article, whether that consideration is in the form of money, services or other things.
The Alcohol and Tobacco Tax and Trade Bureau (TTB) regulations further provide, in pertinent part:
Where transportation expense is incurred in conjunction with a shipment composed of both taxable and nontaxable articles, only the portion of the expense allocable to the taxable articles shall be excludable. In general, unless the taxpayer establishes to the satisfaction of the appropriate TTB officer that another method reasonably apportions such freight expense between taxable and nontaxable articles, such expense should be apportioned on the basis of the relative weights (or, if available, the relative published tariff rates) applicable to the taxable and nontaxable articles. Where it is not feasible to apportion such expense on the basis of relative weights or tariff rates, the expense shall be apportioned on another reasonable basis; for example, in the case of a shipment including both taxable and nontaxable articles which are subject to the same tariff rate, it may be appropriate to apportion the transportation expense on the basis of the relative sale prices.
(See 27 CFR 53.92(b) (emphasis added.))
Based on the above, in almost all circumstances, taxpayers claiming freight credit must base their claims on the actual weight or tariff rate of all firearms and accessories shipped, and use such weights in order to properly apportion the deductible portion of a freight expense. Taxpayers should not use any other basis to calculate the freight credit unless they have submitted to TTB and received approval of an alternate methodology. To receive approval, the alternate methodology must approximate the results that would otherwise be determined by relative weights of the taxable and non-taxable components of freight.
TTB strongly recommends that any alternate methodology be pre-approved by TTB. Failure to receive pre-approval could put the taxpayer at risk of having their exclusion denied.
Please direct any questions concerning this issue to TTB's National Revenue Center located at 550 Main Street, 8002 Federal Office Building, Cincinnati, OH 45202. TTB's FAET Industry Program Analyst can also be reached at 513-684-7228 or by e-mail at IndustryAnalyst.firstname.lastname@example.org.
ATTENTION NEW FEDERAL FIREARMS LICENSES (FFL) HOLDERS: Manufacturers, producers and importers of firearms and ammunition only need to “register” with TTB if they intend to conduct tax-free sales or purchases of firearms and ammunition.
A TTB Form 5300.28, Application for Registration for Tax-Free Transactions Under 26 U.S.C. 4221 only needs to be filed if you intend to:
If you do not intend to conduct tax-free sales or purchases of firearms and ammunition, all you must do is file a TTB Form 5300.26, Federal Firearms and Ammunition Excise Tax Return, when you incur a FAET liability. Upon your initial filing of a return, a tax account will be set up for you by TTB and will remain in effect until you notify TTB that you are discontinuing business and file a “Final “return. No “registration” is required unless you intend to conduct tax-free sales or purchases as explained above.
TTB is responsible for collecting Firearms and Ammunition Excise Tax (FAET) and TTB's National Revenue Center performs all duties supporting the collection of FAET. The TTB.gov FAET homepage provides information and documents organized by topic area. Click on the category below to find relevant resources.
Taxes and Tax Exemptions