Generally speaking, the hunting and angling industries started as primarily U.S. based manufacturing where the manufacturer made the product and sold to a wholesaler. The wholesaler would then sell to a retailer who would put the product on the shelf and you (the consumer) would buy the product and put it to good use in the field or on the water. This fairly simple business model was used by the federal government to develop their excise tax collection model. This fairly simple collection model stated that the entity responsible for paying the excise tax was the manufacturer and the tax was computed on the price the manufacturer charged the wholesaler for the taxable product. The only twist to this simple but effective approach at applying the tax was related to the purpose of the tax. Since the tax was imposed to assist in the conservation of fish and wildlife resources in the U.S., taxable products that were shipped outside of the U.S. were exempt from the excise tax.

Over the next 50-70 years, about the only hiccup in the excise tax collection process dealt with taxable products that were manufactured outside of the U.S. and imported for use here. Because the business model for this situation was relatively simple, so was the modification to the excise tax collection model. The business model involved “importers” who purchased foreign-made taxable products and sold them to wholesalers. The excise tax collection model simply treated the importer as the manufacturer and the excise tax was calculated on the price the importer charged the wholesaler.

Late in the 20^th century, we started to see major shifts in industry business models. Global markets, more efficient shipping techniques, and the continued development of internet connectivity demanded that industries change their approach for getting product from the manufacturing facility to the consumer. Over the last 25 years, we have seen a sea-change in how the consumer now shops for, purchases, and receives hunting and angling equipment. For consumers, this is a great thing – it is easier to shop for their hunting and angling equipment and the products are often cheaper. For the federal agencies responsible for collecting the excise taxes, these changes have resulted in a myriad of tweaks to the excise tax collection model that look more like “band-aids” than true solutions.

Early on in this evolution of the hunting and angling equipment business model, there was always a U.S. based business entity situated between the manufacturer and the consumer and the corresponding alteration of the excise tax collection model simply focused on either modifying the methods for calculating the excise tax or shifting the responsibility down the supply chain. If a U.S. based manufacturer bypassed the wholesaler and sold directly to a retailer or to the consumer, then they could modify their sales price (for excise tax computation purposes) to mimic a price that they would have charged a wholesaler for that same product. If a retailer was bypassing an importer and buying directly from a foreign manufacturer, then they became the importer and were responsible for paying the excise tax based on their selling price for the taxable product.

In recent years, business models have evolved to the point that consumers now have the capability of dealing directly with foreign-based manufacturers or distributors and having their hunting and angling equipment delivered directly – without the involvement of a U.S. based business entity. Most recently, large internet-based sales companies (e.g. Amazon, Alibaba, etc.) have made the connection between consumers and foreign manufacturers even easier. Since the excise tax collection model can only be applied to entities that have a presence in the U.S., these recent changes in industry business models has created a situation where the consumer is responsible for paying the tax.

By shifting the responsibility for paying the excise tax to the consumer, the industry has effectively eliminated the potential for the excise tax collection agencies to collect the tax. A consumer who buys a taxable product from a foreign entity or one of the big internet sellers for $50 is now responsible for paying roughly $5 in excise taxes. We can’t realistically expect the collection agency to monitor excise tax payments at this micro level. This evolution of the industry business model is now at a point where band-aid alterations to the excise tax collection model are no longer working.