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californialawsucks
09-02-2009, 4:13 PM
Hello,
I just called two local FFLs and one said that he would charge me CA sales tax for the firearm while another claimed all taxes were between me and the seller. So how does the sales tax work for this type of transfer?

And yes I did do a search but came up with no answer

Thank You

grammaton76
09-02-2009, 4:16 PM
Wes at 10% Firearms has been told by the State tax board that he must charge CA sales tax on out of state transfers, or else they may hold him liable for the tax at some future point. It's not worth the risk not to comply, when you're not making much on a transfer anyway.

Apparently whether a vendor does this or not has a big thing to do with whether or not they've been notified by the State that they must do so.

californialawsucks
09-02-2009, 4:22 PM
Thank You that clears things up.

ontargetrange
09-02-2009, 4:31 PM
To add my two cents -- the one definition I got from the state was that IF the item was a product sold by my store as regular inventory then consider it taxable -- items that might be sold by me as standard inventory were to be considered taxable as well -- even if I only sell one or two per year -- gotta love this state -- you don't want to piss them off right now as they are looking for anything taxable and a store they can backcharge and add penalties ---


Thank You that clears things up.

Whiskey_Sauer
09-02-2009, 4:51 PM
Yes. But any FFLs out there that want to challenge this in a court filing? I think we might have a good argument that the FFL never actually takes title to the inventory, for accounting purposes, but is merely providing a service to the transferee, and is therefore not responsible for imposing the tax, i.e., acting as an arm of the state? Any brave takers, send me a pm. ;)

jamesob
09-02-2009, 6:05 PM
if a seller out of state does charge you tax, the ffl here can't. if the dealer here wants to charge you tax on the product already taxed, just show him the receipt with the tax shown.

dantodd
09-02-2009, 6:10 PM
If you need help printing a receipt there are lots of templates online.

timdps
09-02-2009, 6:18 PM
Was told by my FFL that he charges sales tax for transfers coming from other dealers, but not not transfers from individuals.

Who knows...

Tim

halifax
09-02-2009, 6:31 PM
if a seller out of state does charge you tax, the ffl here can't. if the dealer here wants to charge you tax on the product already taxed, just show him the receipt with the tax shown.

Incorrect.

BOE response to the very issue you posted about:

In the situation described in your inquiry, the purchaser is purchasing a firearm from an out-of-state retailer. The out-of-state retailer is transferring the firearm to your location for the purpose of processing the necessary paperwork. Since the transfer of the firearm to the customer is taking place in California, the Nevada tax is not applicable. The location where the property (firearm) is passed to the purchaser determines where the tax is due, not the location where the money changes hands. I assume the Nevada retailer is not engaged in business in this state. Accordingly, you would be liable for the sales tax on the firearm transferred to the purchaser in this state. The purchaser should contact the Nevada retailer for a refund of the Nevada tax paid in error

BOLD added. By YOU, he means the CA dealer. I highly doubt the CA dealer will pay your tax liability. He will collect it from you.

halifax
09-02-2009, 6:35 PM
Was told by my FFL that he charges sales tax for transfers coming from other dealers, but not not transfers from individuals.

Who knows...

Tim

Correct.

Sales between individuals are considered occasional sales and are not taxable unless the dealer played a part in arranging the sale. For example consignment sales that are processed as a PPT.

taloft
09-02-2009, 6:50 PM
Technically the State considers it Use Tax and they've instructed FFL01's to collect it. If the transfer dealer doesn't collect it, you're supposed to pay up on your tax return. Here's more info. http://www.ftb.ca.gov/individuals/usetax.shtml

leadchucker
09-02-2009, 6:53 PM
Buying a new gun from an out-of-State retailer may be one thing, but buying a used firearm from an individual PTP, whether in-State or out-of-State, should be quite another, just like any other item. I don't know why guns are being taxed in a different way. As basically stated previously, the law now requires an ffl in the process, but the buyer should not be penalized because of it.

That being said, I was just charged CA State sales tax for my first out-of-State purchase from an individual.

paul0660
09-02-2009, 6:59 PM
Halifax know his stuff, dangit.

halifax
09-02-2009, 6:59 PM
From Post #10

Sales between individuals are considered occasional sales and are not taxable unless the dealer played a part in arranging the sale. For example consignment sales that are processed as a PPT.

Buying a new gun from an out-of-State retailer may be one thing, but buying a used firearm from an individual PTP, whether in-State or out-of-State, should be quite another, just like any other item. I don't know why guns are being taxed in a different way. As basically stated previously, the law now requires an ffl in the process, but the buyer should not be penalized because of it.

That being said, I was just charged CA State sales tax for my first out-of-State purchase from an individual.

If it came directly from the individual, you were incorrectly charged tax. If the individual used an FFL to ship it, I believe you were still incorrectly charged tax but your FFL may not understand that.

BTW, even buying a used gun from an out-of-state retailer's inventory is taxable

timdps
09-02-2009, 7:09 PM
Thank you for the clarification.

Tim

Correct.

Sales between individuals are considered occasional sales and are not taxable unless the dealer played a part in arranging the sale. For example consignment sales that are processed as a PPT.

ldivinag
09-02-2009, 7:15 PM
find another FFL that SHOULD NOT charge you.

they are providing a SERVICE. labor. which is not taxable at this time.

you, as the purchaser of an out of state product is required by law to pay the USE TAX during the time you pay state income tax.

that is the proper time to pay all USE TAXes on everything you purchased...

halifax
09-02-2009, 7:51 PM
Halifax know his stuff, dangit.

Hey Paul, it's just a matter of business survival :)

halifax
09-02-2009, 7:58 PM
find another FFL that SHOULD NOT charge you.

they are providing a SERVICE. labor. which is not taxable at this time.

you, as the purchaser of an out of state product is required by law to pay the USE TAX during the time you pay state income tax.

that is the proper time to pay all USE TAXes on everything you purchased...

If you can find an FFL that still isn't charging sales tax on transfers, by all means use him. It's your $$.

jamesob
09-02-2009, 8:10 PM
Incorrect.

BOE response to the very issue you posted about:



BOLD added. By YOU, he means the CA dealer. I highly doubt the CA dealer will pay your tax liability. He will collect it from you.

i should have been more clear. some businesses are set up to pay california taxes on items that are sold and shipped here. are firearms done differently? could be. for example,i buy items from texas and i have to pay california taxes to them, they in turn pay california there cut. another place in texas doesn't charge me cal. sales tax. i was not refering to the sellers state tax. but you are right, if california taxes were not payed they should collect.

halifax
09-02-2009, 8:25 PM
i should have been more clear. some businesses are set up to pay california taxes on items that are sold and shipped here. are firearms done differently? could be. for example,i buy items from texas and i have to pay california taxes to them, they in turn pay california there cut. another place in texas doesn't charge me cal. sales tax. i was not refering to the sellers state tax. but you are right, if california taxes were not payed they should collect.

If the business you buy from in TX has a presence in CA, they will collect CA sales tax. I was concerned that your post would give others the wrong idea. Thanks for clarifying that.

djbooya
09-26-2009, 2:25 PM
find another FFL that SHOULD NOT charge you.

they are providing a SERVICE. labor. which is not taxable at this time.

you, as the purchaser of an out of state product is required by law to pay the USE TAX during the time you pay state income tax.

that is the proper time to pay all USE TAXes on everything you purchased...

I was reading up on this exact issue. Do you have relevant law to quote here? From what I received from the BOE there was an annotation "Sales and Use Tax Annotation 495.0843" which is specific to FFLs and states they do have to charge sales tax unless they can prove that according to Section 6203 that the out of state "retailer engaged in business in this state".

More information here:
http://www.calguns.net/calgunforum/showpost.php?p=2089443&postcount=17

BigBamBoo
09-26-2009, 2:35 PM
.........

djbooya
09-26-2009, 3:52 PM
I just went through this issue. I bought a USED rifle from a private party from back east...one of the local gun store's here in town were I use to do most of my buying from/through told me the seller must provide them with the ORIGINAL bill of sale....and that they would be charging me sales tax on that amount!?!?!

I found another FFL who did the transfer how it should be done.

Take care,Stan

In this instance I don't see why Sales Tax would be collected. Since the private party doesn't even start to qualify as a retailer the rest of the regs are a moot point. I think the biggest issue is that the current BOE regs and enforcement are so unclear to FFLs that a lot of people either a) don't know the exact cases when they are really supposed to collect tax or b) don't think they even need to collect sales tax at all because of the "service" being performed.

It would be nice if there was a simple reference like:

A) Out of state private party to CA resident - DO NOT COLLECT
B) Out of state business to CA Resident that already collected - DO NOT COLLECT
C) Out of state business to CA resident w/out CA tax paid - COLLECT TAX on FFL fee + firearm fee, but NOT DROS fee.

Not that my reference is necessarily accurate. It's just an example, but that would make things much more clear.

striker3
09-26-2009, 3:54 PM
I just went through this issue. I bought a USED rifle from a private party from back east...one of the local gun store's here in town were I use to do most of my buying from/through told me the seller must provide them with the ORIGINAL bill of sale....and that they would be charging me sales tax on that amount!?!?!

I found another FFL who did the transfer how it should be done.

Take care,Stan

I have been told something similar, the dealer wanted to charge me tax for blue book value, although I had a receipt showing that I had paid less. I ended up just completing the transfer with an Arizona FFL instead, as I am a dual resident. Also, I made the purchase from a private individual.

Mike's Custom
09-26-2009, 4:02 PM
Sorry guys. According to Federal law you must be a resident of the state in which the firearm is purchased 90 days prior to teh purchase. It is illegal for a out of state purchase. There is no difference where the FFL orders the firearm, (or in stock) or you order the firearm, the "sale" takes place in CA. Teh Franchise Tax Board considered it a SALE as well as the CADOJ. Private Party Transfers are not subject to sales tax because it is not in the FFLs inventory. When the firearms is shipped from out of state by a FFL or private party, it MUST BE done as a Dealer Sale. Dealer sales are taxable. This was being enforced back in the 90s when tax audits were done on FFLs and they were forced to pay back taxes on firearms they never collected taxes on. I am not willing to pay taxes on your firearm not "purchased" from me.

djbooya
09-26-2009, 4:09 PM
Sorry guys. According to Federal law you must be a resident of the state in which the firearm is purchased 90 days prior to teh purchase. It is illegal for a out of state purchase. There is no difference where the FFL orders the firearm, (or in stock) or you order the firearm, the "sale" takes place in CA. Teh Franchise Tax Board considered it a SALE as well as the CADOJ. Private Party Transfers are not subject to sales tax because it is not in the FFLs inventory. When the firearms is shipped from out of state by a FFL or private party, it MUST BE done as a Dealer Sale. Dealer sales are taxable. This was being enforced back in the 90s when tax audits were done on FFLs and they were forced to pay back taxes on firearms they never collected taxes on. I am not willing to pay taxes on your firearm not "purchased" from me.

So if I understand what you're saying correctly a firearm purchased from a private party out of state (or even within state and not doing a PPT) is subject to sales tax every time it is sold? That doesn't make sense to me although I guess it can be true since it is for cars. I thought I remember reading somewhere that an item can only be taxed once (with some exception to automobiles I'm guessing), no?

ETA: I guess I answered my own question with google-fu: http://www.taxgirl.com/ask-the-taxgirl-sales-tax-on-resold-items/ .. I guess the used firearm is like a used car in that it has been "modified"? Still sounds weird, but I guess that's why I'm not a lawyer or a tax person. And I guess this may clarify the difference with sales/use tax for cars at least: http://wiki.answers.com/Q/Do_you_have_to_pay_sales_tax_when_purchasing_a_use d_car_from_a_private_party_seller_in_California

Ground Loop
09-26-2009, 10:28 PM
For FFLs that charge "sales tax" to receive a gun that was already purchased, how do they know how much tax to charge? They weren't involved in the sale negotiation or payment, so what's the cost basis?

Mike's Custom
09-26-2009, 11:33 PM
So if I understand what you're saying correctly a firearm purchased from a private party out of state (or even within state and not doing a PPT) is subject to sales tax every time it is sold? That doesn't make sense to me although I guess it can be true since it is for cars. I thought I remember reading somewhere that an item can only be taxed once (with some exception to automobiles I'm guessing), no?

ETA: I guess I answered my own question with google-fu: http://www.taxgirl.com/ask-the-taxgirl-sales-tax-on-resold-items/ .. I guess the used firearm is like a used car in that it has been "modified"? Still sounds weird, but I guess that's why I'm not a lawyer or a tax person. And I guess this may clarify the difference with sales/use tax for cars at least: http://wiki.answers.com/Q/Do_you_have_to_pay_sales_tax_when_purchasing_a_use d_car_from_a_private_party_seller_in_California

Actually, you got it. A firearm is like a car in CA. You can buy a car in NV but to register in CA you have to pay ssales tax. What you guys fail to understand, is as a CA resident you can not buy a firearm in another state no matter what the federal law is or that states laws are. Once a FFL has it, no matter who it came from and it is not a in-state PPT, then it is the property of the FFL no matter who paid for it. At least according to the laws here in CA. Since the firearm is "registered" in CA and a PPT is only between CA residents, then it is considered a SALE by CA and taxes are due. Now, It is best to have a sales receipt for the taxes but if not I charge a reasonable tax on the condition of the firearm. Don't come to me with a pristen Perazzi and tell me you paid $500 for it. But if the gun is worth $1000 and you tell me it was $600 and you bought it because it was a steel then that is what I would base it on. Telling me is $250 would not be believeable.

halifax
09-27-2009, 12:46 AM
Now, I am confused. The BOE responded to Wes' inquiries about this very issue and informed him that sales from private individuals (in-state or out-of-state) aren't taxable. Here is the BOE response (http://www.calguns.net/calgunforum/showpost.php?p=826432&postcount=1).

If an in-state purchaser of a firearm purchases the firearm from an out-of-state person who is not a retailer, the drop shipment provisions do not apply and the transaction is not subject to tax. The drop shipment provisions provided by Revenue and Taxation Code section 6007 and Regulation 1706 only apply in a situation where you are processing a sale on behalf of an out-of-state retailer. Sales between private parties are not subject to tax as occasional sales, regardless of whether the private party seller is located in-state or out-of-state.

Mike's Custom
09-27-2009, 11:59 AM
Now, I am confused. The BOE responded to Wes' inquiries about this very issue and informed him that sales from private individuals (in-state or out-of-state) aren't taxable. Here is the BOE response (http://www.calguns.net/calgunforum/showpost.php?p=826432&postcount=1).

There are NO "out of state" private party purchases. Those are ILLEGAL. CA does not allow a CA resident to purchase firearms in other states and bring the back to CA. CA private party purchases are done at the FFL and FTF except for the Gun Show loophole. CA considers ANY DEALER SALE DROS too be taxable. Federal law does not let ANY private party purchase a firearm without being a resident of that state 90 days prior to the purchase. Since CA requires ALL firearms (very few exceptions) to be DROS'd there is NO place for a OUT OF STATE PPT.

halifax
09-27-2009, 12:05 PM
There are NO "out of state" private party purchases. Those are ILLEGAL. CA does not allow a CA resident to purchase firearms in other states and bring the back to CA. CA private party purchases are done at the FFL and FTF except for the Gun Show loophole. CA considers ANY DEALER SALE DROS too be taxable. Federal law does not let ANY private party purchase a firearm without being a resident of that state 90 days prior to the purchase. Since CA requires ALL firearms (very few exceptions) to be DROS'd there is NO place for a OUT OF STATE PPT.

The response from the BOE didn't use the term PPT (which is a DOJ term). The BOE sees the purchase from a private party, whether in-state or out-of-state, as an occasional sale; hence, a sales tax exempt transaction. At least, according to the quoted response from the BOE.

OCResident
09-27-2009, 12:08 PM
This has been rehashed and rehashed. The fact of the matter is that the BOE (Board of Equalization - the agency that collects sales tax) has determined that FFLs must collect sales tax from out of state transfers unless the dealer on the other end charged CALIFORNIA sales tax already.

Yes, we all think it is BS, yes, we all hate it - but it is what it is. Welcome to California. I know personally of an FFL that was not only called on it, but forced to pay sales tax on all transfers when BOE did an audit. Remember the seller is the one that is actually responsible for paying sales tax, they just get reimbursed by the purchaser (assuming they ask for it).

So if you don't like it, take it up with the legislature. Don't take it out on the FFLs which are just trying to survive and don't want to take a risk that THEY might be paying YOUR sales tax if they get audited by BOE. And if you can find a dealer that doesn't, well then good for you I guess. You may have screwed them over if they end up getting audited by BOE, but I guess it's their responsibility to understand sales tax law as it relates to their business.

halifax
09-27-2009, 12:39 PM
This has been rehashed and rehashed. The fact of the matter is that the BOE (Board of Equalization - the agency that collects sales tax) has determined that FFLs must collect sales tax from out of state transfers unless the dealer on the other end charged CALIFORNIA sales tax already.

Yes, we all think it is BS, yes, we all hate it - but it is what it is. Welcome to California. I know personally of an FFL that was not only called on it, but forced to pay sales tax on all transfers when BOE did an audit. Remember the seller is the one that is actually responsible for paying sales tax, they just get reimbursed by the purchaser (assuming they ask for it).

So if you don't like it, take it up with the legislature. Don't take it out on the FFLs which are just trying to survive and don't want to take a risk that THEY might be paying YOUR sales tax if they get audited by BOE. And if you can find a dealer that doesn't, well then good for you I guess. You may have screwed them over if they end up getting audited by BOE, but I guess it's their responsibility to understand sales tax law as it relates to their business.

If this was intended as a response to my post, I am an FFL and I don't collect sales tax on in-state or out-of-state sales between private individuals. My decision was based on the quoted unambiguous response to Wes (tenpercent) directly from a BOE specialist.

I do, however, understand that retail sales, whether in-state or out-of- state, are taxable. If an out-of-state retailer has not collected CA tax, I do.

OCResident
09-27-2009, 12:47 PM
If this was intended as a response to my post, I am an FFL and I don't collect sales tax on in-state or out-of-state sales between private individuals. My decision was based on the quoted unambiguous response to Wes (tenpercent) directly from a BOE specialist.

I do, however, understand that retail sales, whether in-state or out-of- state, are taxable. If an out-of-state retailer has not collected CA tax, I do.

It wasn't - it was directed at posts like these:

I just went through this issue. I bought a USED rifle from a private party from back east...one of the local gun store's here in town were I use to do most of my buying from/through told me the seller must provide them with the ORIGINAL bill of sale....and that they would be charging me sales tax on that amount!?!?!

I found another FFL who did the transfer how it should be done.

Take care,Stan


find another FFL that SHOULD NOT charge you.

they are providing a SERVICE. labor. which is not taxable at this time.

you, as the purchaser of an out of state product is required by law to pay the USE TAX during the time you pay state income tax.

that is the proper time to pay all USE TAXes on everything you purchased...

OCResident
09-27-2009, 1:34 PM
If this was intended as a response to my post, I am an FFL and I don't collect sales tax on in-state or out-of-state sales between private individuals. My decision was based on the quoted unambiguous response to Wes (tenpercent) directly from a BOE specialist.

I do, however, understand that retail sales, whether in-state or out-of- state, are taxable. If an out-of-state retailer has not collected CA tax, I do.

I don't want to get in a pissing match with you obviously have been down this path and know your stuff pretty well...I'm not an FFL, but have a couple close friends that are and have discussed this issue at length.

That being said, more for the benefit of the others on this thread, here's the BOE letter on the subject:

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

And as far as "occasional sales from out-of-state private parties", look at the following:

I note that Penal Code section 12082 requires each sale of a firearm to be made through a gun dealer licensed in California pursuant to Penal Code sections 12071 and 12072(d). Penal Code section 12082 permits the seller and the purchaser to complete the sale through a registered dealer, without first having to pass title to the dealer.
For situations in which private parties transfer firearms in California between themselves, and they do so through a dealer such as M---, with the dealer simply registering the firearm without taking title to it at any time, the dealer will not be regarded as the retailer of the firearm. Rather, the private party who sells the firearm is the party making the retail sale.

So then if it's an out-of-state PRIVATE PARTY then it's non-taxable, right? Well, maybe according to the BOE specialist you talked to (which I haven't seen), but an out-of-state private party sale is not a 12082 sale. The dealer takes title in their book and must process it as a non PPT transaction in DROS. So in essence it becomes a retail transaction by essence of the federal and state transfer requirements.

Even if you still say no...the letter continues:
“When tangible personal property is delivered by an owner,... or by a[n]...agent of that owner...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.”

Anyways, I think Gene put it best in a previous thread:
Let me say it again (and be ignored again.) The Board of Equalization has promulgated a letter opinion saying that California FFLs should collect sales tax on out of state transfers. The letter is wrong on the law but it will take a concerted effort up to and including suing BOE to get the letter thrown out.

Some FFLs choose to ignore that letter and not collect sales tax. Some FFLs choose to not lose their business licenses and pay fines on not collecting the sales tax.

Either way it is not your place to complain that the State of California has put the FFLs into a no win situation. There are at least 6 different threads on this site that will explain the situation in detail if only you'd use search.

-Gene

Mike's Custom
09-27-2009, 2:39 PM
PPTs are not taxable. Since there are no OUT of state PPTs and theya re Dealer Sales they are TAXABLE. That is not hard to understand. Guns and cars are not the same as T-shirts or gun stocks. A NON FFL can NOT purchase firearms outside CA or in a state that they are NOT a resident of 90 days prior to teh purchase. Actually, it is illegal for a FFL to sell firearms outside their state of license. PERIOD. That is why there are no AZ or NV or any other FFLs selling firearms at CA gun shows. If a NON CA FFL comes to CA to sell a firearm in CA they must then remove the guns from CA and ship them back to a CA FFL and then taxes are collected because it is registered as a DEALER SALE.

tenpercentfirearms
09-27-2009, 2:46 PM
Here is my first response from the BOE.

To :
Wesley Morris
Date :
December 9, 2005

guns@tenpercentfirearms.com

From : Bradley Miller

Business Taxes Specialist, MIC 44


Reference : F05-11-093 - 1125 – 1208



Subject : Firearms
100 604540


Thank you for your recent e-mail requesting our advice regarding the proper application of the California Sales and Use Tax Law.

As a preliminary matter, Section 6596, “Excusable Delay-Reliance on Advice,” of the California Sales and Use Tax Law grants taxpayers relief from future liabilities if the underreported tax is based on incorrect written advice provided by a Board representative. However, without specific details regarding the transactions in question, I cannot provide you with a specific opinion. The answer given is intended to provide general information regarding the application of tax based on the information you have provided and will not serve for relief of liability under Section 6596.

For your general information, the Revenue and Taxation Code provides that sales tax is imposed on the gross receipts from the retail sales of tangible personal property in this state. The sales tax is imposed upon the retailer for the privilege of selling tangible personal property at retail in California. The use tax is complementary (and mutually exclusive) to the sales tax and is imposed upon the storage, use, or other consumption in this state of tangible personal property, not subject to the sales tax. The obligation to pay the use tax is on the consumer.

Revenue and Taxation Code Section 6012 defines the term ‘‘gross receipts’’ to mean the total amount of the sale or lease or rental price, as the case may be, of the retail sales of retailers, valued in money, whether received in money or otherwise. The total amount of the sale or lease or rental price includes all of the following:
• Any services that are a part of the sale.
• All receipts, cash, credits and property of any kind.
• Any amount for which credit is allowed by the seller to the purchaser.

Revenue and Taxation Code Section 6007 defines the term “retail sale” or “sale at retail” to mean 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.

For ease of response, I will restate each of your questions, followed by my response.

Question 1:
If a person in the state of California orders a firearm from me, do I charge them sales tax even if I am not the dealer than delivers the firearm? For example, I order a pistol for you, but you live in Sacramento, I would have to send you to a local Sacramento dealer. The local Sacramento dealer will hold onto the firearm while he/she processes your ten day waiting period/background check. That dealer can charge you a fee in addition to the state mandated $25 DROS fee. Should I collect the sales tax since the customer actually bought the firearm from me?

Response:
As the retailer of the firearm in this transaction, you would be responsible for collecting and remitting the sales tax on the retail sale of the firearm. The local dealer that is actually delivering the firearm to the purchaser should collect tax on any fees the local dealer charges to the customer, except for the DROS fee imposed by the Department of Justice.

Question 2:
If I process a firearm transaction where an individual in my area pays another dealer for a firearm, but I handle the 10 day wait/background check and charge the individual the $25 DROS fee and possibly a $30 fee I charge, what is subject to sales tax? I know the DROS fee is not subject to sales tax. What about my $30 fee to conduct the transfer? What about the cost of the firearm? If the firearm comes from in state and the purchaser already paid tax to the original seller, this wouldn’t make any sense and would be double taxation.

Response:
If you are making delivery of a firearm to a customer on behalf of another firearms dealer located in this state, you should collect and remit sales tax on the $30 service fee you charge to the customer. This $30 service fee is considered part of the gross receipts from a retail sale and is subject to tax. You are correct that sales tax does not apply to the DROS fee. The DROS fee is imposed by the Department of Justice directly on the purchaser rather than on the retailer, so it is not considered part of your gross receipts. You would not collect tax on the sales price of the firearm because the selling dealer should have already collected the tax on the sale.

Question 3:
What if the firearm comes from out of state and the purchaser already paid the person shipping the firearm to me? I am simply a transfer dealer charging the person a $25 DROS fee imposed by the state and $30 to do the transfer. I did not sell any tangible personal property. Do I still tax the cost of the firearm? Do I tax my $30 service charge for conducting the paperwork?

Response:
If the firearm dealer is registered with the Board of Equalization, the tax will be collected by the selling dealer. When the dealer ships the firearm to you, you should obtain from the customer documentation showing the tax paid to the selling dealer. If the out-of-state firearm dealer is not registered with the Board of Equalization, you must collect the use tax on the sales price of the firearm and remit the tax to the Board. You are considered the retailer of the firearm in this situation pursuant to Revenue and Taxation Code Section 6007. Again, the $25 DROS fee is exempt from tax, but your $30 service fee is subject to tax, regardless of whether the selling dealer collects tax on the sale or not.

I hope this information is helpful. If you have any further questions regarding this or any other issue, please write or call our Information Center at (800) 400-7115. You may also visit our website at www.boe.ca.gov. [/quote]

tenpercentfirearms
09-27-2009, 2:47 PM
Here is my second letter to the BOE regarding private party sales, in or out of state.To :
Wes Morris
Date :
November 5, 2007
guns@tenpercentfirearms.com



From : Bradley Miller

Business Taxes Specialist, MIC 44


Reference : F07-10-047 - 1018 - 1102



Subject : Firearms
100 604540


Thank you for your recent e-mail requesting our advice regarding the proper application of the California Sales and Use Tax Law.

As a preliminary matter, section 6596, “Excusable Delay-Reliance on Advice,” of the California Sales and Use Tax Law grants taxpayers relief from future liabilities if the underreported tax is based on incorrect written advice provided by a Board representative. However, without specific details regarding the transactions in question, I cannot provide you with a specific opinion. The answer given is intended to provide general information regarding the application of tax based on the information you have provided and will not serve for relief of liability under section 6596.

If an in-state purchaser of a firearm purchases the firearm from an out-of-state person who is not a retailer, the drop shipment provisions do not apply and the transaction is not subject to tax. The drop shipment provisions provided by Revenue and Taxation Code section 6007 and Regulation 1706 only apply in a situation where you are processing a sale on behalf of an out-of-state retailer. Sales between private parties are not subject to tax as occasional sales, regardless of whether the private party seller is located in-state or out-of-state.

If you are processing the paperwork for an in-state purchaser pursuant to a sale of the firearm by an out-of-state retailer, you would be responsible for collecting the use tax from the purchaser based on the purchase price of the firearm. I would think in most cases, the purchaser you are processing the sale for should have a sales receipt of some kind issued by the out-of-state retailer documenting the purchase price. In the event the purchaser does not have such a receipt, you may wish to contact the retailer directly for a copy of such documentation. I would recommend making a copy of this receipt for your records to document the amount you collected tax on. If the amount shown on the invoice is below the firearms retail value, you should still use the purchase price shown on the invoice in calculating the tax due. If neither the purchaser nor the retailer provides you with documentation establishing a purchase price, I recommend you use a fair retail value of the firearm in calculating the amount of tax due.

I hope this information is helpful. If you have any further questions regarding this or any other issue, please write again or call our Information Center at (800) 400-7115. You may also visit our website at www.boe.ca.gov.

tenpercentfirearms
09-27-2009, 2:50 PM
You will note that the BOE letter reference to here (http://www.boe.ca.gov/sutax/annotati...f/495.0843.pdf) is dated December 7, 1995 and also claims that DROS is taxable. DROS is clearly no longer taxable as stated by the BOE and the CA DOJ.

If the CA DOJ and the BOE wants to try and claim that there is no such thing as an occaissional sale out of state like Mike claims, I have my get out of jail free card and now I am sharing it with all of you.

halifax
09-27-2009, 2:52 PM
That's it. Thanks Wes.

Mike's Custom
09-27-2009, 2:56 PM
Wes, I understand that and they did a great job in their replies. But, there is no place on a DROS for a Out Of State PPT and the DROS is done as a Dealer Sale. Sales are taxable. This is the catch 22. So, if all FFLs want to CYA then require all out of state purchased be shipped from a FFL. That way all records will will show up as what it is, a Dealer Sale. Keep in mind, that we are in CA.

Federal law still requires that the purchaser be a resident of the state in which the firearm is purchased 90 days prior to the purchase. With 2 brother-in-laws that are now retired from BATFE with over 33 years each, a CA resident can not buy a firearm in another state from a FFL. For CA, a CA resident is prevented from purchasing firearms in other states and bringing them back into CA except for a couple exceptions. Again, a catch 22 between some state and federal laws.

halifax
09-27-2009, 3:08 PM
The language of the DOJ is different than the language of the BOE. Yes, the DOJ doesn't recognize PPTs from out of state, but the BOE does recognize sales from private parties from out of state. What does it matter to the tax man how you DROS it? What does it matter to the DOJ whether or not you tax non-PPT out of state sales...that is not their in their purview?

halifax
09-27-2009, 3:22 PM
Wes, I understand that and they did a great job in their replies. But, there is no place on a DROS for a Out Of State PPT and the DROS is done as a Dealer Sale. Sales are taxable. This is the catch 22. So, if all FFLs want to CYA then require all out of state purchased be shipped from a FFL. That way all records will will show up as what it is, a Dealer Sale. Keep in mind, that we are in CA.

RETAIL sales are taxable.

Federal law still requires that the purchaser be a resident of the state in which the firearm is purchased 90 days prior to the purchase. With 2 brother-in-laws that are now retired from BATFE with over 33 years each, a CA resident can not buy a firearm in another state from a FFL. For CA, a CA resident is prevented from purchasing firearms in other states and bringing them back into CA except for a couple exceptions. Again, a catch 22 between some state and federal laws.

Unless a CA FFL is involved and delivery takes place in CA. I have plenty of clients who purchase firearms out of state. Those dealers are more than happy to take their money but only if they ship to a CA FFL. No laws broken. I get calls from Cabela's all the time requesting a copy of my FFL. Reno gunshow dealers also.

OR

Customer: Hey Jim. I'm at my brother's house in Oregon. I'm buying two rifles from him. Can he ship them to you?

Me: Sure.


ATF FAQs

(B2) From whom may an unlicensed person acquire a firearm under the GCA? [Back]

A person may only acquire a firearm within the person’s own State, except that he or she may purchase or otherwise acquire a rifle or shotgun, in person, at a licensee's premises in any State, provided the sale complies with State laws applicable in the State of sale and the State where the purchaser resides. A person may borrow or rent a firearm in any State for temporary use for lawful sporting purposes.


[18 U.S.C. 922(a)(3) and (5), 922(b)(3), 27 CFR 478.29 and 478.30]



(B3) May an unlicensed person obtain a firearm from an out-of-State source if the person arranges to obtain the firearm through a licensed dealer in the purchaser’s own State? [Back]


A person not licensed under the GCA and not prohibited from acquiring firearms may purchase a firearm from an out-of-State source and obtain the firearm if an arrangement is made with a licensed dealer in the purchaser's State of residence for the purchaser to obtain the firearm from the dealer.

[18 U.S.C. 922(a)(3) and 922(b)(3)]




Anyway, let's just agree to disagree.

tenpercentfirearms
09-27-2009, 3:29 PM
Wes, I understand that and they did a great job in their replies. But, there is no place on a DROS for a Out Of State PPT and the DROS is done as a Dealer Sale. Sales are taxable. This is the catch 22. So, if all FFLs want to CYA then require all out of state purchased be shipped from a FFL. That way all records will will show up as what it is, a Dealer Sale. Keep in mind, that we are in CA.

Federal law still requires that the purchaser be a resident of the state in which the firearm is purchased 90 days prior to the purchase. With 2 brother-in-laws that are now retired from BATFE with over 33 years each, a CA resident can not buy a firearm in another state from a FFL. For CA, a CA resident is prevented from purchasing firearms in other states and bringing them back into CA except for a couple exceptions. Again, a catch 22 between some state and federal laws.

There is no catch-22. The CA DOJ calls it a dealer sale, that is fine. I don't run it as a PPT. I however have A&D book data that shows the firearm was received from a private party out of state and I have Point of Sale (POS) data that shows I did not collect transfer sales tax as it was a private party sale from out of state.

Second, I have a BOE letter that says I do not have to collect that sales tax as it is considered an occassional sale.

I have all of my bases covered. I honestly don't care that the DOJ doesn't have a separate DROS screen for out of state PPT sales as that seems to be the only justification your argument has for requiring me to collect sales tax on an out of state private sale.

VegasND
09-27-2009, 6:25 PM
...Federal law still requires that the purchaser be a resident of the state in which the firearm is purchased 90 days prior to the purchase...
That's either BS or I -- and a lot of other people -- have made a whole bunch of federally illegal gun purchases over the years. And the BATFE cleared the background check using an out-of-state license.

I agree you guys in CA are screwed by your state government - but Federal law allows out of state purchase for long guns.

striker3
09-27-2009, 7:13 PM
That's either BS or I -- and a lot of other people -- have made a whole bunch of federally illegal gun purchases over the years. And the BATFE cleared the background check using an out-of-state license.

I agree you guys in CA are screwed by your state government - but Federal law allows out of state purchase for long guns.

He is speaking specifically about CA. To transfer a long gun to an out of state resident, the FFL has to follow all the laws in the buyers state. The out of state FFL cannot submit the DROS that CA requires.

VegasND
09-27-2009, 7:18 PM
He is speaking specifically about CA. To transfer a long gun to an out of state resident, the FFL has to follow all the laws in the buyers state. The out of state FFL cannot submit the DROS that CA requires.
Let's look at what I referred to:

...Federal law still requires that the purchaser be a resident of the state in which the firearm is purchased 90 days prior to the purchase...
I agreed that CA law screws you -- his reference to Federal law is incorrect -- despite the relatives who've been Feds...

striker3
09-27-2009, 7:42 PM
I read it as he was stating the Federal residency requirements, in which he is correct, in regards to the fact that only a CA resident may conduct a PPT. (As that is what his other posts referred to.) The rest of the paragraph, where he talks about his relatives, deal with CA only as well.

I may have read it wrong.

Mike's Custom
09-29-2009, 5:09 PM
I read it as he was stating the Federal residency requirements, in which he is correct, in regards to the fact that only a CA resident may conduct a PPT. (As that is what his other posts referred to.) The rest of the paragraph, where he talks about his relatives, deal with CA only as well.

I may have read it wrong.

Nope, you read it as I intended. I am also speaking to the general legality because there are some exceptions to most laws.

PIRATE14
09-29-2009, 5:52 PM
Well whatever side of the fence your on....the BOE is out there and they are hungry.....

They've been to all the major gunshows in CA and are taking down all the info in their little portable computers....

They've also been hassling a lot of out state gun manfactures on sales into the state of CALIF.......so, that is some food for thought....

hawk81
09-29-2009, 5:55 PM
Here is your answer, California sucks.

Maestro Pistolero
09-29-2009, 7:40 PM
How they they charge tax on a sale they didn't make? They don't even have reference for the amount of the sale. if this is the case there are going to be a lot of "$100.00" 1911's, Glocks, XDs, etc. ;)

Harley Quinn
09-30-2009, 4:44 PM
The state is doing everything it can for revenue...

DMV allows you to do the cost (value) item, and if you are not close/correct, and they find out it is heavily taxed and fined...

Not a good idea to lie, to mother nature, the state is similar to that...


How they they charge tax on a sale they didn't make? They don't even have reference for the amount of the sale. if this is the case there are going to be a lot of "$100.00" 1911's, Glocks, XDs, etc.


Regards