In this blog, you will find an in-depth guide on the Sport Fishing Equipment Tax, covering the following key topics:
What is the Sport Fishing Equipment Tax? – An explanation of the tax and its purpose.
Who is responsible for paying the Sport Fishing Equipment Tax? – Understanding who is required to pay this tax.
How much is the Sport Fishing Equipment Tax? – Details on the tax rates and how they are calculated.
Why is there a tax on fishing equipment? – The reasons behind the implementation of this tax.
Which fishing items are subject to the tax, and which are exempt? – A breakdown of taxable and non-taxable fishing gear.
How do you pay the Fishing Equipment Tax? – A guide to the process of paying the tax.
The Sport Fishing Equipment Tax is an excise tax imposed on the sale of certain fishing-related equipment. This tax is paid by the manufacturer or importer at the first point of sale for items such as fishing rods, fishing kits, fishing tackle, and other related gear. Established in 1950 under the Dingell–Johnson Act, this tax was designed to support conservation and fishery management programs.
The revenue generated from this tax goes towards funding wildlife restoration and improving fish habitats across the United States.
The Sport Fishing Equipment Tax is initially paid by the manufacturer to the IRS at the point of production or importation of the equipment. However, this cost is ultimately passed down the supply chain. Here's how it works:
The manufacturer pays the tax directly to the IRS, but they include this cost in the price when selling to wholesalers.
The wholesaler, in turn, passes the cost to the retailers by including it in their pricing.
Finally, the retailer incorporates this tax into the final sales price paid by the customer. Although the customer is the one who ultimately bears the cost of the tax, it is not itemized separately on receipts—it is embedded in the overall sales price of the equipment.
Therefore, while the tax is technically paid by the manufacturer, the customer indirectly pays for it when purchasing the fishing equipment. The manufacturer remains responsible for collecting and remitting the tax to the IRS.
The Sport Fishing Equipment Tax generally imposes an excise tax of 10% to 11% on the sales price of most fishing equipment. However, there are specific rules and limitations, such as:
For fishing rods and poles, the tax is capped at $10, meaning the tax cannot exceed this amount per rod or pole, regardless of the price.
Additionally, a 3% tax is applied to the sale of electric outboard motors and fishing tackle boxes by the manufacturer, producer, or importer.
These taxes are part of the broader effort to generate funds for fishery conservation and habitat restoration programs.
The Sport Fishing Equipment Tax is imposed for several important reasons:
The funds generated from the tax on most fishing, hunting, and shooting-sports equipment are allocated to Wildlife and Sport Fish Restoration programs.
These taxes contribute to the conservation and management of America’s fish and wildlife populations, which, in turn, create more hunting and fishing opportunities for the public.
Revenue from the tax is used to support conservation and rehabilitation projects, which benefit ecosystems and provide economic returns through improved recreational opportunities.
As of 2006, the excise tax collections have contributed $251 million annually to wildlife restoration efforts.
Additionally, the import duties on fishing equipment have averaged $110 million annually.
Wholesale purchases of taxable fishing equipment have averaged $2.3 billion per year, indicating the scale of the tax base supporting these vital environmental programs.
These taxes play a crucial role in preserving natural resources while also promoting outdoor recreational activities.
Bags, canvas, baskets, and other containers used for fishing.
Baits made from various edible foods and semi-soft processed cheese.
Bobbers, Creels, and Drayles.
Electric outboard boat motors, which are used to move the boat for fishing.
Fish fighting chairs, stringers, blades, downriggers, harnesses, outriggers, rigs, vests, and other equipment like hooks and jigs used specifically for fishing purposes.
Fish tank aerators, fishing kites, and fishwells.
Natural baits (such as live bait) and processed marshmallows.
Lights, lure retrievers, and nets used for night fishing.
Sinkers for nets, scent oils for bait, strike indicators, and terminal tackle are also not taxed.
The Fishing Equipment Tax is reported and paid using Form 720, which is the Quarterly Federal Excise Tax Return form. There are two ways to file Form 720: manually or online.
1. Manual Filing:
Complete Form 720 with the necessary business information, including your business name, address, tax period, and the quarter for which you're filing.
Make sure to fill in IRS number 41 (for sport fishing equipment other than fishing rods and fishing poles) on the form.
Once filled, mail the completed form along with the payment check to the IRS mailing address.
2. Online Filing:
You can also file the tax electronically with our IRS-approved 720 modernized e-file platform. Follow these steps:
Log in to Simple720 and provide basic details.
From the left panel, select the Sport Fishing Equipment category.
Complete the filing of Form 720 for your fishing equipment tax by completing the payment.
Important Notes:
Form 720 is filed quarterly, so you need to submit it for each quarter of the year.
Even if you haven't made any sales during a particular quarter, you are still required to file the form with a $0 tax liability to stay compliant with IRS regulations.
This process ensures that you're fulfilling your tax obligations in a timely manner.
WRAP:
This blog provides a clear understanding of the fishing equipment tax, including why it exists, tax rates, taxable and exempt items, who pays it, and how to file using Form 720.