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Eitc 5. Eitc   Manufacturers Taxes Table of Contents Importer. Eitc Use considered sale. Eitc Lease considered sale. Eitc Bonus goods. Eitc Taxable Event ExemptionsRequirements for Exempt Sales Credits or Refunds Sport Fishing EquipmentRelated person. Eitc Bows, Quivers, Broadheads, and Points Arrow ShaftsExemption for certain wooden arrows. Eitc CoalExported. Eitc Taxable TiresQualifying intercity or local bus. Eitc Qualifying school bus. Eitc Gas Guzzler TaxVehicles not subject to tax. Eitc Imported automobiles. Eitc VaccinesConditions to allowance. Eitc Taxable Medical Devices The following discussion of manufacturers taxes applies to the tax on: Sport fishing equipment; Fishing rods and fishing poles; Electric outboard motors; Fishing tackle boxes; Bows, quivers, broadheads, and points; Arrow shafts; Coal; Taxable tires; Gas guzzler automobiles; and Vaccines. Eitc Manufacturer. Eitc   The term “manufacturer” includes a producer or importer. Eitc A manufacturer is any person who produces a taxable article from new or raw material, or from scrap, salvage, or junk material, by processing or changing the form of an article or by combining or assembling two or more articles. Eitc If you furnish the materials and keep title to those materials and to the finished article, you are considered the manufacturer even though another person actually manufactures the taxable article. Eitc   A manufacturer who sells a taxable article in knockdown (unassembled) condition is liable for the tax. Eitc The person who buys these component parts and assembles a taxable article may also be liable for tax as a further manufacturer depending on the labor, material, and overhead required to assemble the completed article if the article is assembled for business use. Eitc Importer. Eitc   An importer is a person who brings a taxable article into the United States, or withdraws a taxable article from a customs bonded warehouse for sale or use in the United States. Eitc Sale. Eitc   A sale is the transfer of the title to, or the substantial incidents of ownership in, an article to a buyer for consideration that may consist of money, services, or other things. Eitc Use considered sale. Eitc   A manufacturer who uses a taxable article is liable for the tax in the same manner as if it were sold. Eitc Lease considered sale. Eitc   The lease of an article (including any renewal or extension of the lease) by the manufacturer is generally considered a taxable sale. Eitc However, for the gas guzzler tax, only the first lease (excluding any renewal or extension) of the automobile by the manufacturer is considered a sale. Eitc Manufacturers taxes based on sale price. Eitc   The manufacturers taxes imposed on the sale of sport fishing equipment, electric outboard motors, and bows are based on the sale price of the article. Eitc The taxes imposed on coal are based either on the sale price or the weight. Eitc   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. Eitc However, you include certain charges made when a taxable article is sold and you exclude others. Eitc To figure the price on which you base the tax, use the following rules. Eitc Include both the following charges in the price. Eitc Any charge for coverings or containers (regardless of their nature). Eitc Any charge incident to placing the article in a condition packed ready for shipment. Eitc Exclude all the following amounts from the price. Eitc The manufacturers excise tax, whether or not it is stated as a separate charge. Eitc The transportation charges pursuant to the sale. Eitc The cost of transportation of goods to a warehouse before their bona fide sale is not excludable. Eitc Delivery, insurance, installation, retail dealer preparation charges, and other charges you incur in placing the article in the hands of the purchaser under a bona fide sale. Eitc Discounts, rebates, and similar allowances actually granted to the purchaser. Eitc Local advertising charges. Eitc A charge made separately when the article is sold and that qualifies as a charge for “local advertising” may, within certain limits, be excluded from the sale price. Eitc Charges for warranty paid at the purchaser's option. Eitc However, a charge for a warranty of an article that the manufacturer requires the purchaser to pay to obtain the article is included in the sale price on which the tax is figured. Eitc Bonus goods. Eitc   Allocate the sale price if you give free nontaxable goods with the purchase of taxable merchandise. Eitc Figure the tax only on the sale price attributable to the taxable articles. Eitc Example. Eitc A manufacturer sells a quantity of taxable articles and gives the purchaser certain nontaxable articles as a bonus. Eitc The sale price of the shipment is $1,500. Eitc The normal sale price is $2,000: $1,500 for the taxable articles and $500 for the nontaxable articles. Eitc Since the taxable items represent 75% of the normal sale price, the tax is based on 75% of the actual sale price, or $1,125 (75% of $1,500). Eitc The remaining $375 is allocated to the nontaxable articles. Eitc Taxable Event Tax attaches when the title to the article sold passes from the manufacturer to the buyer. Eitc When the title passes depends on the intention of the parties as gathered from the contract of sale. Eitc In the absence of expressed intention, the legal rules of presumption followed in the jurisdiction where the sale occurs determine when title passes. Eitc If the taxable article is used by the manufacturer, the tax attaches at the time use begins. Eitc The manufacturer is liable for the tax. Eitc Partial payments. Eitc   The tax applies to each partial payment received when taxable articles are: Leased, Sold conditionally, Sold on installment with chattel mortgage, or Sold on installment with title to pass in the future. Eitc To figure the tax, multiply the partial payment by the tax rate in effect at the time of the payment. Eitc Exemptions The following sales by the manufacturer are exempt from the manufacturers tax. Eitc Sale of an article to a state or local government for the exclusive use of the state or local government. Eitc This exemption does not apply to the taxes on coal, gas guzzlers, and vaccines. Eitc State is defined in Definitions in chapter 1. Eitc Sale of an article to a nonprofit educational organization for its exclusive use. Eitc This exemption does not apply to the taxes on coal, gas guzzlers, and vaccines. Eitc Nonprofit educational organization is defined under Communications Tax in chapter 4. Eitc Sale of an article to a qualified blood collector organization. Eitc This exemption does not apply to gas guzzlers, recreational equipment, and vaccines. Eitc Qualified blood collector organizations are defined under Communications Tax in chapter 4. Eitc Sale of an article for use by the purchaser as supplies for vessels. Eitc This exemption does not apply to the taxes on coal and vaccines. Eitc Supplies for vessels means ships' stores, sea stores, or legitimate equipment on vessels of war of the United States or any foreign nation, vessels employed in the fisheries or whaling business, or vessels actually engaged in foreign trade. Eitc Sale of an article for use by the purchaser for further manufacture, or for resale by the purchaser to a second purchaser for use by the second purchaser for further manufacture. Eitc This exemption does not apply to the tax on coal and tires. Eitc Use for further manufacture means use in the manufacture or production of an article subject to the manufacturers excise taxes. Eitc If you buy articles tax free and resell or use them other than in the manufacture of another article, you are liable for the tax on their resale or use just as if you had manufactured and sold them. Eitc Sale of an article for export or for resale by the purchaser to a second purchaser for export. Eitc The article may be exported to a foreign country or to a possession of the United States. Eitc A vaccine shipped to a possession of the United States is not considered to be exported. Eitc If an article is sold tax free for export and the manufacturer does not receive proof of export, described later, the manufacturer is liable for the tax. Eitc Sales of articles of native Indian handicraft, such as bows and arrow shafts, manufactured by Indians on reservations, in Indian schools, or under U. Eitc S. Eitc jurisdiction in Alaska. Eitc For tire exemptions, see section 4221(e)(2). Eitc Requirements for Exempt Sales The following requirements must be met for a sale to be exempt from the manufacturers tax. Eitc Registration requirements. Eitc   The manufacturer, first purchaser, and second purchaser in the case of resales must be registered. Eitc See the Form 637 instructions for more information. Eitc Exceptions to registration requirements. Eitc   Registration is not required for: State or local governments, Foreign purchasers of articles sold or resold for export, The United States, or Parties to a sale of supplies for vessels and aircraft. Eitc Certification requirement. Eitc   If the purchaser is required to be registered, the purchaser must give the manufacturer its registration number and certify the exempt purpose for which the article will be used. Eitc The information must be in writing and may be noted on the purchase order or other document furnished by the purchaser to the seller in connection with the sale. Eitc   For a sale to a state or local government, an exemption certificate must be signed by an officer or employee authorized by the state or local government. Eitc See Regulations section 48. Eitc 4221-5(c) for the certificate requirements. Eitc   For sales for use as supplies for vessels and aircraft, if the manufacturer and purchaser are not registered, the owner or agent of the vessel must provide an exemption certificate to the manufacturer before or at the time of sale. Eitc See Regulations section 48. Eitc 4221-4(d) for the certificate requirements. Eitc Proof of export requirement. Eitc   Within 6 months of the date of sale or shipment by the manufacturer, whichever is earlier, the manufacturer must receive proof of exportation. Eitc See Regulations section 48. Eitc 4221-3(d) for evidence that qualifies as proof of exportation. Eitc Proof of resale for further manufacture requirement. Eitc   Within 6 months of the date of sale or shipment by the manufacturer, whichever is earlier, the manufacturer must receive proof that the article has been resold for use in further manufacture. Eitc See Regulations section 48. Eitc 4221-2(c) for evidence that qualifies as proof of resale. Eitc Information to be furnished to purchaser. Eitc   The manufacturer must indicate to the purchaser that the articles normally would be subject to tax and are being sold tax free for an exempt purpose because the purchaser has provided the required certificate. Eitc Credits or Refunds The manufacturer may be eligible to obtain a credit or refund of the manufacturers tax for certain uses, sales, exports, and price readjustments. Eitc The claim must set forth in detail the facts upon which the claim is based. Eitc Uses, sales, and exports. Eitc   A credit or refund (without interest) of the manufacturers taxes may be allowable if a tax-paid article is, by any person: Exported, Used or sold for use as supplies for vessels (except for coal and vaccines), Sold to a state or local government for its exclusive use (except for coal, gas guzzlers, and vaccines), Sold to a nonprofit educational organization for its exclusive use (except for coal, gas guzzlers, and vaccines), Sold to a qualified blood collector organization for its exclusive use (except for gas guzzlers, recreational equipment, and vaccines), or Used for further manufacture of another article subject to the manufacturers taxes (except for coal). Eitc Export. Eitc   If a tax-paid article is exported, the exporter or shipper may claim a credit or refund if the manufacturer waives its right to claim the credit or refund. Eitc In the case of a tax-paid article used to make another taxable article, the subsequent manufacturer may claim the credit or refund. Eitc Price readjustments. Eitc   In addition, a credit or refund (without interest) may be allowable for a tax-paid article for which the price is readjusted by reason of return or repossession of the article or a bona fide discount, rebate, or allowance for taxes based on price. Eitc Conditions to allowance. Eitc   To claim a credit or refund in the case of export; supplies for vessels; or sales to a state or local government, nonprofit educational organization, or qualified blood collector organization; the person who paid the tax must certify on the claim that one of the following applies and that the claimant has the required supporting information. Eitc The claimant sold the article at a tax-excluded price. Eitc The person has repaid, or agreed to repay, the tax to the ultimate vendor of the article. Eitc The person has obtained the written consent of the ultimate vendor to make the claim. Eitc The ultimate vendor generally is the seller making the sale that gives rise to the overpayment of tax. Eitc Claim for further manufacture. Eitc   To claim a credit or refund for further manufacture, the claimant must include a statement that contains the following. Eitc The name and address of the manufacturer and the date of payment. Eitc An identification of the article for which the credit or refund is claimed. Eitc The amount of tax paid on the article and the date on which it was paid. Eitc Information indicating that the article was used as material in the manufacture or production of, or as a component part of, a second article manufactured or produced by the manufacturer, or was sold on or in connection with, or with the sale of a second article manufactured or produced by the manufacturer. Eitc An identification of the second article. Eitc   For claims by the exporter or shipper, the claim must contain the proof of export and a statement signed by the person that paid the tax waiving the right to claim a credit or refund. Eitc The statement must include the amount of tax paid, the date of payment, and the office to which it was paid. Eitc Claim for price readjustment. Eitc   To claim a credit or refund for a price readjustment, the person who paid the tax must include with the claim, a statement that contains the following. Eitc A description of the circumstances that gave rise to the price readjustment. Eitc An identification of the article whose price was readjusted. Eitc The price at which the article was sold. Eitc The amount of tax paid on the article and the date on which it was paid. Eitc The name and address of the purchaser. Eitc The amount repaid to the purchaser or credited to the purchaser's account. Eitc Sport Fishing Equipment A tax of 10% of the sale price is imposed on many articles of sport fishing equipment sold by the manufacturer. Eitc This includes any parts or accessories sold on or in connection with the sale of those articles. Eitc Pay this tax with Form 720. Eitc No tax deposits are required. Eitc Sport fishing equipment includes all the following items. Eitc Fishing rods and poles (and component parts), fishing reels, fly fishing lines, and other fishing lines not over 130 pounds test, fishing spears, spear guns, and spear tips. Eitc Items of terminal tackle, including leaders, artificial lures, artificial baits, artificial flies, fishing hooks, bobbers, sinkers, snaps, drayles, and swivels (but not including natural bait or any item of terminal tackle designed for use and ordinarily used on fishing lines not described in (1)). Eitc The following items of fishing supplies and accessories: fish stringers, creels, bags, baskets, and other containers designed to hold fish, portable bait containers, fishing vests, landing nets, gaff hooks, fishing hook disgorgers, and dressing for fishing lines and artificial flies. Eitc Fishing tip-ups and tilts. Eitc Fishing rod belts, fishing rodholders, fishing harnesses, fish fighting chairs, fishing outriggers, and fishing downriggers. Eitc See Revenue Ruling 88-52 in Cumulative Bulletin 1988-1 for a more complete description of the items of taxable equipment. Eitc Fishing rods and fishing poles. Eitc   The tax on fishing rods and fishing poles (and component parts) is 10% of the sales price not to exceed $10 per article. Eitc The tax is paid by the manufacturer, producer, or importer. Eitc Fishing tackle boxes. Eitc   The tax on fishing tackle boxes is 3% of the sales price. Eitc The tax is paid by the manufacturer, producer, or importer. Eitc Electric outboard boat motors. Eitc   A tax of 3% of the sale price is imposed on the sale by the manufacturer of electric outboard motors. Eitc This includes any parts or accessories sold on or in connection with the sale of those articles. Eitc Certain equipment resale. Eitc   The tax on the sale of sport fishing equipment is imposed a second time under the following circumstances. Eitc If the manufacturer sells a taxable article to any person, the manufacturer is liable for the tax. Eitc If the purchaser or any other person then sells it to a person who is related (discussed next) to the manufacturer, that related person is liable for a second tax on any subsequent sale of the article. Eitc The second tax, however, is not imposed if the constructive sale price rules under section 4216(b) apply to the sale by the manufacturer. Eitc   If the second tax is imposed, a credit for tax previously paid by the manufacturer is available provided the related person can document the tax paid. Eitc The documentation requirement is generally satisfied only through submission of copies of actual records of the person that previously paid the tax. Eitc Related person. Eitc   For the tax on sport fishing equipment, a person is a related person of the manufacturer if that person and the manufacturer have a relationship described in section 465(b)(3)(C). Eitc Bows, Quivers, Broadheads, and Points The tax on bows is 11% (. Eitc 11) of the sales price. Eitc The tax is paid by the manufacturer, producer, or importer. Eitc It applies to bows having a peak draw weight of 30 pounds or more. Eitc The tax is also imposed on the sale of any part or accessory suitable for inclusion in or attachment to a taxable bow and any quiver, broadhead, or point suitable for use with arrows described below. Eitc Pay this tax with Form 720. Eitc No tax deposits are required. Eitc Arrow Shafts The tax on arrow shafts is listed on Form 720. Eitc The tax is paid by the manufacturer, producer, or importer of any arrow shaft (whether sold separately or incorporated as part of a finished or unfinished product) of a type used in the manufacture of any arrow that after its assembly meets either of the following conditions. Eitc It measures 18 inches or more in overall length. Eitc It measures less than 18 inches in overall length but is suitable for use with a taxable bow, described earlier. Eitc Exemption for certain wooden arrows. Eitc   After October 3, 2008, the tax does not apply to any shaft made of all natural wood with no laminations or artificial means of enhancing the spine of such shaft (whether sold separately or incorporated as part of a finished or unfinished product) and used in the manufacture of any arrow that after its assembly meets both of the following conditions. Eitc It measures 5/16 of an inch or less in diameter. Eitc It is not suitable for use with a taxable bow, described earlier. Eitc Pay this tax with Form 720. Eitc No tax deposits are required. Eitc Coal A tax is imposed on the first sale of coal mined in the United States. Eitc The producer of the coal is liable for the tax. Eitc The producer is the person who has vested ownership of the coal under state law immediately after the coal is severed from the ground. Eitc Determine vested ownership without regard to any contractual arrangement for the sale or other disposition of the coal or the payment of any royalties between the producer and third parties. Eitc A producer includes any person who extracts coal from coal waste refuse piles (or from the silt waste product that results from the wet washing of coal). Eitc The tax is not imposed on coal extracted from a riverbed by dredging if it can be shown that the coal has been taxed previously. Eitc Tax rates. Eitc   The tax on underground-mined coal is the lower of: $1. Eitc 10 a ton, or 4. Eitc 4% of the sale price. Eitc   The tax on surface-mined coal is the lower of: 55 cents a ton, or 4. Eitc 4% of the sale price. Eitc   Coal will be taxed at the 4. Eitc 4% rate if the selling price is less than $25 a ton for underground-mined coal and less than $12. Eitc 50 a ton for surface-mined coal. Eitc Apply the tax proportionately if a sale or use includes a portion of a ton. Eitc Example. Eitc If you sell 21,000 pounds (10. Eitc 5 tons) of coal from an underground mine for $525, the price per ton is $50. Eitc The tax is $1. Eitc 10 × 10. Eitc 5 tons ($11. Eitc 55). Eitc Coal production. Eitc   Coal is produced from surface mines if all geological matter (trees, earth, rock) above the coal is removed before the coal is mined. Eitc Treat coal removed by auger and coal reclaimed from coal waste refuse piles as produced from a surface mine. Eitc   Treat coal as produced from an underground mine when the coal is not produced from a surface mine. Eitc In some cases, a single mine may yield coal from both surface mining and underground mining. Eitc Determine if the coal is from a surface mine or an underground mine for each ton of coal produced and not on a mine-by-mine basis. Eitc Determining tonnage or selling price. Eitc   The producer pays the tax on coal at the time of sale or use. Eitc In figuring the selling price for applying the tax, the point of sale is f. Eitc o. Eitc b. Eitc (free on board) mine or f. Eitc o. Eitc b. Eitc cleaning plant if you clean the coal before selling it. Eitc This applies even if you sell the coal for a delivered price. Eitc The f. Eitc o. Eitc b. Eitc mine or f. Eitc o. Eitc b. Eitc cleaning plant is the point at which you figure the number of tons sold for applying the applicable tonnage rate, and the point at which you figure the sale price for applying the 4. Eitc 4% rate. Eitc   The tax applies to the full amount of coal sold. Eitc However, the IRS allows a calculated reduction of the taxable weight of the coal for the weight of the moisture in excess of the coal's inherent moisture content. Eitc Include in the sale price any additional charge for a freeze-conditioning additive in figuring the tax. Eitc   Do not include in the sales price the excise tax imposed on coal. Eitc Coal used by the producer. Eitc   The tax on coal applies if the coal is used by the producer in other than a mining process. Eitc A mining process means the same for this purpose as for percentage depletion. Eitc For example, the tax does not apply if, before selling the coal, you break it, clean it, size it, or apply any other process considered mining under the rules for depletion. Eitc In this case, the tax applies only when you sell the coal. Eitc The tax does not apply to coal used as fuel in the coal drying process since it is considered to be used in a mining process. Eitc However, the tax does apply when you use the coal as fuel or as an ingredient in making coke since the coal is not used in a mining process. Eitc   You must use a constructive sale price to figure the tax under the 4. Eitc 4% rate if you use the coal in other than a mining process. Eitc Base your constructive sale price on sales of a like kind and grade of coal by you or other producers made f. Eitc o. Eitc b. Eitc mine or cleaning plant. Eitc Normally, you use the same constructive price used to figure your percentage depletion deduction. Eitc Blending. Eitc   If you blend surface-mined coal with underground-mined coal during the cleaning process, you must figure the excise tax on the sale of the blended, cleaned coal. Eitc Figure the tax separately for each type of coal in the blend. Eitc Base the tax on the amount of each type in the blend if you can determine the proportion of each type of coal contained in the final blend. Eitc Base the tax on the ratio of each type originally put into the cleaning process if you cannot determine the proportion of each type of coal in the blend. Eitc However, the tax is limited to 4. Eitc 4% of the sale price per ton of the blended coal. Eitc Exemption from tax. Eitc   The tax does not apply to sales of lignite and imported coal. Eitc The only other exemption from the tax on the sale of coal is for coal exported as discussed next. Eitc Exported. Eitc   The tax does not apply to the sale of coal if the coal is in the stream of export when sold by the producer and the coal is actually exported. Eitc   Coal is in the stream of export when sold by the producer if the sale is a step in the exportation of the coal to its ultimate destination in a foreign country. Eitc For example, coal is in the stream of export when: The coal is loaded on an export vessel and title is transferred from the producer to a foreign purchaser, or The producer sells the coal to an export broker in the United States under terms of a contract showing that the coal is to be shipped to a foreign country. Eitc   Proof of export includes any of the following items. Eitc A copy of the export bill of lading issued by the delivering carrier. Eitc A certificate signed by the export carrier's agent or representative showing actual exportation of the coal. Eitc A certificate of landing signed by a customs officer of the foreign country to which the coal is exported. Eitc If the foreign country does not have a customs administrator, a statement of the foreign consignee showing receipt of the coal. Eitc Taxable Tires Taxable tires are divided into three categories for reporting and figuring the tax as described below. Eitc A tax is imposed on taxable tires sold by the manufacturer, producer, or importer at the rate of $. Eitc 0945 ($. Eitc 04725 in the case of a biasply tire or super single tire) for each 10 pounds of the maximum rated load capacity over 3,500 pounds. Eitc The three categories for reporting the tax and the tax rate are listed below. Eitc Taxable tires other than biasply or super single tires at $. Eitc 0945. Eitc Taxable tires, biasply or super single tires (other than super single tires designed for steering) at $. Eitc 04725. Eitc Taxable tires, super single tires designed for steering at $. Eitc 0945. Eitc A taxable tire is any tire of the type used on highway vehicles if wholly or partially made of rubber and if marked according to federal regulations for highway use. Eitc A biasply tire is a pneumatic tire on which the ply cords that extend to the beads are laid at alternate angles substantially less than 90 degrees to the centerline of the tread. Eitc A super single tire is a tire greater than 13 inches in cross section width designed to replace 2 tires in a dual fitment. Eitc Special rule, manufacturer's retail stores. Eitc   The excise tax on taxable tires is imposed at the time the taxable tires are delivered to the manufacturer-owned retail stores, not at the time of sale. Eitc Tires on imported articles. Eitc   The importer of an article equipped with taxable tires is treated as the manufacturer of the tires and is liable for the taxable tire excise tax when the article is sold (except in the case of an automobile bus chassis or body with tires). Eitc Tires exempt from tax. Eitc   The tax on taxable tires does not apply to the following items. Eitc Domestically recapped or retreaded tires if the tires have been sold previously in the United States and were taxable tires at the time of sale. Eitc Tire carcasses not suitable for commercial use. Eitc Tires for use on qualifying intercity, local, and school buses. Eitc For tax-free treatment, the registration requirements discussed earlier under Requirements for Exempt Sales apply. Eitc Tires sold for the exclusive use of the Department of Defense or the Coast Guard. Eitc Tires of a type used exclusively on mobile machinery. Eitc A taxable tire used on mobile machinery is not exempt from tax. Eitc Qualifying intercity or local bus. Eitc   This is any bus used mainly (more than 50%) to transport the general public for a fee and that either operates on a schedule along regular routes or seats at least 20 adults (excluding the driver). Eitc Qualifying school bus. Eitc   This is any bus substantially all the use (85% or more) of which is to transport students and employees of schools. Eitc Credit or refund. Eitc   A credit or refund (without interest) is allowable on tax-paid tires if the tires have been: Exported; Sold to a state or local government for its exclusive use; Sold to a nonprofit educational organization for its exclusive use (as defined under Communications Tax in chapter 4); Sold to a qualified blood collector organization (as defined under Communications Tax in chapter 4) for its exclusive use in connection with a vehicle the organization certifies will be primarily used in the collection, storage, or transportation of blood; Used or sold for use as supplies for vessels; or Sold in connection with qualified intercity, local, or school buses. Eitc   Also, a credit or refund (without interest) is allowable on tax-paid tires sold by any person on, or in connection with, any other article that is sold or used in an activity listed above. Eitc   The person who paid the tax is eligible to make the claim. Eitc Gas Guzzler Tax Tax is imposed on the sale by the manufacturer of automobiles of a model type that has a fuel economy standard as measured by the Environmental Protection Agency (EPA) of less than 22. Eitc 5 miles per gallon. Eitc If you import an automobile for personal use, you may be liable for this tax. Eitc Figure the tax on Form 6197, as discussed later. Eitc The tax rate is based on fuel economy rating. Eitc The tax rates for the gas guzzler tax are shown on Form 6197. Eitc A person that lengthens an existing automobile is the manufacturer of an automobile. Eitc Automobiles. Eitc   An automobile (including limousines) means any four-wheeled vehicle that is: Rated at an unloaded gross vehicle weight of 6,000 pounds or less, Propelled by an engine powered by gasoline or diesel fuel, and Intended for use mainly on public streets, roads, and highways. Eitc Vehicles not subject to tax. Eitc   For the gas guzzler tax, the following vehicles are not considered automobiles. Eitc Limousines with a gross unloaded vehicle weight of more than 6,000 pounds. Eitc Vehicles operated exclusively on a rail or rails. Eitc Vehicles sold for use and used primarily: As ambulances or combination ambulance-hearses, For police or other law enforcement purposes by federal, state, or local governments, or For firefighting purposes. Eitc Vehicles treated under 49 U. Eitc S. Eitc C. Eitc 32901 (1978) as non-passenger automobiles. Eitc This includes limousines manufactured primarily to transport more than 10 persons. Eitc   The manufacturer can sell a vehicle described in item (3) tax free only when the sale is made directly to a purchaser for the described emergency use and the manufacturer and purchaser (other than a state or local government) are registered. Eitc   Treat an Indian tribal government as a state only if the police or other law enforcement purposes are an essential tribal government function. Eitc Model type. Eitc   Model type is a particular class of automobile as determined by EPA regulations. Eitc Fuel economy. Eitc   Fuel economy is the average number of miles an automobile travels on a gallon of gasoline (or diesel fuel) rounded to the nearest 0. Eitc 1 mile as figured by the EPA. Eitc Imported automobiles. Eitc   The tax also applies to automobiles that do not have a prototype-based fuel economy rating assigned by the EPA. Eitc An automobile imported into the United States without a certificate of conformity to United States emission standards and that has no assigned fuel economy rating must be either: Converted by installation of emission controls to conform in all material respects to an automobile already certified for sale in the United States, or Modified by installation of emission control components and individually tested to demonstrate emission compliance. Eitc   An imported automobile that has been converted to conform to an automobile already certified for sale in the United States may use the fuel economy rating assigned to that certified automobile. Eitc   A fuel economy rating is not generally available for modified imported automobiles because the EPA does not require a highway fuel economy test on them. Eitc A separate highway fuel economy test would be required to devise a fuel economy rating (otherwise the automobile is presumed to fall within the lowest fuel economy rating category). Eitc   For more information about fuel economy ratings for imported automobiles, see Revenue Ruling 86-20 and Revenue Procedure 86-9 in Cumulative Bulletin 1986-1, and Revenue Procedure 87-10 in Cumulative Bulletin 1987-1. Eitc Exemptions. Eitc   No one is exempt from the gas guzzler tax, including the federal government, state and local governments, qualified blood collector organizations, and nonprofit educational organizations. Eitc However, see Vehicles not subject to tax, earlier. Eitc Form 6197. Eitc   Use Form 6197 to figure your tax liability for each quarter. Eitc Attach Form 6197 to your Form 720 for the quarter. Eitc See the Form 6197 instructions for more information and the one-time filing rules. Eitc Credit or refund. Eitc   If the manufacturer paid the tax on a vehicle that is used or resold for an emergency use (see item (3) under Vehicles not subject to tax), the manufacturer can claim a credit or refund. Eitc For information about how to file for credits or refunds, see the Instructions for Form 720 or Form 8849. Eitc Vaccines Tax is imposed on certain vaccines sold by the manufacturer in the United States. Eitc A taxable vaccine means any of the following vaccines. Eitc Any vaccine containing diphtheria toxoid. Eitc Any vaccine containing tetanus toxoid. Eitc Any vaccine containing pertussis bacteria, extracted or partial cell bacteria, or specific pertussis antigens. Eitc Any vaccine containing polio virus. Eitc Any vaccine against measles. Eitc Any vaccine against mumps. Eitc Any vaccine against rubella. Eitc Any vaccine against hepatitis A. Eitc Any vaccine against hepatitis B. Eitc Any vaccine against chicken pox. Eitc Any vaccine against rotavirus gastroenteritis. Eitc Any HIB vaccine. Eitc Any conjugate vaccine against streptococcus pneumoniae. Eitc Any trivalent vaccine against influenza or any other vaccine against influenza. Eitc Any meningococcal vaccine. Eitc Any vaccine against the human papillomavirus. Eitc The effective date for the tax on any vaccine against influenza, other than trivalent influenza vaccines, is the later of August 1, 2013, or the date the Secretary of Health and Human Services lists a vaccine against seasonal influenza for purposes of compensation for any vaccine-related injury or death through the Vaccine Injury Compensation Trust Fund. Eitc The tax is $. Eitc 75 per dose of each taxable vaccine. Eitc The tax per dose on a vaccine that contains more than one taxable vaccine is $. Eitc 75 times the number of taxable vaccines. Eitc Taxable use. Eitc   Any manufacturer (including a governmental entity) that uses a taxable vaccine before it is sold will be liable for the tax in the same manner as if the vaccine was sold by the manufacturer. Eitc Credit or refund. Eitc   A credit or refund (without interest) is available if the vaccine is: Returned to the person who paid the tax (other than for resale), or Destroyed. Eitc The claim for a credit or refund must be filed within 6 months after the vaccine is returned or destroyed. Eitc Conditions to allowance. Eitc   To claim a credit or refund, the person who paid the tax must have repaid or agreed to repay the tax to the ultimate purchaser of the vaccine or obtained the written consent of such purchaser to allowance of the credit or refund. Eitc Taxable Medical Devices Taxable medical devices. Eitc   The tax on the sale of certain medical devices by the manufacturer, producer, or importer of the device is 2. Eitc 3% (. Eitc 023) of the sales price. Eitc A taxable medical device is a device that is listed as a device with the Food and Drug Administration (FDA) under section 510(j) of the Federal Food, Drug, and Cosmetic Act and 21 CFR part 807, pursuant to FDA requirements. Eitc There are specific exemptions for eyeglasses, contact lenses, and hearing aids. Eitc There is also an exemption for devices that are determined by the Secretary to be of a type that are generally purchased by the general public at retail for individual use (this exemption is known as the retail exemption). Eitc See T. Eitc D. Eitc 9604 for information on how to determine whether a device falls within the retail exemption, and examples of how a taxpayer might evaluate a given device. Eitc More information. Eitc   For more information on the medical device tax, see section 4191, T. Eitc D. Eitc 9604, and Notice 2012-77. Eitc You can find T. Eitc D. Eitc 9604 and Notice 2012-77 on pages 730 and 781, respectively, of I. Eitc R. Eitc B. Eitc 2012-52 at www. Eitc irs. Eitc gov/pub/irs-irbs/irb12-52. Eitc pdf. Eitc Prev  Up  Next   Home   More Online Publications
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Eitc 7. Eitc   Filing Information Table of Contents Introduction Topics - This chapter discusses: Useful Items - You may want to see: What, When, and Where To FileResident Aliens Nonresident Aliens Amended Returns and Claims for Refund Other Forms You May Have To File PenaltiesCivil Penalties Criminal Penalties Introduction This chapter provides the basic filing information that you may need. Eitc Topics - This chapter discusses: Forms aliens must file, When and where to file, Penalties, and Amended returns and claims for refund. Eitc Useful Items - You may want to see: Forms (and Instructions) 1040 U. Eitc S. Eitc Individual Income Tax Return 1040A U. Eitc S. Eitc Individual Income Tax Return 1040EZ Income Tax Return for Single and Joint Filers With No Dependents 1040NR U. Eitc S. Eitc Nonresident Alien Income Tax Return 1040NR-EZ U. Eitc S. Eitc Income Tax Return for Certain Nonresident Aliens With No Dependents See chapter 12 for information about getting these forms. Eitc What, When, and Where To File What return you must file as well as when and where you file that return, depends on your status at the end of the tax year as a resident or a nonresident alien. Eitc Resident Aliens Resident aliens should file Form 1040EZ, 1040A, or 1040 at the address shown in the instructions for that form. Eitc The due date for filing the return and paying any tax due is April 15 of the year following the year for which you are filing a return (but see the Tip, later). Eitc Under U. Eitc S. Eitc immigration law, a lawful permanent resident who is required to file a tax return as a resident and fails to do so may be regarded as having abandoned status and may lose permanent resident status. Eitc Extensions of time to file. Eitc   You are allowed an automatic extension to June 15 to file if your main place of business and the home you live in are outside the United States and Puerto Rico on April 15. Eitc You can get an extension of time to October 15 to file your return if you get an extension by April 15 (June 15 if you qualify for the June 15 extension). Eitc Use Form 4868 to get the extension to October 15. Eitc In addition to this 6-month extension, taxpayers who are out of the country (as defined in the Form 4868 instructions) can request a discretionary 2-month additional extension of time to file their returns (to December 15 for calendar year taxpayers). Eitc To request this extension, you must send the IRS a letter explaining the reasons why you need the additional 2 months. Eitc Send the letter by the extended due date (October 15 for calendar year taxpayers) to the following address:  Department of the Treasury Internal Revenue Service Center Austin, TX 73301-0215   You will not receive any notification from the IRS unless your request is denied for being untimely. Eitc   The discretionary 2-month additional extension is not available to taxpayers who have an approved extension of time to file on Form 2350 (for U. Eitc S. Eitc citizens and resident aliens abroad who expect to qualify for special tax treatment). Eitc    If the due date for filing falls on a Saturday, Sunday, or legal holiday, the due date is the next day which is not a Saturday, Sunday, or legal holiday. Eitc You may be able to file your return electronically. Eitc See IRS e-file in your form instructions. Eitc Nonresident Aliens Nonresident aliens who are required to file an income tax return should use Form 1040NR or, if qualified, Form 1040NR-EZ. Eitc If you are any of the following, you must file a return. Eitc A nonresident alien individual engaged or considered to be engaged in a trade or business in the United States during 2013. Eitc (But see Exceptions , later. Eitc ) You must file even if: Your income did not come from a trade or business conducted in the United States, You have no income from U. Eitc S. Eitc sources, or Your income is exempt from income tax. Eitc A nonresident alien individual not engaged in a trade or business in the United States with U. Eitc S. Eitc income on which the tax liability was not satisfied by the withholding of tax at the source. Eitc A representative or agent responsible for filing the return of an individual described in (1) or (2). Eitc A fiduciary for a nonresident alien estate or trust. Eitc You must also file if you want to: Claim a refund of overwithheld or overpaid tax, or Claim the benefit of any deductions or credits. Eitc For example, if you have no U. Eitc S. Eitc business activities but have income from real property that you choose to treat as effectively connected income (discussed in chapter 4), you must timely file a true and accurate return to take any allowable deductions against that income. Eitc For information on what is timely, see When to file for deductions and credits under When To File, later. Eitc Exceptions. Eitc   You do not need to file Form 1040NR or Form 1040NR-EZ if you meet either of the following conditions. Eitc Your only U. Eitc S. Eitc trade or business was the performance of personal services, and Your wages were less than $3,900, and You have no other need to file a return to claim a refund of overwithheld taxes, to satisfy additional withholding at source, or to claim income exempt or partly exempt by treaty. Eitc You were a nonresident alien student, teacher, or trainee who was temporarily present in the United States under an “F,” “J,” “M,” or “Q” visa and you have no income that is subject to tax, such as wages, tips, scholarship and fellowship grants, dividends, etc. Eitc Even if you have left the United States and filed a Form 1040-C, U. Eitc S. Eitc Departing Alien Income Tax Return, on departure, you still must file an annual U. Eitc S. Eitc income tax return. Eitc If you are married and both you and your spouse are required to file, you must each file a separate return. Eitc Form 1040NR-EZ You can use Form 1040NR-EZ if all of the following conditions are met. Eitc You do not claim any dependents. Eitc You cannot be claimed as a dependent on someone else's U. Eitc S. Eitc tax return. Eitc If you were married, you do not claim an exemption for your spouse. Eitc Your taxable income is less than $100,000. Eitc The only itemized deduction you can claim is for state and local income taxes. Eitc Note. Eitc Residents of India who were students or business apprentices may be able to take the standard deduction instead of the itemized deduction for state and local income taxes. Eitc See chapter 5. Eitc Your only U. Eitc S. Eitc source income is from wages, salaries, tips, taxable refunds of state and local income taxes, scholarship or fellowship grants, and nontaxable interest or dividends. Eitc (If you had taxable interest or dividend income, you cannot use this form. Eitc ) You are not claiming any adjustments to income other than the student loan interest deduction or scholarship and fellowship grants excluded. Eitc You are not claiming any tax credits. Eitc This is not an “expatriation return. Eitc ” See Expatriation Tax in chapter 4. Eitc The only taxes you owe are: The income tax from the Tax Table. Eitc The social security and Medicare tax from Form 4137 or Form 8919. Eitc You are not claiming a credit for excess social security and tier 1 RRTA tax withheld. Eitc You are not filing Form 8959, to figure the amount of Additional Medicare Tax you owe and/or the amount of Additional Medicare Tax withheld by your employer, if any. Eitc If you do not meet all of the above conditions, you must file Form 1040NR. Eitc When To File If you are an employee and you receive wages subject to U. Eitc S. Eitc income tax withholding, you will generally file by the 15th day of the 4th month after your tax year ends. Eitc For the 2013 calendar year, file your return by April 15, 2014. Eitc If you are not an employee who receives wages subject to U. Eitc S. Eitc income tax withholding, you must file by the 15th day of the 6th month after your tax year ends. Eitc For the 2013 calendar year, file your return by June 16, 2014 (because June 15 is a Sunday. Eitc ) Extensions of time to file. Eitc   If you cannot file your return by the due date, file Form 4868 or use one of the electronic filing options explained in the Form 4868 instructions. Eitc For the 2013 calendar year, this will extend the due date to October 15, 2014 (December 15, 2014, if the regular due date of your return is June 16, 2014). Eitc You must file the extension by the regular due date of your return. Eitc   In addition to the 6-month extension to October 15, taxpayers whose main place of business is outside the United States and Puerto Rico and who live outside those jurisdictions can request a discretionary 2-month extension of time to file their returns (to December 15 for calendar year taxpayers). Eitc To request this extension, you must send the IRS a letter explaining the reasons why you need the additional 2 months. Eitc Send the letter by the extended due date (October 15 for calendar year taxpayers) to the following address: Department of the Treasury Internal Revenue Service Center Austin, TX 73301-0215   You will not receive any notification from the IRS unless your request is denied for being untimely. Eitc When to file for deductions and credits. Eitc   To get the benefit of any allowable deductions or credits, you must timely file a true and accurate return. Eitc For this purpose, a return is timely if it is filed within 16 months of the due date just discussed. Eitc However, if you did not file a 2012 tax return and 2013 is not the first year for which you are required to file one, your 2013 return is timely for this purpose if it is filed by the earlier of: The date that is 16 months after the due date for filing your 2013 return, or The date the IRS notifies you that your 2013 return has not been filed and that you cannot claim certain deductions and credits. Eitc The allowance of the following credits is not affected by this time requirement. Eitc Credit for withheld taxes. Eitc Credit for excise tax on certain uses of gasoline and special fuels. Eitc Credit for tax paid by a mutual fund (or other regulated investment company) or a real estate investment trust on undistributed long-term capital gains. Eitc Protective return. Eitc   If your activities in the United States were limited and you do not believe that you had any gross income effectively connected with a U. Eitc S. Eitc trade or business during the year, you can file a protective return (Form 1040NR) by the deadline explained above. Eitc By filing a protective return, you protect your right to receive the benefit of deductions and credits in the event it is later determined that some or all of your income is effectively connected. Eitc You are not required to report any effectively connected income or any deductions on the protective return, but you must give the reason the return is being filed. Eitc   If you believe some of your activities resulted in effectively connected income, file your return reporting that income and related deductions by the regular due date. Eitc To protect your right to claim deductions or credits resulting from other activities, attach a statement to that return explaining that you wish to protect your right to claim deductions and credits if it is later determined that the other activities produced effectively connected income. Eitc   You can follow the same procedure if you believe you have no U. Eitc S. Eitc tax liability because of a U. Eitc S. Eitc tax treaty. Eitc Be sure to also complete item L on page 5 of Form 1040NR. Eitc Waiver of filing deadline. Eitc   The IRS may waive the filing deadline if you establish that, based on the facts and circumstances, you acted reasonably and in good faith in failing to file a U. Eitc S. Eitc income tax return (including a protective return) and you cooperate with the IRS in determining your U. Eitc S. Eitc income tax liability for the tax year for which you did not file a return. Eitc Where To File If you are not enclosing a payment, file Form 1040NR-EZ and Form 1040NR at the following address. Eitc  Department of the Treasury Internal Revenue Service Center Austin, TX 73301-0215 If enclosing a payment, mail your return to:  Internal Revenue Service  P. Eitc O. Eitc Box 1303 Charlotte, NC 28201-1303 Aliens from the U. Eitc S. Eitc Virgin Islands. Eitc    If you are a bona fide resident of the U. Eitc S. Eitc Virgin Islands during your entire tax year and work temporarily in the United States, you must pay your income taxes to the U. Eitc S. Eitc Virgin Islands and file your income tax returns at the following address. Eitc Virgin Islands Bureau of Internal Revenue 6115 Estate Smith Bay Suite 225 St. Eitc Thomas, VI 00802   Report all income from U. Eitc S. Eitc sources, as well as income from other sources, on your return. Eitc For information on filing U. Eitc S. Eitc Virgin Islands returns, contact the U. Eitc S. Eitc Virgin Islands Bureau of Internal Revenue. Eitc   Chapter 8 discusses withholding from U. Eitc S. Eitc wages of U. Eitc S. Eitc Virgin Islanders. Eitc Aliens from Guam or the Commonwealth of the Northern Mariana Islands. Eitc   If you are a bona fide resident of Guam or the Commonwealth of the Northern Mariana Islands (CNMI) during your entire tax year, you must file your return with, and pay any tax due to, Guam or the CNMI. Eitc Report all income, including income from U. Eitc S. Eitc sources, on your return. Eitc It is not necessary to file a separate U. Eitc S. Eitc income tax return. Eitc    Bona fide residents of Guam should file their Guam returns at the following address. Eitc   Department of Revenue and Taxation Government of Guam P. Eitc O. Eitc Box 23607 GMF, GU 96921    Bona fide residents of the CNMI should file their CNMI income tax returns at the following address. Eitc   Department of Finance Division of Revenue and Taxation Commonwealth of the Northern Mariana Islands P. Eitc O. Eitc Box 5234 CHRB Saipan, MP 96950   If you are not a bona fide resident of Guam or the CNMI, see Pub. Eitc 570, Tax Guide for Individuals With Income From U. Eitc S. Eitc Possessions, for information on where to file your return. Eitc Amended Returns and Claims for Refund If you find changes in your income, deductions, or credits after you mail your return, file Form 1040X, Amended U. Eitc S. Eitc Individual Income Tax Return. Eitc Also use Form 1040X if you should have filed Form 1040, 1040A, or 1040EZ instead of Form 1040NR or 1040NR-EZ, or vice versa. Eitc If you amend Form 1040NR or Form 1040NR-EZ or file the correct return, attach the corrected return (Form 1040, Form 1040NR, etc. Eitc ) to Form 1040X. Eitc Print “Amended” across the top. Eitc Ordinarily, an amended return claiming a refund must be filed within 3 years from the date your return was filed or within 2 years from the time the tax was paid, whichever is later. Eitc A return filed before the final due date is considered to have been filed on the due date. Eitc Other Forms You May Have To File You may be required to file information returns to report certain foreign income or assets, or monetary transactions. Eitc FinCen Form 105 FinCEN Form 105 (formerly Customs Form 4790), Report of International Transportation of Currency or Monetary Instruments, must be filed by each person who physically transports, mails, or ships, or causes to be physically transported, mailed, or shipped, currency or other monetary instruments in a total amount of more than $10,000 at one time from the United States to any place outside the United States, or into the United States from any place outside the United States. Eitc The filing requirement also applies to each person who receives in the United States currency or monetary instruments totaling more than $10,000 at one time from any place outside of the United States. Eitc The term “monetary instruments” means the following: Coin and currency of the United States or of any other country, Travelers' checks in any form, Investment securities or stock in bearer form or otherwise in such form that title to them passes upon delivery, Negotiable instruments (including checks, promissory notes, and money orders) in bearer form, endorsed without restriction, made out to a fictitious payee, or otherwise in such form that title to them passes upon delivery, and Checks, promissory notes, and money orders which are signed but on which the name of the payee has been omitted. Eitc However, the term does not include: Checks or money orders made payable to the order of a named person which have not been endorsed or which contain restrictive endorsements, Warehouse receipts, or Bills of lading. Eitc A transfer of funds through normal banking procedures (wire transfer) that does not involve the physical transportation of currency or monetary instruments is not required to be reported on FinCEN Form 105. Eitc Filing requirements. Eitc   FinCEN Form 105 filing requirements follow. Eitc Recipients. Eitc   Each person who receives currency or other monetary instruments in the United States must file FinCEN Form 105 within 15 days after receipt, with the Customs officer in charge at any port of entry or departure, or by mail at the following address. Eitc Commissioner of Customs  Attention: Currency Transportation Reports Washington, DC 20229 Shippers or mailers. Eitc   If the currency or other monetary instrument does not accompany the person entering or departing the United States, FinCEN Form 105 can be filed by mail at the above address on or before the date of entry, departure, mailing, or shipping. Eitc Travelers. Eitc   Travelers must file FinCEN Form 105 with the Customs officer in charge at any Customs port of entry or departure, when entering or departing the United States. Eitc Penalties. Eitc   Civil and criminal penalties are provided for failing to file a report, filing a report containing material omissions or misstatements, or filing a false or fraudulent report. Eitc Also, the entire amount of the currency or monetary instrument may be subject to seizure and forfeiture. Eitc More information. Eitc   More information regarding the filing of FinCEN Form 105 can be found in the instructions on the back of the form. Eitc Form 8938 You may have to file Form 8938, Statement of Specified Foreign Financial Assets, to report the ownership of specified foreign financial asset(s) if you are one of the following individuals. Eitc A resident alien of the United States for any part of the tax year. Eitc A resident alien of the United States who elects to be treated as a resident of a foreign country under the provisions of a U. Eitc S. Eitc income tax treaty. Eitc See Effect of Tax Treaties in chapter 1. Eitc A nonresident alien who makes an election to be treated as a resident alien for purposes of filing a joint income tax return. Eitc See chapter 1 for information about this election. Eitc A nonresident alien who is a bona fide resident of American Samoa or Puerto Rico. Eitc See Publication 570, Tax Guide for Individuals With Income From U. Eitc S. Eitc Possessions, for a definition of bona fide resident. Eitc You must file Form 8938 if the total value of those assets exceeds an applicable threshold (the “reporting threshold”). Eitc The reporting threshold varies depending on whether you live in the United States, are married, or file a joint income tax return with your spouse. Eitc Specified foreign financial assets include any financial account maintained by a foreign financial institution and, to the extent held for investment, any stock, securities, or any other interest in a foreign entity and any financial instrument or contract with an issuer or counterparty that is not a U. Eitc S. Eitc person. Eitc You may have to pay penalties if you are required to file Form 8938 and fail to do so, or if you have an understatement of tax due to any transaction involving an undisclosed foreign financial asset. Eitc More information about the filing of Form 8938 can be found in the separate instructions for Form 8938. Eitc Penalties The law provides penalties for failure to file returns or pay taxes as required. Eitc Civil Penalties If you do not file your return and pay your tax by the due date, you may have to pay a penalty. Eitc You may also have to pay a penalty if you substantially understate your tax, file a frivolous tax submission, or fail to supply your taxpayer identification number. Eitc If you provide fraudulent information on your return, you may have to pay a civil fraud penalty. Eitc Filing late. Eitc   If you do not file your return by the due date (including extensions), you may have to pay a failure-to-file penalty. Eitc The penalty is based on the tax not paid by the due date (without regard to extensions). Eitc The penalty is usually 5% for each month or part of a month that a return is late, but not more than 25%. Eitc Fraud. Eitc   If your failure to file is due to fraud, the penalty is 15% for each month or part of a month that your return is late, up to a maximum of 75%. Eitc Return over 60 days late. Eitc   If you file your return more than 60 days after the due date or extended due date, the minimum penalty is the smaller of $135 or 100% of the unpaid tax. Eitc Exception. Eitc   You will not have to pay the penalty if you show that you failed to file on time because of reasonable cause and not because of willful neglect. Eitc Paying tax late. Eitc   You will have to pay a failure-to-pay penalty of ½ of 1% (. Eitc 50%) of your unpaid taxes for each month, or part of a month, after the due date that the tax is not paid. Eitc This penalty does not apply during the automatic 6-month extension of time to file period, if you paid at least 90% of your actual tax liability on or before the due date of your return and pay the balance when you file the return. Eitc   The monthly rate of the failure-to-pay penalty is half the usual rate (. Eitc 25% instead of . Eitc 50%) if an installment agreement is in effect for that month. Eitc You must have filed your return by the due date (including extensions) to qualify for this reduced penalty. Eitc   If a notice of intent to levy is issued, the rate will increase to 1% at the start of the first month beginning at least 10 days after the day that the notice is issued. Eitc If a notice and demand for immediate payment is issued, the rate will increase to 1% at the start of the first month beginning after the day that the notice and demand is issued. Eitc   This penalty cannot be more than 25% of your unpaid tax. Eitc You will not have to pay the penalty if you can show that you had a good reason for not paying your tax on time. Eitc Combined penalties. Eitc   If both the failure-to-file penalty and the failure-to-pay penalty (discussed earlier) apply in any month, the 5% (or 15%) failure-to-file penalty is reduced by the failure-to-pay penalty. Eitc However, if you file your return more than 60 days after the due date or extended due date, the minimum penalty is the smaller of $135 or 100% of the unpaid tax. Eitc Accuracy-related penalty. Eitc   You may have to pay an accuracy-related penalty if you underpay your tax because: You show negligence or disregard of rules or regulations, You substantially understate your income tax, You claim tax benefits for a transaction that lacks economic substance, or You fail to disclose a foreign financial asset. Eitc The penalty is equal to 20% of the underpayment. Eitc The penalty is 40% of any portion of the underpayment that is attributable to an undisclosed noneconomic substance transaction or an undisclosed foreign financial asset transaction. Eitc The penalty will not be figured on any part of an underpayment on which the fraud penalty (discussed later) is charged. Eitc Negligence or disregard. Eitc   The term “negligence” includes a failure to make a reasonable attempt to comply with the tax law or to exercise ordinary and reasonable care in preparing a return. Eitc Negligence also includes failure to keep adequate books and records. Eitc You will not have to pay a negligence penalty if you have a reasonable basis for a position you took. Eitc   The term “disregard” includes any careless, reckless, or intentional disregard. Eitc Adequate disclosure. Eitc   You can avoid the penalty for disregard of rules or regulations if you adequately disclose on your return a position that has at least a reasonable basis. Eitc See Disclosure statement , later. Eitc   This exception will not apply to an item that is attributable to a tax shelter. Eitc In addition, it will not apply if you fail to keep adequate books and records, or substantiate items properly. Eitc Substantial understatement of income tax. Eitc   You understate your tax if the tax shown on your return is less than the correct tax. Eitc The understatement is substantial if it is more than the larger of 10% of the correct tax or $5,000. Eitc However, the amount of the understatement is reduced to the extent the understatement is due to: Substantial authority, or Adequate disclosure and a reasonable basis. Eitc   If an item on your return is attributable to a tax shelter, there is no reduction for an adequate disclosure. Eitc However, there is a reduction for a position with substantial authority, but only if you reasonably believed that your tax treatment was more likely than not the proper treatment. Eitc Substantial authority. Eitc   Whether there is or was substantial authority for the tax treatment of an item depends on the facts and circumstances. Eitc Consideration will be given to court opinions, Treasury regulations, revenue rulings, revenue procedures, and notices and announcements issued by the IRS and published in the Internal Revenue Bulletin that involve the same or similar circumstances as yours. Eitc Disclosure statement. Eitc   To adequately disclose the relevant facts about your tax treatment of an item, use Form 8275, Disclosure Statement. Eitc You must also have a reasonable basis for treating the item the way you did. Eitc   In cases of substantial understatement only, items that meet the requirements of Revenue Procedure 2012-51, 2012-51 IRB 719 (or later update) are considered adequately disclosed on your return without filing Form 8275. Eitc   Use Form 8275-R, Regulation Disclosure Statement, to disclose items or positions contrary to regulations. Eitc Transaction lacking economic substance. Eitc   For more information on economic substance, see section 7701(o). Eitc Foreign financial asset. Eitc   For more information on undisclosed foreign financial assets, see section 6662(j) or the Instructions for Form 8938. Eitc Reasonable cause. Eitc   You will not have to pay a penalty if you show a good reason (reasonable cause) for the way you treated an item. Eitc You must also show that you acted in good faith. Eitc This does not apply to a transaction that lacks economic substance. Eitc Filing erroneous claim for refund or credit. Eitc   You may have to pay a penalty if you file an erroneous claim for refund or credit. Eitc The penalty is equal to 20% of the disallowed amount of the claim, unless you can show a reasonable basis for the way you treated an item. Eitc However, any disallowed amount due to a transaction that lacks economic substance will not be treated as having a reasonable basis. Eitc The penalty will not be figured on any part of the disallowed amount of the claim that relates to the earned income credit or on which the accuracy-related or fraud penalties are charged. Eitc Frivolous tax submission. Eitc   You may have to pay a penalty of $5,000 if you file a frivolous tax return or other frivolous submissions. Eitc A frivolous tax return is one that does not include enough information to figure the correct tax or that contains information clearly showing that the tax you reported is substantially incorrect. Eitc For more information on frivolous returns, frivolous submissions, and a list of positions that are identified as frivolous, see Notice 2010-33, 2010-17 IRB 609 available at www. Eitc irs. Eitc gov/irb/2010-17_irb/ar13. Eitc html. Eitc   You will have to pay the penalty if you filed this kind of return or submission based on a frivolous position or a desire to delay or interfere with the administration of federal tax laws. Eitc This includes altering or striking out the preprinted language above the space provided for your signature. Eitc   This penalty is added to any other penalty provided by law. Eitc Fraud. Eitc   If there is any underpayment of tax on your return due to fraud, a penalty of 75% of the underpayment due to fraud will be added to your tax. Eitc Failure to supply taxpayer identification number. Eitc   If you do not include your social security number (SSN) or individual taxpayer identification number (ITIN) or the SSN or ITIN of another person where required on a return, statement, or other document, you will be subject to a penalty of $50 for each failure. Eitc You will also be subject to a penalty of $50 if you do not give your SSN or ITIN to another person when it is required on a return, statement, or other document. Eitc   For example, if you have a bank account that earns interest, you must give your SSN or ITIN to the bank. Eitc The number must be shown on the Form 1099-INT or other statement the bank sends you. Eitc If you do not give the bank your SSN or ITIN, you will be subject to the $50 penalty. Eitc (You also may be subject to “backup” withholding of income tax. Eitc )   You will not have to pay the penalty if you are able to show that the failure was due to reasonable cause and not willful neglect. Eitc Criminal Penalties You may be subject to criminal prosecution (brought to trial) for actions such as: Tax evasion, Willful failure to file a return, supply information, or pay any tax due, Fraud and false statements, or Preparing and filing a fraudulent return. Eitc Prev  Up  Next   Home   More Online Publications