What is the purpose of a CSP?
Since your FAET liability is based on the wholesale price of your article, the Internal Revenue Code established the concept of a CSP to ensure tax fairness. For example, when you sell an article at retail or on consignment, your retail sale price will usually be higher than your wholesale price. The Internal Revenue Code permits you to use a CSP so you can establish a sale price for your article that is comparable to your wholesale price. However, when you sell an article not at arm’s length and less than fair market value, your sale price will usually be lower than if you had sold the article at arm’s length and fair market value. In this instance, the Internal Revenue Code requires you to base your FAET on an increased sale price. Note: You should contact the National Revenue Center for information on how to determine your CSP.
