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Federal Excise Tax

I purchase truck tires from vendors and I get charged Federal Excise Tax (FET) for each tire purchased. I then resell the tires to consumers and charge them, pass on, the same FET, no profit .  What is the best way to set up the payment of and the collection of FET in my chart of accounts?

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Best answer 02-05-2018

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Established Community Backer ***

Re: Federal Excise Tax

First thing to check into is whether or not as a reseller there is a form you can provide to the vendor so youo can buy FET free.  There is such a thing for sales tax, called a resellers permit.

 

In QBO all you can do is create a service item that posts to an FET liability account you set up.  When required, run a liability report and find the total FET due for that reporting period and pay the tax.  Use that service item on the sale document to the cusotmer.

 

IF you have to pay the FET even as a reseller, then that FET is part of the cost of the tire

8 Comments
Established Community Backer ***

Re: Federal Excise Tax

First thing to check into is whether or not as a reseller there is a form you can provide to the vendor so youo can buy FET free.  There is such a thing for sales tax, called a resellers permit.

 

In QBO all you can do is create a service item that posts to an FET liability account you set up.  When required, run a liability report and find the total FET due for that reporting period and pay the tax.  Use that service item on the sale document to the cusotmer.

 

IF you have to pay the FET even as a reseller, then that FET is part of the cost of the tire

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Re: Federal Excise Tax

Thank you Rustler for your reply!  Everyone except government entities or an exporter has to pay FET immediately upon buying a product that incurs it.  Your last comment is what I will have to do.  I have heard there are companies that show FET as a loss but I cant figure out how they do that because as a dealer we have to pay it then we just pass it on to the consumer for the same amount.

Established Community Backer ***

Re: Federal Excise Tax

Isn't FET calculated on the sales price and not the cost when you resell?

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Re: Federal Excise Tax

Hi Rustler, thanks again for your reply.  F.E.T. is pre-calculated by the Federal Government and is based on the weight of the tire.  I believe it starts with tires that are used on highways that weigh 40 pounds or more.  18 wheeler tires as an example have average FET tax of about  30.00  It seems the only choice would be to make it a sales item and also a COGS.

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Re: Federal Excise Tax

I'm confused now, 

If the vendor is already receiving the FET and paying the tax on their end, why would you as the reseller pay tax on that amount again-

 

should it not be a reimbursed expense as a reseller?

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Re: Federal Excise Tax

I'm confused now, 

If the vendor is already receiving the FET and paying the tax on their end, why would you as the reseller pay tax on that amount again-

 

should it not be a reimbursed expense as a reseller?

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Re: Federal Excise Tax

Did you  receive an answer to this question?  I am wondering the same.  If our supplier charges us FET and then we pass the charge on to our customers, I wouldn't think we would be filing excise tax.  

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Re: Federal Excise Tax

Did you receive an answer to this question? I don't understand why we would file FET if the distributor charged us and we collected the cost from the customer.  Wouldn't the distributor be the only one to file?  

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