Legally Avoiding Taxes on the Sale of Rifles??

[SJG 253]

I am told that on the sale of every new rifle, there is built into the sale price an 11% federal excise tax but that there is no federal excise tax built into the sale price if you purchase the upper and lower individually. (Of course how beneficial this depends on the ultimate vendor set price for the two components)  Is this true??

[Maksim 1,504]

Just now, SJG said:

I am told that on the sale of every new rifle, there is built into the sale price an 11% federal excise tax but that there is no federal excise tax built into the sale price if you purchase the upper and lower individually. (Of course how beneficial this depends on the ultimate vendor set price for the two components)  Is this true??

The excise tax is paid by manufacturers. Not ffl, retail. 

As such on a ar... if you build from lower, the excise tax was paid by lower manufacture.

[PK90 3,570]

There are unscrupulous dealers who evade paying the tax, that sell rifles at low prices by slapping together uppers and lowers, which that can't do without being a manufacturer.

[Maksim 1,504]

4 minutes ago, PK90 said:

There are unscrupulous dealers who evade paying the tax, that sell rifles at low prices by slapping together uppers and lowers, which that can't do without being a manufacturer.

Correct.  

Folks that are technically manufacturers that are not registered as manufacturers... and as such they are not paying excise tax....

45 minutes ago, SJG said:

I am told that on the sale of every new rifle, there is built into the sale price an 11% federal excise tax but that there is no federal excise tax built into the sale price if you purchase the upper and lower individually. (Of course how beneficial this depends on the ultimate vendor set price for the two components)  Is this true??

To answer your question more specifically, there was an excise tax paid on the lower by the manufacturer.   Not on the upper however. 

[PK90 3,570]

12 minutes ago, Maksim said:

Correct.  

Folks that are technically manufacturers that are not registered as manufacturers... and as such they are not paying excise tax....

To answer your question more specifically, there was an excise tax paid on the lower by the manufacturer.   Not on the upper however. 

AFAIK, excise taxes are only paid on complete firearms.

[Maksim 1,504]

Just now, PK90 said:

AFAIK, excise taxes are only paid on complete firearms.

Thanks... will double check... I thought otherwise... or at least on AR lowers too.

[PK90 3,570]

Where does FAET apply?

FAET applies to:

Portable weapons that use an explosive to expel a projectile such as:

• Pistols
• Revolvers
• Shotguns
• Rifles
• Black powder firearms
• Machine guns
• Antique firearms

[Refer to Revenue Ruling 57-606 and Revenue Ruling 74-137 ]

Ammunition such as:

• Shells
• Cartridges

[Refer to 27 CFR 53.61(a)(4) ]

Firearms and ammunition that are unassembled but contain all component parts (such as firearms kits)

[Refer to Revenue Ruling 56-208 and Revenue Ruling 62-169 ]

https://www.ttb.gov/firearms/faet-faqs.shtml#Manufacturers

[PK90 3,570]

1. Am I a manufacturer? 

You are a manufacturer if you manufacture or produce a taxable article from scrap, salvage, junk material, new material, or raw material by: 
•processing, manipulating, or changing the form of an article; or 
•combining or assembling two or more articles. 
[Refer to 27 CFR 53.11 (definition of manufacturer)] 

2. If I manufacture an article and sell it in knockdown condition, am I liable for FAET? 

Yes. If you manufacture an article and sell it in knockdown condition (unassembled but complete as to all component parts), you are liable for FAET. 

[Refer to 27 CFR 53.11 (definition of manufacturer)] 

3. If I purchase an article in knockdown condition and assemble it, am I liable for FAET? 

If you purchase an article in knockdown condition and assemble it, your liability for FAET will depend on the following factors: 

•the amount of labor, material, and overhead required to assemble the article; and 
•whether you assemble the article for business or personal use. 
[Refer to 27 CFR 53.11 (definition of manufacturer)] 

4. If I manufacture an article only for my personal use, am I still liable for FAET? 

If you manufacture a firearm for your personal use, you are not liable for FAET. (Note: this exemption does not apply to partnerships and corporations)