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View Full Version : Do all CA FFL's charge sales tax?


Ryantope
02-25-2009, 1:46 PM
I am looking at purchasing a 1911 from an out of state dealer but I have called a few of my local FFl's in Orange County and they have all said they charge sales tax. Is this mandatory in CA? Thanks in advance.

BONECUTTER
02-25-2009, 1:47 PM
What places did you call????

jmf_tracy
02-25-2009, 1:50 PM
no. i have had a few tell that they would for an out-of-state transfer. needless to say, they did not get my business then or ever after. there are plenty of FFL that will do a reasonable out of state transfer. it should cost no more than $100 out the door (fees, DROS, etc.). it would help if you listed your location.

BONECUTTER
02-25-2009, 2:12 PM
Riflegear does. Ade's does not.

Last time I checked Riflegear did not charge sales tax.

Ryantope
02-25-2009, 2:22 PM
thanks guys. I am located in Newport Beach. I will call RifleGear and Ade's and check them out.

Oldnoob
02-25-2009, 2:58 PM
OC Indoor Range at Brea don't charge tax neither. What place did you call?

comandante costello
02-25-2009, 3:18 PM
The first time I did an online transfer (second gun I bought) I went with a local FFL, had no idea some of them charged sales tax. It was too late, so I paid it. Great guy, but tax really killed the deal.

Moral of the story is, now I always ask before.

shark92651
02-25-2009, 4:47 PM
Riflegear does. Ade's does not.

RifleGear does not charge tax on transfers. When we first started transfer business after getting an FFL we discussed it but we decided against it and have never done so.

Scooterg55
02-25-2009, 5:13 PM
Use OC Armory in Laguna Hills. They do not charge sales tax and the Total Fees including the DROS is $70. I have used them many times.

chucks
02-25-2009, 6:22 PM
I am looking at purchasing a 1911 from an out of state dealer but I have called a few of my local FFl's in Orange County and they have all said they charge sales tax. Is this mandatory in CA? Thanks in advance.

It is not a sales tax, it is called a "use tax". It was discussed here:

http://www.calguns.net/calgunforum/showthread.php?t=148717

Not FUD, just a very old law...

baselfish
02-25-2009, 7:24 PM
It is not a sales tax, it is called a "use tax". It was discussed here:

http://www.calguns.net/calgunforum/showthread.php?t=148717

Not FUD, just a very old law...

staight from the horse's...opps i mean the cal doj

Does sales tax apply to the DROS fees?

No. The DROS fees are not subject to sales tax. Questions regarding firearms transfer fees can be directed to the DOJ through this website or by calling (916) 263-4887.

Questions regarding sales tax can be made to the California Board of Equalization at its website www.boe.ca.gov.

so in essence, just like your flat screen TV you buy on Amazon...you should be informing the FTB (franchise tax board) and paying your california "use" tax...

yep im gonna do that...

bF

laguns
02-25-2009, 7:45 PM
Folks, a few years ago I checked with my state board rep and it was clear that tax should be paid on any item we purchase from out-of-state, but it was also clear that it is NOT the responsibility of a gun dealer to collect this tax. In other words they can if they want to, but they certainly don' have to.

Things may have changed in the last year or so but I doubt it. Just to make sure, I'll call them tomorrow and let you guys know.

jwc
02-25-2009, 10:51 PM
RifleGear does not charge tax on transfers. When we first started transfer business after getting an FFL we discussed it but we decided against it and have never done so.

Thank you for the clarification. I am glad to hear you decided against it as your is the nicest shop with an FFL in Orange County.

Sam
02-26-2009, 1:53 AM
so in essence, just like your flat screen TV you buy on Amazon...you should be informing the FTB (franchise tax board) and paying your california "use" tax...

yep im gonna do that...

bF

I haven't used all those guns I have in the safe...honest Mr. Tax Man... :D

I wonder, if you've never used the item are you required to pay a use tax? Can you take such an item and use it out of state and then bring it back into the state without it being "used" and thus taxable? Does the tax man talk to the DROS man?

slick_711
02-26-2009, 2:12 AM
no. i have had a few tell that they would for an out-of-state transfer. needless to say, they did not get my business then or ever after. there are plenty of FFL that will do a reasonable out of state transfer. it should cost no more than $100 out the door (fees, DROS, etc.). it would help if you listed your location.

You punished them for obeying the law? You are legally required to pay sales tax on any item you purchase in the state of CA. Things purchased out of state are still bound by that, the state just calls it a "use tax."

Now, I don't agree with the tax, but shops that charge sales tax on transfers are just making sure you pay the tax to cover their butts. You think they keep it or something? A little extra money in their pocket? :p

If you don't pay it to them, you're supposed to declare it and pay it on your next return. I'm sure they don't need to charge it though, because you can be trusted to do it yourself on your return right? :thumbsup:

halifax
02-26-2009, 6:46 AM
This has been discussed many times before.




Basically, CA law is clear that a sales/use tax must be paid on all retail sales of tangible goods for use in CA. In most cases the BOE relies on the end-user to claim out-of-state purchases on their Form 540.

In some cases, however, the BOE has determined that if an agent is used to facilitate the sale or transfer of taxable goods, the agent is responsible for collecting the sales tax. FFLs fall into the agent category as does the DMV. The BOE uses Annotations as their guidelines. Annotations are interpretations/clarifications of the law as determined by the BOE. The annotation that specifically pertains to FFL dealers is:

495.0843 Deliveries by California Firearm Dealers for Out-of-State Retailers. California residents order firearms from out-of-state retailers and the retailers ship the firearms to an authorized California firearm dealer for delivery to the customer. The California firearm dealer charges a fee to register each firearm in California.

When the California firearm dealer completes the registration paperwork and delivers a firearm to a California purchaser for an out-of-state retailer not registered with the Board as a retailer engaged in business in this state, it is presumed that the firearm dealer is the retailer of the firearm under the second paragraph of section 6007. In such a case, the firearm dealer would owe sales tax on the total amount of the retail sales price of the gun to the customer, including the Department of Justice fee if passed on to the customer, and including any service charge made by the firearm dealer.

If the firearm dealer establishes to the satisfaction of the Board that the out-of-state retailer was engaged in business in this state under section 6203, its deliveries for that retailer will not be considered taxable retail sales by the firearm dealer, even if the out-of-state retailer has not registered with the Board as a retailer engaged in business in this state. In such cases, as well as in situations in which the retailer is in fact registered as a retailer engaged in business in this state, the out-of-state retailer has a duty to collect the use tax under section 6203. The retailer should collect use tax on the invoice price of the firearm, plus the service fee, even if paid directly to the firearm dealer by the customer. Also, the Department of Justice fee passed onto the customer should be included in the measure of tax. 12/7/95. (Am. 99–2).

(Note: On and after January 1, 1999, the Department of Justice fee is not includible in the measure of tax, but all other charges remain subject to tax.)

As applied to FFL dealers, the DEALER is responsible for paying the sales tax. Unless the dealer wants to pay your sales tax out of his own pocket, he will collect it from you.

Note also that the DROS fee is not taxable.

Some dealers do not collect tax. I'm assuming that is because, either, they are unaware of this Annotation, or they have been advised that annotations do not carry the weight of law:

Annotations are summaries of the conclusions reached by staff counsel as applied to specific factual situations. They are a research tool and intended to provide guidance regarding the interpretation of Board statutes and regulations. Annotations are not regulations of the Board and do not have the force or effect of law. In any instance where there is an inconsistency between the statutory law and an annotation, statutory law is controlling.

Some dealers do collect tax. I'm assuming that is because they can't afford to pay your tax for you and they are not prepared to take-on a protracted battle with the BOE and risk losing their business because their Seller's Permit gets yanked.

Hope this helps.

jksupplyco
02-26-2009, 7:05 AM
495.0843 Deliveries by California Firearm Dealers for Out-of-State Retailers. California residents order firearms from out-of-state retailers and the retailers ship the firearms to an authorized California firearm dealer for delivery to the customer. The California firearm dealer charges a fee to register each firearm in California.

When the California firearm dealer completes the registration paperwork and delivers a firearm to a California purchaser for an out-of-state retailer not registered with the Board as a retailer engaged in business in this state, it is presumed that the firearm dealer is the retailer of the firearm under the second paragraph of section 6007. In such a case, the firearm dealer would owe sales tax on the total amount of the retail sales price of the gun to the customer, including the Department of Justice fee if passed on to the customer, and including any service charge made by the firearm dealer.

If the firearm dealer establishes to the satisfaction of the Board that the out-of-state retailer was engaged in business in this state under section 6203, its deliveries for that retailer will not be considered taxable retail sales by the firearm dealer, even if the out-of-state retailer has not registered with the Board as a retailer engaged in business in this state. In such cases, as well as in situations in which the retailer is in fact registered as a retailer engaged in business in this state, the out-of-state retailer has a duty to collect the use tax under section 6203. The retailer should collect use tax on the invoice price of the firearm, plus the service fee, even if paid directly to the firearm dealer by the customer. Also, the Department of Justice fee passed onto the customer should be included in the measure of tax. 12/7/95. (Am. 99–2).

(Note: On and after January 1, 1999, the Department of Justice fee is not includible in the measure of tax, but all other charges remain subject to tax.)



+1000000000 !! I hate to do it, but as a small business, I would CEASE to exist if I got hit for the tax liability of all of the out-of-state purchases that I process. I collect the tax, and it all goes to the state. There is no benefit for me to collect it. I have a copy of this posted in the shop for anyone to read.

JSH
02-26-2009, 10:50 AM
So if we went to another state and paid a gun with its sales tax, ask the FFL there shipped it to california FFL for me. Then in CA, we have to pay CA FFL sales tax? Pay sales tax twice(one out of state, one in CA)?

Another question is how does CA FFL know how much is the purchase price if the out-of-state FFL send the invoice directly to the buyer?

Palindari
02-26-2009, 10:57 AM
RifleGear does not charge tax on transfers. When we first started transfer business after getting an FFL we discussed it but we decided against it and have never done so.

Question:

How can you collect or not collect a tax?

If there is a requirement to collect - then you must. Collecting a "tax" is not an option.

halifax
02-26-2009, 11:10 AM
So if we went to another state and paid a gun with its sales tax, ask the FFL there shipped it to california FFL for me. Then in CA, we have to pay CA FFL sales tax? Pay sales tax twice(one out of state, one in CA)?

If they're shipping the gun to another state for a resident of that other state, they should not be collecting the local tax.

Another question is how does CA FFL know how much is the purchase price if the out-of-state FFL send the invoice directly to the buyer?

You either show them the actual receipt or pay tax on MSRP.

JSH
02-26-2009, 6:58 PM
You either show them the actual receipt or pay tax on MSRP.

Is that what law says or just your imagination?

Rudolf the Red
02-26-2009, 9:35 PM
+1000000000 !! I hate to do it, but as a small business, I would CEASE to exist if I got hit for the tax liability of all of the out-of-state purchases that I process. I collect the tax, and it all goes to the state. There is no benefit for me to collect it. I have a copy of this posted in the shop for anyone to read.


+1 to that.

I collect tax because the tax people told me I have to.

I hate doing it but no one has complained yet. If they do, oh well. It's my FFL, not theirs. :cool2:

halifax
02-26-2009, 10:35 PM
Is that what law says or just your imagination?

I imagine the dealer would have little choice if the customer refused to present a receipt. At least that is my policy.

tacticalcity
02-27-2009, 12:04 AM
Is that not illegal? Somebody has to pay the tax.

Oh, got you. The item was purchased out of state. He is just processing the DROS. He should only charge tax on the cost of the DROS. He is not selling you the gun. He is selling you the service of processing the DROS, not the sale of the gun. The person who sold you the gun was in another state. California is not entitled to that money. The sale took place in the sellers state. Not California.

This is covered in your briefing you get when you file for your resale license. It is basic sales tax 101.

halifax
02-28-2009, 7:33 AM
He should only charge tax on the cost of the DROS.

Wrong. On and after January 1, 1999, the Department of Justice fee [DROS] is not includible in the measure of tax, but all other charges remain subject to tax

He is not selling you the gun. He is selling you the service of processing the DROS, not the sale of the gun.

Wrong. BOE Annotation from earlier in this thread:

495.0843 Deliveries by California Firearm Dealers for Out-of-State Retailers.

California residents order firearms from out-of-state retailers and the retailers ship the firearms to an authorized California firearm dealer for delivery to the customer. The California firearm dealer charges a fee to register each firearm in California.

When the California firearm dealer completes the registration paperwork and delivers a firearm to a California purchaser for an out-of-state retailer not registered with the Board as a retailer engaged in business in this state, it is presumed that the firearm dealer is the retailer of the firearm under the second paragraph of section 6007. In such a case, the firearm dealer would owe sales tax on the total amount of the retail sales price of the gun to the customer, including the Department of Justice fee if passed on to the customer, and including any service charge made by the firearm dealer.

If the firearm dealer establishes to the satisfaction of the Board that the out-of-state retailer was engaged in business in this state under section 6203, its deliveries for that retailer will not be considered taxable retail sales by the firearm dealer, even if the out-of-state retailer has not registered with the Board as a retailer engaged in business in this state. In such cases, as well as in situations in which the retailer is in fact registered as a retailer engaged in business in this state, the out-of-state retailer has a duty to collect the use tax under section 6203. The retailer should collect use tax on the invoice price of the firearm, plus the service fee, even if paid directly to the firearm dealer by the customer. Also, the Department of Justice fee passed onto the customer should be included in the measure of tax. 12/7/95. (Am. 99–2).

(Note: On and after January 1, 1999, the Department of Justice fee is not includible in the measure of tax, but all other charges remain subject to tax.)



California is not entitled to that money. The sale took place in the sellers state. Not California.

Wrong. http://www.boe.ca.gov/sutax/faqusetax.htm

[FAQ #1]
What type of merchandise is subject to use tax?

Generally, the same types of items that are subject to sales tax are subject to use tax. Sales and use tax applies to the sale or use of tangible personal property in California. Section 6016 of the Revenue and Taxation Code defines tangible personal property as "personal property which may be seen, weighed, measured, felt, or touched, or which is in any other manner perceptible to the senses."

And,

[FAQ #4]
Is the California use tax new?

No. The California use tax law became effective on July 1, 1935. Section 6201 of the Revenue and Taxation Code established the use tax to eliminate the price disadvantage of California businesses when California consumers purchase taxable merchandise from out-of-state retailers.



This is covered in your briefing you get when you file for your resale license. It is basic sales tax 101.

Really?

SpecV
02-28-2009, 9:16 AM
wow helifax, you know your stuff. thanks some of the laws clear.

halifax
02-28-2009, 9:49 AM
wow helifax, you know your stuff. thanks some of the laws clear.

What I have posted is just my understanding after years of seeing this issue hashed out here on CGN in many different threads. Also, from my personal communications with the BOE.

ersatz
02-28-2009, 10:08 AM
Do you also have to pay sales tax on PPT?

Also some out of state vendors charge sales tax for their respective state which is probably mandated by their state laws. So then you are also forced to pay Cali sales tax as well? I guess I shouldn't be that surprised though as they do the same with income tax. Went to NY made some money and had to pay their state income tax. Then being a Cali resident I had to declare it as income and pay the CA state income tax too.

azn_wrx
02-28-2009, 10:25 AM
Has anyone else thought how ridiculous it is for turners to charge tax on consignment guns that they transfer as a PPT.

halifax
02-28-2009, 10:54 AM
Do you also have to pay sales tax on PPT?

Also some out of state vendors charge sales tax for their respective state which is probably mandated by their state laws. So then you are also forced to pay Cali sales tax as well? I guess I shouldn't be that surprised though as they do the same with income tax. Went to NY made some money and had to pay their state income tax. Then being a Cali resident I had to declare it as income and pay the CA state income tax too.

PPT sales are considered occasional and not subject to sales/use tax even if they are from out-of-state private parties.

I don't know which states require collecting sales tax on non-residents (if any) but most would not require tax be collected on items being sent out-of-state. The dealers doing it may just be doing it wrong.

halifax
02-28-2009, 11:08 AM
Has anyone else thought how ridiculous it is for turners to charge tax on consignment guns that they transfer as a PPT.

Consignment sales are taxable because the dealer facilitated the sale. Same reason the BOE uses to justify putting the burden of sales tax on the CA dealer for out-of-state retail sales. The CA FFL dealer is acting as an agent in these retail sales.

http://www.boe.ca.gov/business/Vol1/Sut/sutl.pdf

6007. ‘‘Retail sale.’’ A‘‘retail sale’’ or ‘‘sale at retail’’ means a sale for
any purpose other than resale in the regular course of business in the form of
tangible personal property. When tangible personal property is delivered by an owner or former owner thereof, or by a factor or agent of that owner, former owner or factor to a consumer or to a person for redelivery to a consumer, pursuant to a retail sale made by a retailer not engaged in business in this state, the person making the delivery shall be deemed the retailer of that property. He or she shall include the retail selling price of the property in his or her gross receipts or sales price.

JSH
02-28-2009, 12:54 PM
I don't know which states require collecting sales tax on non-residents (if any) but most would not require tax be collected on items being sent out-of-state. The dealers doing it may just be doing it wrong.

If you go to Nevada and buy a TV there, I do not believe they will not charge your sales tax, even you ask them ship it to CA. Same for buying a gun in another state and let the store ship it to FFL here.

halifax
02-28-2009, 1:05 PM
If you go to Nevada and buy a TV there, I do not believe they will not charge your sales tax, even you ask them ship it to CA. Same for buying a gun in another state and let the store ship it to FFL here.

Cabelas will not charge NV tax if you are a CA resident and they are shipping it to a CA dealer. You may have to talk to the manager but I have received firearms purchased from them where they didn't charge the buyer NV tax. Don't know about others though.