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ChuckBooty
04-15-2009, 2:45 PM
I recently criticized a new gun shop for charging 8.75% sales tax for firearms being shipped from out of state. Somebody mentioned that this may be a new state law. It seems to me that California would have no right to collect sales tax on purchases from OTHER states. Am I wrong?

Here's the shops fee schedule:

We do California Handgun Safety Cards, General Transfers, Private Party Transfers and Special Orders.

**You must have a California Handgun Safety Card to purchase a Handgun in the State of California, unless you are exempt. You must also bring along proof of residency for all handgun purchases and are required by law to purchase a Cal Doj approved gun lock, if your purchase doesn't come with one. OUT OF STATE TRANSFERS Your transfer has to be California legal! To check - http://certguns.doj.ca.gov


Fees:

Handgun Safety Cards

$25.00 (allows you to take the test twice if you fail the first time) Handgun Safety Cards are good for 5 years and can be used at any gun shop throughout California.

General Transfers

$50.00 dealer fee, Each additional firearm is $10.00 per firearm
$25.00 DROS fee (background check)
8.75% sales tax for firearms being shipped from out of state.

Private Party Transfers - Handgun

$25.00 DROS fee (background check)
$10.00 fee for the first handgun
$31.00 for each additional handgun transferred

Long Gun

$25.00 DROS fee (background check)
$10.00 fee for each long gun transferred

Special Orders

Requires half down for the special order to be placed. There is a $200.00 cancellation fee if customer changes their mind once the order has been submitted.
http://laststandguns.com/services.html

wash
04-15-2009, 2:49 PM
use tax...

fairfaxjim
04-15-2009, 4:29 PM
Lots of posts, some pretty recent, on here about this one. Some do, some don't collect sales tax. CA BOE has gone on record that "use tax" is to be collected by FFL's for out of state purchased firearm transfers that they do. If audited, the FFL that doesn't could find themselves liable for uncollected taxes. It is pretty much agreed that the BOE is "off the ranch" on this one, but they got the hammer.

lasereye
04-15-2009, 5:05 PM
It was used, right??? No tax, IIRC.

hoffmang
04-15-2009, 9:03 PM
BOE requires FFL's to charge sales/use tax on out of state transfers. BOE is wrong on the law, but no one has had time to formally challenge their letter ruling. FFL's should be collecting tax until such time as someone can get that issue fixed at the BOE.

-Gene

halifax
04-15-2009, 9:12 PM
It was used, right??? No tax, IIRC.

Used from a dealer's inventory is taxable. Used from a private party is not.

ZirconJohn
04-16-2009, 12:39 AM
Yup-yup... it's called 'Use Tax'

For the record; I seriously D-E-S-P-I-S-E this 'Use Tax' thing!

With that said; here you go...

http://www.boe.ca.gov/pdf/pub109.pdf

http://www.boe.ca.gov/sutax/annotations/pdf/495.0843.pdf

http://www.net-ffl.com/salestax.pdf

Very sorry for this; I am NOT one to tangle with the State Board of Equalization... and you shouldn't either. They are all of the following three things;

1) They are vicious! :taz:
2) They are vicious! :taz:
and 3) They are vicious!:taz:

I have never tangled with them, and DON'T want to!

They have a notorious REP!

However, if'n y'all ever tangle with the BOE... will ya let us know how it goes?:innocent:

foxtrotuniformlima
04-16-2009, 8:04 AM
not all FFL's charge the tax. Ask before hand. They will tell you if they do.

If it is worth it to you, shop around.

johnny_22
04-16-2009, 8:17 AM
If the FFL does not charge me sales tax, I pay the use tax using form 79b, or on my 540 on April 15.

The reason is that there is this record that the State will have that a transfer of a firearm occurred. With little footwork, they can find me and send me a bill.

No do not mess with the BOE. They will track you down. Take it from me.

ohsmily
04-16-2009, 9:42 AM
Am I wrong?



Yes. And this has been discussed countless times.

rbetts
04-16-2009, 9:57 AM
No do not mess with the BOE. They will track you down. Take it from me.

So do we all think that the BOE will be extra aggressive now that the state has no money? How can we get the word out to the Cal Gunners that they should expect to pay tax on an out of state transfer?

The out of state option works for me on all my other purchases personally. (big Screen Amazon, no tax!)

Now I am in a dilemma. As an FFL, charge Use Tax, keep my license and business but have to fight for business with those FFL's who do not charge.

I guess the answer is good communications on what to expect with the buyers.

DDT
04-16-2009, 10:09 AM
The out of state option works for me on all my other purchases personally. (big Screen Amazon, no tax!)


Read your tax forms more closely. Line 49 of form 540.
"Line 49 – Use Tax. This is not a total line.
As explained on page 6, California use tax applies to purchases from out-of‑state sellers (for example, purchases made by telephone, over the Internet, by mail, or in person).
You may report use tax on your income tax return instead of filing a use tax return with the State Board of Equalization. To report use tax on your income tax return, complete the Use Tax Worksheet on the next page. For questions on whether a purchase is taxable, go to the State Board of Equalization’s website at boe.ca.gov, or call their Taxpayer Information Section at 800.400.7115 or TTY/TDD 800.735.2929."

halifax
04-22-2009, 5:07 AM
Where is wes, he likes to stroke this one. Many people have proven him and the BOE wrong, but it is ok to spread FUD as long as you can make money out of it.

Finally proof is at hand. Please link to the proof of which you speak. I'd love to stop collecting this tax since it puts me at a competative disadvantage.

Apparently hoffmang is also un-aware of such definative proof:

BOE requires FFL's to charge sales/use tax on out of state transfers. BOE is wrong on the law, but no one has had time to formally challenge their letter ruling. FFL's should be collecting tax until such time as someone can get that issue fixed at the BOE.

-Gene

BTW - any dealer who is collecting this tax to keep from being put out of business by the BOE is probably not just pocketing the money.

tenpercentfirearms
04-22-2009, 6:13 AM
Where is wes, he likes to stroke this one. Many people have proven him and the BOE wrong, but it is ok to spread FUD as long as you can make money out of it.

G17GUY, you are the only guy spreading FUD. Please never accuse me of making money on sales tax ever again. That is a serious charge and you better be ready to back it up.

As I have stated in numerous posts, the BOE has instructed me to collect sales tax on retail sales. The BOE considers me the retailer if the item I am delivering to you comes from another retailer. I have posted the letter I received and the section of code they are referring to.

You don't have to agree with it just like I don't agree with it. However, a $50 transfer is no where near worth taking on the sales tax liability for your purchase should I ever get audited. I suppose I could spend a lot of my corporation's money fighting with some tax lawyers to prove we are all correct. Again, I find that waste of money. Or the BOE might be proven correct and then I would owe thousands of dollars of back taxes with penalties. For every gun over about $610 I bring in, I have now lost money.

And unless it is a private party transaction, you are liable for use tax anyway. You are breaking the law if you buy items out of state and do not claim the use tax on them at the end of the year. So we have a couple of people on this forum rant on about how dealer's are stealing the sales tax money and make baseless accusations because they are obviously upset they can't break the law and not report their use tax obligations. They can't con certain dealers into accepting their tax liability so they can cheat on their taxes. That is what this really boils down to.

So yes, I collect sales tax on out of state transfers from another retailer. I clearly state that up front. I will continue to do so until someone proves the BOE wrong.

http://www.calguns.net/calgunforum/showthread.php?t=133435&highlight=ca+boe+retail+tax
http://www.calguns.net/calgunforum/showthread.php?t=118369&highlight=ca+boe+retail+tax
http://www.calguns.net/calgunforum/showthread.php?t=74622&highlight=ca+boe+retail+tax
http://www.calguns.net/calgunforum/showthread.php?t=93971&highlight=ca+boe+retail+tax
http://www.calguns.net/calgunforum/showthread.php?t=72346&highlight=ca+boe+retail+tax
http://www.calguns.net/calgunforum/showthread.php?t=61114&highlight=ca+boe+retail+tax
http://www.calguns.net/calgunforum/showthread.php?t=51391&highlight=ca+boe+retail+tax
http://www.calguns.net/calgunforum/showthread.php?t=34694&highlight=ca+boe+retail+tax

Now I am in a dilemma. As an FFL, charge Use Tax, keep my license and business but have to fight for business with those FFL's who do not charge. You can have all of my transfer business from the guys who make a big deal about paying sales tax on retail purchases. Transfers are not my bread and butter and transfer customer's who would get worked up about this are the types of customers I wouldn't mind losing. Again, I am not going to assume anyone else's sales tax liability. The state is going to collect sales tax from me whether I collect it from the customer or not. They will not come looking for the customer and ask for the money. They will take it from me. That should make the decision whether to tax or not pretty simple for a business owner.

This is a battle simply not worth fighting over when people just want to cheat the system and make me liable for it. No thanks. It really is that simple.

SubstanceP
04-22-2009, 6:47 AM
The state is going to collect sales tax from me whether I collect it from the customer or not. They will not come looking for the customer and ask for the money.

Wes, are you sure about the above quote? Just curious because an FFL I'm using for a transaction does not intend to charge me taxes. Looks like I'm going to have to talk him into charging me. :(

tenpercentfirearms
04-22-2009, 7:00 AM
Wes, are you sure about the above quote? Just curious because an FFL I'm using for a transaction does not intend to charge me taxes. Looks like I'm going to have to talk him into charging me. :(

If he doesn't want to charge you, then that is his choice. If he doesn't mind taking on your possible sales tax liability, then don't worry about it. He may never get audited and they may never care.

The only reason I get so defensive is there are so many people out there that claim I collect sales tax just so I can pocket it. Not only is that theft and against the law, but it is just plain stupid. Plus it would actually take me a lot of work to go back and void out your sales receipt and take the tax back out and erase my evidence of stealing your sales tax and in the end, you still have proof that I charged you for tax. It is beyond absurd.

I simply don't want to get stuck holding a tax bill at the end of an audit and having no recourse to recover the missed tax from you. Basically I would lose a lot of my business' money so you could save 8.25%. That simply doesn't add up especially if you are just going to pay the use tax in the end anyway. Or maybe you don't plan on paying the use tax and really I am the only guy getting hosed.

If you can find a dealer who doesn't charge sales tax, use them. There is nothing wrong with that. Just remember if you are purchasing items that would normally be subject to sales tax in state, you are supposed to claim them for use tax at the end of the year. If the dealer doesn't charge you, then you are now liable for sure.

The interesting thing would be if the state figured this out, audited a dealer, took his uppaid sales tax, and then used that as an audit tool to check and see if individuals were claiming these purchases on their use tax, and then ask them for back taxes too. They could fleece everyone for double the tax!

That is highly unlikely, but I prevent them from doing so. I charge the sales tax, you have a receipt showing you paid it, and you no longer have to worry about use tax. We keep it simple.

TripleT
04-22-2009, 7:48 AM
I am a retailer of other goods and services in California and have been through many BOE audits over the years. In an audit, they will spot check transactions along with your returns. If they see a receipt for a ffl transfer and dros, you can rest assured they will want to know the value of what was transferred and where the tax was paid.

Also, something I found odd, if I make a mistake and collect no tax or the wrong amount of tax, I am expected to pay the tax or the shortage and they could care less if I go back and collect it from the customer. Here is where it get's weird, if I collect too much tax, easy to do when your selling and delivering goods and services to different cities and counties, they keep the overage and you or your customer have no recourse to ask for it back.

If a discrepancy is found on a return, the BOE will calculate the shortage plus interest from when it was shorted and send you a letter to pay. If you don't or can't, they will levy bank accounts, attach wages, etc. They don't play nice. I would rather deal with the IRS than these guys and I'm willing to bet they are aware of the surge in gun sales and see an opportunity to collect some tax.
Just my .02...