Legislation

Federal Excise Taxes Boost Archery and Bowhunting

Federal Excise Taxes provide a stable funding source for the nation’s conservation work. Without this source, wildlife populations would suffer. In turn, those losses would reduce hunting and bowhunting opportunities for the nation’s recreational hunters.
Photo Credit: Shane Indrebo

Author: Cassie Scott

American hunters, shooters and anglers indirectly contribute millions each year to improve fishing, boating, hunting, shooting and wildlife-associated recreation. The mechanism for these contributions is a manufacturer’s Federal Excise Tax (FET) paid by archery, firearms, fishing and boating companies.

How does this work? It’s an amazing story that started in 1937 when progressive hunters, conservationists and manufacturers joined forces with state fish and wildlife agencies to protect America’s wildlife with long-term, science-based management programs funded by a reliable source: federal excise taxes.

The Federal Excise Tax is a 10- to 11-percent tax manufacturers pay on the first sale of firearms, ammunition and some archery equipment under the Federal Aid in Wildlife Restoration Act, more commonly called the Pittman-Robertson Act.

What is the federal excise tax?

The FET is a 10- to 11-percent tax manufacturers pay on the first sale of firearms, ammunition, and some archery equipment under the Federal Aid in Wildlife Restoration Act, more commonly called the Pittman-Robertson Act. The original FET, approved by Congress in 1937, only taxed firearms and ammo. The archery FET was included 35 years later after passing the U.S. House and Senate, and signed into law by President Nixon in 1972. Since then, bows, arrows and all equipment that attaches to a bow and is used to shoot archery are subject to the FET.

The archery FET was updated in 2003 to create two separate collections:

  1. One form of the tax is applied as an 11 percent tax imposed on bows, quivers, broadheads and archery accessories that attach to a bow;
  2. A second form is a flat tax  imposed on arrow shafts which is  adjusted annually based on the Consumer Price Index. The current tax is 50 cents per shaft.

In the 2016 Federal fiscal year (October 1- September 30), the 11 percent tax on bows and accessories brought in nearly $40 million, while the flat tax on arrow shafts generated over $10 million. Those totals contributed $50 million for the 50 states’ hunting, shooting and wildlife-management programs.

Revenues generated by the FET are collected by the IRS and sent to the U.S. Fish and Wildlife Service. The funds cannot be used for anything in the federal budget except the costs of handling the funds and providing oversight to the states. The F&WS redistributes the money to state wildlife agencies for habitat restoration, hunter education, wildlife research, public-access programs and other high-priority nationwide conservation projects.

Federal Excise Taxes are a stable funding source for the nation’s conservation work. Depending on the amount of FET revenues collected each year, states receive an allocation based on their geographic size and number of licensed hunters.

Why is the FET important?

Without this stable funding source for the nation’s conservation work, wildlife populations would suffer. In turn, those losses would reduce hunting and bowhunting opportunities for the nation’s recreational hunters.

Dan Forster, the ATA’s director of government relations, worked regularly with P-R funding in his previous work with the Georgia Department of Natural Resources. As director of the agency’s wildlife resources division, Forster saw the FET’s importance firsthand.

“Most state wildlife agencies in this country rely on two primary funding sources,” Forster said. “One is hunting and fishing license revenues, and the other is the FET collected on hunting and fishing equipment. Those two sources provide probably 90 percent or more of the conservation dollars states use in their wildlife-management programs.”

Depending on the amount of FET revenues collected each year, states receive an allocation based on their geographic size and number of licensed hunters. The state’s wildlife agency then writes grants for programs and projects that must fit guidelines established by the P-R program.

By providing access to public lands and managing game birds, animals and other wildlife, the states can provide more hunting opportunities. In turn, more hunters and more hunting generates more sales of hunting equipment, and more FET for future programs. The program’s “user-pays, user-benefits” principle creates a cycle of long-term success. The excise taxes, coupled with the state agencies’ science-based projects and programs, are a primary reason our nation’s wildlife populations are so abundant and available to hunters.

Overall, the funds benefit the archery, hunting and shooting industries by providing more hunting and recreational shooting opportunities through accountable, well-organized management programs.

Most ATA members in the bowhunting business are required to pay the Federal Excise Tax. The money they pay through the tax goes back to support and grow the resources that provide archery and bowhunting recreation.

Who pays the FET?

All firearms-, ammunition- and archery-industry members – with few exceptions – who manufacture, produce or import taxable equipment must pay the excise tax.

“Most ATA members in the bowhunting business are required to pay the FET,” Forster said. “Although that may hinder their bottom line, the money they pay through the tax goes back to support and grow the resources that provide archery and bowhunting recreation.”

Forster considers it essential the archery and firearms industries self-tax.

“It’s an investment and, without it, we would not have the level of professional scientific management that’s in place today with state fish and wildlife agencies,” Forster said. “They ensure we have places to hunt and animals to pursue; two essentials the industry and ATA members rely on to stay in business and be fruitful.”

Paying the FET is mandatory for companies that make and sell products specified in the P-R Act. Those failing to pay …

  • Put themselves and their business at risk by breaking IRS laws and regulations;
  • Distort market values by undercutting competitors who comply;
  • Hurt the nation’s conservation efforts by reducing contributions to the P-R fund;
  • Could be fined and penalized by the IRS, which risks their business’s reputation and credibility.

 

The chart above illustrates the flow of Federal Excise Taxes, from the consumer to the manufacturer and to the states.

Your Go-To Resources

The ATA provides free advice and information to its members on FET regulations and issues.

Wendy Lang, the ATA’s membership manager, is your first point of contact if you have questions or concerns. Further advice is available from Forster and Jay McAninch, ATA president/CEO.

ATA members can also find a wealth of FET information under the member login portal on the ATA website. Simply log in, navigate to the members-only section, and click on “Federal Excise Tax.” You can download documents on archery items subject to the tax, as well as the IRS’s Archery FET Handbook and IRS registration forms.

Further, the members-only section of the ATA website will soon offer a comprehensive ATA Archery FET Guide later this year. The guide was developed by ATA staff with help from the American Sportfishing Association.

McAninch said the fishing industry pays a similar FET through the Dingell-Johnson Act. The ASA also works with its members to ensure the FET is levied fairly and equitably, which ensures stable funding to boost participation and protect fish and wildlife resources.

“The ATA Archery FET Guide will be a phenomenal resource for ATA members,” Forster said. “It will help members comply with IRS rules and regulations. It also discusses which products are taxed, who must pay the tax, and how the tax is calculated.”

Meanwhile, the ATA’s communications team works to keep you up to date on FET information. They regularly research and write articles about issues like the FET on bowstrings and arrow shafts, and efforts to update the P-R Act.

To learn more, visit the Wildlife & Sport Fish Restoration Program website and IRS website. You’ll find valuable presentations, charts and summaries.

For FET-related questions and concerns, contact Wendy Lang, ATA membership manager at (507) 233-8134 or wendylang@archerytrade.org.

 

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