[Congressional Record Volume 149, Number 27 (Thursday, February 13, 2003)]
[Senate]
[Page S2471]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. BAUCUS (for himself and Mr. GRASSLEY):
  S. 396. A bill to amend the Internal Revenue Code of 1986 to exempt 
small manufacturers from the firearms excise tax; to the Committee on 
Finance.
  Mr. BAUCUS. Mr. President, I am pleased to introduce the Gunsmith 
Excise Tax Simplification Act of 2003. This bill will protect funding 
for the Federal Aid to Wildlife Restoration Fund by simplifying 
administration and compliance with the excise tax by eliminating the 
assessment of the tax against custom gunsmiths.
  The creation of the Federal Aid to Wildlife Restoration Fund is one 
of the great success stories of cooperation among America's sportsmen 
and women, state fish and wildlife agencies, and the sporting goods 
industry. Working together with Congress, Americans who enjoy the 
outdoors volunteered to pay an excise tax on sporting arms and 
ammunition to be used for hunter education programs, wildlife 
restoration, and habitat conservation.
  Under the tax code, all manufacturers of firearms must pay an excise 
tax of 10 percent or 11 percent of the retail price, depending on the 
type of firearm. For more than 25 years custom gunsmiths have sought to 
clarify that they were not intended to be subject to this tax. Many 
custom gunsmiths do not actually make new guns, rather they remodel or 
refurbish existing firearms. The proposal establishes an exemption from 
the excise tax for manufacturers of fewer than 50 firearms per year.
  This issue is important to individuals in Montana. Steven Dodd 
Hughes, a custom gunmaker in Livingston, MT, pays this tax. He has a 
sole proprietorship, a one man shop. Steven's business is generated 
from outside of Montana and brings in much needed revenue to his 
community. He agrees with the tax as it was intended, on manufacturers. 
It was not intended to be applied to one man operations such as his. 
The American Custom Gunmakers Guild and the NRA agree with Mr. Hughes.
  In summary, the Gunsmith Excise Tax Simplification Act of 2003 would 
accomplish two worthy objectives. First, this proposal will eliminate 
the assessment of the excise tax on custom gunmakers, which is fair. 
Second it eliminates the significant administrative burden placed on 
small businesses, such as determining who the manufacturer is and who 
is going to assess and collect the tax. These custom gunmakers rebuild 
and update the firearms, they don't administer tax laws. Last year, the 
Joint Committee on Taxation estimated the proposal will decrease 
revenues by less than $10 million over ten years, resulting in minimal 
reduction of the Federal Aid to Wildlife Restoration Fund.
  I ask unanimous consent that the text of my bill entitled ``The 
Gunsmith Excise Tax Simplification Act of 2003'' be printed in the 
Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                 S. 396

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Gunsmith Excise Tax 
     Simplification Act of 2003''.

     SEC. 2. CUSTOM GUNSMITHS.

       (a) Small Manufacturers Exempt From Firearms Excise Tax.--
     Section 4182 of the Internal Revenue Code of 1986 (relating 
     to exemptions) is amended by redesignating subsection (c) as 
     subsection (d) and by inserting after subsection (b) the 
     following new subsection:
       ``(c) Small Manufacturers, Etc.--
       ``(1) In general.--The tax imposed by section 4181 shall 
     not apply to any article described in such section if 
     manufactured, produced, or imported by a person who 
     manufactures, produces, and imports less than 50 of such 
     articles during the calendar year.
       ``(2) Controlled groups.--All persons treated as a single 
     employer for purposes of subsection (a) or (b) of section 52 
     shall be treated as one person for purposes of paragraph 
     (1).''.
       (b) Effective Date.--
       (1) In general.--The amendments made by this section shall 
     apply to articles sold by the manufacturer, producer, or 
     importer on or after the date which is the first day of the 
     month beginning at least 2 weeks after the date of the 
     enactment of this Act.
       (2) No inference.--Nothing in the amendments made by this 
     section shall be construed to create any inference with 
     respect to the proper tax treatment of any sales before the 
     effective date of such amendments.
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