Taxes and
Tax Rates for State Excise Tax
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Excise taxes are taxes
paid when purchases are made on a
specific good, such as gasoline. Excise taxes are often included in the
final price of products and services,
and are often hidden to consumers.
There are also excise
taxes on activities, such as on wagering
or on highway usage by trucks. Excise
Tax has several general excise tax
programs.
One of the major
components of the excise program is
motor fuel.
Excise taxes
are special taxes on specific goods or
activities—such as gasoline, tobacco or
gambling—rather than general tax bases
such as income or consumption.
Publication 510 (2010),
Excise
Taxes
An excise or excise tax
(sometimes called a duty of excise or a
special tax) may be defined broadly as
an inland tax on the production or sale
of a good produced within the country.
Excises are distinguished from customs
duties, which are taxes on importation.
Excises, whether broadly defined or
narrowly defined, are inland taxes,
whereas customs duties are border taxes.
An excise is an indirect tax, meaning
that the producer or seller who pays the
tax to the government is expected to try
to recover the tax by raising the price
paid by the buyer.
Excises are typically
imposed in addition to another indirect
tax such as a sales tax or Value Added
Tax (VAT).
A excise is distinguished
from a sales tax or VAT in three ways:
-
an excise typically
applies to a narrower range of
products
-
an excise is
typically heavier, accounting for
higher fractions (sometimes half or
more) of the retail prices of the
targeted products
-
an excise is
typically specific (so much per unit
of measure; e.g. so many cents per
gallon), whereas a sales tax or VAT
is ad valorem, proportional to value
(a percentage of the price in the
case of a sales tax, or of value
added in the case of a VAT).
Overall excise taxes account for less
than 10 percent of all federal receipts.
All 50 states and many
local municipalities levy excise taxes
of various kinds. Studies show excise
taxes are disproportionately borne by
low-income taxpayers, making them one of
the most regressive components of the
U.S. tax system.
State Excise Taxed Products and Rates
Registration for certain activities. You
are required to be registered for
certain excise tax activities, such as
blending of gasoline, diesel fuel, or
kerosene outside the bulk
transfer/terminal system. See the
instructions for Form 637 for the list
of activities for which you must
register.
Also see
Registration Requirements
under
Fuel
Taxes in chapter 1 for
information on registration for
activities related to fuel. Each
business unit that has, or is required
to have, a separate employer
identification number must be
registered.
To apply for registration,
complete Form 637 and provide the
information requested in its
instructions. If your application is
approved, you will receive a
Letter of
Registration showing the
activities for which you are registered,
the effective date of the registration,
and your registration number. A copy of
Form 637 is not a
Letter of
Registration.
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