The "Sporting Goods Excise Tax Modernization Act" clarifies that marketplace providers are responsible for excise taxes on certain imported sporting goods sold through their platforms.
Jimmy Panetta
Representative
CA-19
The "Sporting Goods Excise Tax Modernization Act" modifies excise tax regulations by treating marketplace providers as the importer and seller for excise tax purposes on taxable sporting goods sold through their platform if the goods are shipped from outside the U.S. This applies when the marketplace provider lists the product, collects payments, and the manufacturer is not the marketplace provider. The regulations will be applied to sales in calendar quarters starting 60 days after the enactment of this Act.
Marketplace Tax Shift: Online Platforms Now Responsible for Sporting Goods Excise Tax on Imports
The "Sporting Goods Excise Tax Modernization Act" changes who's on the hook for excise taxes when you buy certain sporting goods online from overseas. Instead of the purchaser potentially owing the tax, the marketplace provider—think big online retailers that host third-party sellers—will now be treated as the importer and seller for tax purposes. This means they're responsible for collecting and remitting the excise tax on these sales.
Making Online Marketplaces Accountable
This bill specifically targets sales where the marketplace provider lists the product, processes the payment, and the item ships from outside the U.S. The manufacturer also can't be the marketplace provider. Section 2 defines a "marketplace provider" as an entity that lists products for sale and collects/transmits payments. So, if you're buying, say, a fishing rod from a seller in another country through a major online platform, that platform is now responsible for the excise tax, not you.
For example a company like "Big River Sporting Goods", if it acts as a marketplace, listing fishing reels made and shipped from overseas, it would now be responsible for collecting and paying the excise tax. Before this bill, it's possible this tax wasn't being consistently collected on these types of sales.
Real-World Rollout and Potential Challenges
The new rule kicks in 60 days after the Act is enacted, applying to sales in the following calendar quarters (Section 2). The Treasury Secretary will issue regulations to clarify implementation, especially around situations where multiple related entities are involved (Section 2). One potential challenge is that some platforms might try to restructure to avoid being classified as a "marketplace provider." The bill also makes it clear that this change doesn't imply anything about who should have been considered the importer before this clarification (Section 2).
Leveling the Playing Field?
This shift could mean more consistent tax revenue for the government. It might also level the playing field for domestic sporting goods retailers and manufacturers who were potentially competing with untaxed imports sold through these online marketplaces. While this is a targeted change, it reflects a broader trend of tax authorities trying to adapt to the realities of e-commerce and global supply chains.