Making and selling ammo without a license, legal?

[newdude]

Well, i have recently thought about selling some reloaded ammo, just to boost my income. I have been under the impression that i needed ATF approval and a ammunition manufactures licnese, but i was told recently by a knowledgable friend of mine that i need no such thing. Which way is it???

Thanks,

Neal

 

[TexasRifleman]

You need a license to make and sell ammo unless you already have one to manufacture firearms. It's a type 06 FFL.

27 CFR 178.41

You do NOT need a license to sell ammo made by someone else.

Type 06 - MANUFACTURER OF AMMUNITION FOR FIREARMS
other than ammunition for destructive devices or armor piercing ammunition. 18 U.S.C 923(a)(1)(C)
Fee: $30.00 for three (3) years. Application: ATF Form 7 (5310.12)

 

[newdude]

Sweet, i was under the impression that the fee was like $1k per year.


Thanks for the info TexasRifleman!

 

[TexasRifleman]

Sweet, i was under the impression that the fee was like $1k per year.

Doesn't seem to be, at least for the license itself. I dunno if there are other fees involved.

 

[steveno]

a LOT of insurance would be a good thing to have also

 

[TAB]

Not to mention I'm sure your state fire codes would also apply. Which could be no big deal, or could be a a real PITA.

 

[newdude]

a LOT of insurance would be a good thing to have also

Very true. Now i need to find a insurance company who covers this kind of stuff.....?

 

[Master Blaster]

The reason they want you to be licensed is to collect Uncle sam's share of your selling price, 14%, thats the federal excise tax on ammo IIRC. If you dont pay the tax you will be in violation of the law.

 

[newdude]

Wait, so on top of getting the license, i have to pay da man 14% of what i earn?!? Ouch!

 

[rcmodel]

It's collected under the Pittman-Robinson Act of 1937.

And it goes to a very good cause.

Wildlife management, habitat restoration, F&G law enforcement, etc.

rc

 

[A/C Guy]

You will wish it was only 14%

Wait, so on top of getting the license, i have to pay da man 14% of what i earn?!? Ouch!

You pay 14% excise tax first, then you pay estimated quarterly income tax on the profits. At the end of the year, you pay the balance of income tax due. If you underestimate your quarterly payments by more than 10%, than you pay penalties even though you file and pay on time. Since you are not a large corporation, you do not get to pay the 15% rate, you get to pay closer to 30%. So if you want to actually make money at this, figure that 50% of what you collect will go to the Feds. Adjust your selling price accordingly.

 

[mgkdrgn]

Wait, so on top of getting the license, i have to pay da man 14% of what i earn?!? Ouch!

No.

You have to pay 14% on the sales of the ammo as a tax on the ammo.

You have to pay income taxes (Federal, State, Local), self employment tax (15%), and medicare/medicade on what you "earn" (ie, your profit).

What ever is left after that (maybe 30%) is what you get to keep ... assuming you "earn" enough to cover your fixed costs to make anything at all.

Welcome to the brave new world of small business in America!

 

[wildbilll]

It would seem that you would be due a credit for any FET paid when the components required to assemble the ammunition. Otherwise, it would end up as a VAT, and we don't do that in the USA.
If you were making the components from scratch, obviously there is no FET already paid, but if you are purchasing pre-formed bullets, they may already have the tax priced in. Perhaps the license would allow you to purchase the components tax exempt.

 

[newdude]

You pay 14% excise tax first, then you pay estimated quarterly income tax on the profits. At the end of the year, you pay the balance of income tax due. If you underestimate your quarterly payments by more than 10%, than you pay penalties even though you file and pay on time

Okay, that is plain stupid. I wonder what they would say if i estimated my earnings at $5 and only sold 2 boxes of ammo.....

So if you want to actually make money at this, figure that 50% of what you collect will go to the Feds. Adjust your selling price accordingly.

Well, i have found that with DG ammo, i could make up to $50 per box, before fed stuff. So it should be fine with that, but if i make only .223.....huge ouch.

 

[Buck Snort]

"a LOT of insurance would be a good thing to have also"

You can say that again, and again, and again!!

 

[Buck Snort]

Hell, I don't even GIVE my reloads away!!

 

[1858rem]

i have found that with DG ammo, i could make up to $50 per box

what is DG ammo?