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  #1  
Old 07-01-2009, 8:14 AM
ept000 ept000 is offline
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Default Tax? Sorry, this has probably been beat to death

I just ordered a 1911 from Bud's Gun Shop, but they couldn't answer my question. If I ordered and paid for the gun from Bud's, does my FFL still collect state sales tax?

Sorry if this has been drug through the mud over and over. This is the first time I bought a gun this way. Thanks.
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  #2  
Old 07-01-2009, 8:17 AM
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When I did the same last year. my local FFL did not charge me tax
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Old 07-01-2009, 8:46 AM
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some will some wont,
simple as that

some FFLs are not selling you the gun you bought from Bud's, they are just just providing a service of transferring and thus not taxable.

While others are actually selling you the firearm, and will charge you sales tax.

This is the real dumbed down version, it is actually more complicated than that. Saying that, I will not go a FFL that does charge sales tax for transferring out of state firearms.

-bb
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  #4  
Old 07-01-2009, 9:16 AM
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Hmmmm..... not exactly as cut and dried as I hoped....
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  #5  
Old 07-01-2009, 9:48 AM
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It is very cut and dry actually and the answer is if the FFL is following the law, then sales/use tax has to be collected on the firearm if it comes from a business. For "proof" please see CA Sales Tax Firearms Information 495.0843 & 495.0848 on the CA BOE website http://www.boe.ca.gov/. The direct link to the whole document is below. I also have a pdf with just those sections.

http://www.boe.ca.gov/business/Vol2/suta-q-s.pdf

If the firearm comes from a private party and the person is willing to write a letter stating that it is a private sale, an occasional sale and they they don't have a business, then sales/use tax is not collected. Without the letter it is risky.

The reality is that the CA FFL is actually transfering the firearm to you. While you paid for it directly, you are not actually purchasing it until the transfer and the ownership is changed.

It is also the case that if you purchase something out of state that you owe CA sales/use tax (see CA tax return for the nice line for paying). Most people don't pay and it is difficult for CA to get the information, but since a firearm is transfered through a CA business, it is much easier to track down.

See:

http://www.boe.ca.gov/pdf/pub79c.pdf
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  #6  
Old 07-01-2009, 10:28 AM
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I see now. Thank you very much for the information. The FFL that is working with me is a friend of a friend, and I want everything to be correct for me and him. I don't think he has handled many out of state transfers yet, but he was the first person to mention that he had to collect the tax. Then a bunch of other people (not involved in the business) started talking about all the transfers they were involved in that they never paid taxes on... You know how that goes. Since I have never done this, I felt it was best to do some asking of people in the know. Thanks again for the information. The really good news is my new gun is on it's way!
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Old 07-01-2009, 10:34 AM
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In many states there is no sales tax due on such a transfer.

This is a lot like buying mail order and the state claiming the post office has to collect sales tax because they delivered it to you.
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  #8  
Old 07-01-2009, 10:54 AM
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Well, we don't live in another state.

It does bring up issues with FFLs from out of state because they don't understand this and don't want to give a copy of the receipt. The CA FFL is in a bit of a spot because they are required to collect the sales tax, but have no means of ensuring that they know what was paid or that what is being claimed is accurate.

Take a look at the name of the dept which deals with this "Board of EQUALIZATION". What exactly is that supposed to mean?

In the case of mail order, it is not the post office who has to collect it, you are supposed to pay it on your income tax return. It is also different since shippers don't collect it, but businesses do. Just because you pay for a firearm does not mean that you own it and that is where they get you.

BTW, the FFL also has to collect sales tax on his transfer fee (same sections).
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  #9  
Old 07-01-2009, 11:06 AM
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Quote:
Originally Posted by kemasa View Post
BTW, the FFL also has to collect sales tax on his transfer fee (same sections).
This part threw me. I saw where it was stated in the rules, but it still threw me.

FWIW lots of people are quick to say we should just leave CA because of all it's ridiculous laws, but I say nay nay. Others should move here and help us fight. After all, when they finish crushing CA, they are coming for your state next. You need to fight where the battle is, and right now it's in CA.

Sorry, I tend to get off track every once in a while...
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Old 07-01-2009, 11:15 AM
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The way it is supposed to work is that unless the business you buy online from has a presence in CA, they don't collect the sales tax. The buyer is supposed to pay it on his income tax form.

If CA taxes services, than the FFL fee would be taxed in the normal way.

I don't see how the FFL can be forced to collect the sales tax from a sale he did not make. That does not mean the state would not attempt to enforce such a practice.

IMO, title to the gun changes hands when the money does (or when it gets shipped). Possession is not the same thing as ownership.
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Last edited by ilbob; 07-01-2009 at 11:19 AM..
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  #11  
Old 07-01-2009, 11:23 AM
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Well. what aspect to CA which many people in other states forget is property tax issues (Prop 13). In other states they can tax you out of your house. A friend, who used to live in CA, complained about the cost of living in CA, but then moved to PA and learned what expensive was. In the township, there is a privilege tax just because you live there.

The CA FFL can forced to collect sales tax because the sale is done by the CA FFL. DROS==Dealer Record of SALE. The actual ownership of the firearm is done by the CA Dealer. Who and when it was paid for really does not matter in many respects (strawman purchase excluded).

What I have a problem with is the lack of consistancy. The FFL is not taxable in the case of a PPT. Basically, what I was told was that if the firearm is taxable, then the FFL fee is taxable. To me, it should always be the same and the FFL fee is basically a labor fee for filling out the paperwork.
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Old 07-01-2009, 11:44 AM
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Quote:
Originally Posted by kemasa View Post
Well. what aspect to CA which many people in other states forget is property tax issues (Prop 13). In other states they can tax you out of your house. A friend, who used to live in CA, complained about the cost of living in CA, but then moved to PA and learned what expensive was. In the township, there is a privilege tax just because you live there.

The CA FFL can forced to collect sales tax because the sale is done by the CA FFL. DROS==Dealer Record of SALE. The actual ownership of the firearm is done by the CA Dealer. Who and when it was paid for really does not matter in many respects (strawman purchase excluded).
I am not surprised the state enforces such a policy, but I don't know if it is legal or not. I don't see where title to the firearm ever transfered to the CA dealer, short of CA just saying it did.

OTOH, I also don't see that the legal fees involved in fighting such a thing would be worth the effort.
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  #13  
Old 07-01-2009, 11:57 AM
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Well, take a look at the bound book and that shows that the firearm was transfered to the CA dealer. That could be viewed as the title. It could be considered that the person who paid for it has a lien on the firearm, but they don't own it as the ownership is not transfered until the transaction is completed.
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  #14  
Old 07-01-2009, 12:04 PM
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Quote:
Originally Posted by ilbob View Post
The way it is supposed to work is that unless the business you buy online from has a presence in CA, they don't collect the sales tax. The buyer is supposed to pay it on his income tax form.
I agree with you, but the CA tax law I looked up online does not. It specifically says that even if the business is not recognized by the state of CA, the tax must still be collected by the FFL. Also, this seems to specifically apply to guns. If you buy other stuff from out of state you are supposed to pay the tax on your income tax.

It was a little more "legal" than that, but that's the general idea.
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  #15  
Old 07-01-2009, 2:50 PM
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If you buy really expensive towels on ebay from Boston, you are suppossed to pay a use tax on your 540 for that purchase. No one does and the state can't enforce it.

If you buy a car on ebay in Boston, you have to register it with California when you bring it back in. They got you for tax on the amount you declare because of the DMV hoop you have to jump through. Guns are exactly the same. I am your DMV for guns.

Maybe after awhile, Obama will mandate towel dealers.
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  #16  
Old 07-01-2009, 3:03 PM
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Quote:
Originally Posted by Rudolf the Red View Post
If you buy really expensive towels on ebay from Boston, you are suppossed to pay a use tax on your 540 for that purchase. No one does and the state can't enforce it.
Well, the state can't enforce it UNLESS they happen to get the sales records from the business. I have heard rumor that with the money shortage, CA is working harder to get this information.

The problem is that you have to trust that the business will honor your privacy and not turn over the information.

Quote:
Originally Posted by Rudolf the Red View Post
If you buy a car on ebay in Boston, you have to register it with California when you bring it back in. They got you for tax on the amount you declare because of the DMV hoop you have to jump through. Guns are exactly the same. I am your DMV for guns.
Quite so.

Quote:
Originally Posted by Rudolf the Red View Post
Maybe after awhile, Obama will mandate towel dealers.
Most likely the towel dealers will just go out of business and you will no longer be able to get towels, plus you won't even have money to buy towels, which solves the problem with sales tax in two ways.
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Old 07-02-2009, 7:14 PM
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Regarding to the sales tax for out-of-state transfer, I got embarrassed the other day:

I was in a gun shop in IN, want to buy one nice pistol which is on the CA approved list and price is very good. I talked to the manager that I was from CA, the gun need to be shipped to my FFL, so there should be no IN sales tax for this purchase. The manager refused, said if I buy gun here, I need to pay IN sales tax, he does not care whether the CA FFL charges sales tax or not.

So if I buy the gun there, shipped to here, I have to pay sales tax twice: one in IN, one in CA while transfer? Ridiculous! Left without purchase(too expensive, twice sales taxes+shipping)
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Old 07-03-2009, 1:03 PM
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Go outside and call the place. Tell them that you are from CA and heard that they had a firearm that you wanted and that you will have it shipped to your FFL. If you really want it, call them when you are not there. Also, if you get your FFL to send his/her paperwork, then a resale permit should be included and that is used to avoid paying sales tax.

A customer of mine had the same situation, he was at the place. I called the place and explained that my resale permit was included with my FFL and that while the person was paying, they were not actually buying it there, so that no sales tax was to be charged. It took a bit, but they eventually agreed.

If you do not pick it up, then you really are not buying it. The simple fact is that you can not actually "buy" it since you are from out of state. You can pay for it, but that does not transfer ownership to you. It is a strange case where paying does not equal buying as the ownership does not transfer, which is needed for you to "buy" it.
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Old 07-11-2009, 9:34 AM
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BTW, it is not the case that a PPT is sales tax free in all cases. If the FFL is involved in finding the buyer or if the FFL is involved in the sale price, then sales tax is due.
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Old 07-11-2009, 10:19 AM
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Quote:
Originally Posted by maxima View Post
Regarding to the sales tax for out-of-state transfer, I got embarrassed the other day:

I was in a gun shop in IN, want to buy one nice pistol which is on the CA approved list and price is very good. I talked to the manager that I was from CA, the gun need to be shipped to my FFL, so there should be no IN sales tax for this purchase. The manager refused, said if I buy gun here, I need to pay IN sales tax, he does not care whether the CA FFL charges sales tax or not.

So if I buy the gun there, shipped to here, I have to pay sales tax twice: one in IN, one in CA while transfer? Ridiculous! Left without purchase(too expensive, twice sales taxes+shipping)
You can get a form that you fill out to get a refund for sales tax that you paid as a non-resident. You can even do that for out of country purchases in Canada, for instance. Contact online the taxing agency from the state you made the purchase in and they will likely have a form. You fill it out and attach proof of residency in another state.

Many businesses that are near state lines have those forms on hand to help encourage tourists to buy.
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Old 07-14-2009, 1:50 PM
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Thank you for the good advice, kemasa and eltee. It looks like a lot of hassle to do in-person our-of-state purchase
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  #22  
Old 07-15-2009, 12:24 PM
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Actually, it is not all that much of a hassle. The main problem is in finding out all the rules and regulations. I recently received more info with respect to sales tax which is that if the firearm comes from a CA dealer which charges sales tax an the transfer dealer does not get involved with the price or find the buyer, then no sales tax is due.
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Old 07-16-2009, 7:03 PM
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Quote:
Originally Posted by ept000 View Post
This part threw me. I saw where it was stated in the rules, but it still threw me.

FWIW lots of people are quick to say we should just leave CA because of all it's ridiculous laws, but I say nay nay. Others should move here and help us fight. After all, when they finish crushing CA, they are coming for your state next. You need to fight where the battle is, and right now it's in CA.

Sorry, I tend to get off track every once in a while...
The only way you are going to change the laws in this state is to do a ballot initiative. The state legislature will never change them and fighting them in the courts will take years, millions of dollars, and will unlikely give you the results you would like to accomplish.
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