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  #1  
Old 01-01-2013, 4:06 PM
glorified_welder glorified_welder is offline
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Default paying tax on a used gun purchased from lgs

I recently dros'd a kimber 1911 from a local gunstore. They had just taken in a complete estate of firearms from a customer whos wife made him sell off his whole collection. I figured it would be a ppt due to it coming from a private party. As I paid for the 1911 I was charged a $35 fee for dros and another $70 for tax, when asked about the $70 for tax I was told I was being charged tax because they bought the whole lot of guns so my purchase was from the shop not a private party.

I'm wondering if being charged tax on a used firearm purchase is correct. I was also told once by a respected ffl, that when a ffl takes in firearms in this manner their is a 30 day period in which they must wait before they can be sold thru the shop. I read the sticky above but really didn't find my answer. It is a new ffl and if they are doing it wrong I would like to inform them as they are very unaware of the laws. They are nice guys but ive already seen them trying to sell stripped pistol lowers and sbr. I was able to inform them of the current laws and they corrected their information. Thanks you for your time.
-Jason
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  #2  
Old 01-01-2013, 4:14 PM
gregorio gregorio is offline
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The way the tax law read is that sales tax is supposed to be collected on any and every transaction of qualified goods even between private parties. No one does but since there is someone with a license involved, there is no way around it.
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  #3  
Old 01-01-2013, 5:02 PM
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Quote:
Originally Posted by gregorio View Post
The way the tax law read is that sales tax is supposed to be collected on any and every transaction of qualified goods even between private parties. No one does but since there is someone with a license involved, there is no way around it.
I don't think that is correct.

Sales tax is collected whenever a retailer makes a retail sale. Since the retailer has the firearm listed at the business and they are helping sell it, the sales tax is due. Had you bought it directly from the guy, then no sales tax would be due.
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Old 01-01-2013, 6:54 PM
gregorio gregorio is offline
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In the specific case above, the dealer took ownership and possession. Since they are a business entitiy engaged in retail sales, they are required to hold a resale license and must pay sales tax regardless if the item is new or used.

I went back and read the rule I had in mind and it looks to be more geared towards interstate sales. See Publication #110 http://www.boe.ca.gov/pdf/pub110.pdf for what I was thinking. Private parties engaged in frequent substantial sales (3+ per year) of goods are required to report and pay sales tax. I was combining the two in my head.
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  #5  
Old 01-01-2013, 9:54 PM
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If I remember correctly there is also a section that states something to the extent that if the business predominantly conducts business in those manors then tax must be collected. IE LGS buys and sells online but their bread and butter is privet party transfers or estate sales.

What I'm wondering in the OP's statement is that the LGS said that tax is due because they bought the entire lot of weapons. If that is the case why are they charging the $35 DROS/Transfer fees. Seems to me that they charged you an extra $10 for DROS (ran it through as a PPT) but also charged as if the firearm was on consignment/bought directly from the shop.
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  #6  
Old 01-01-2013, 10:14 PM
bill_k_lopez bill_k_lopez is offline
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Quote:
Originally Posted by tenpercentfirearms View Post
I don't think that is correct.

Sales tax is collected whenever a retailer makes a retail sale. Since the retailer has the firearm listed at the business and they are helping sell it, the sales tax is due. Had you bought it directly from the guy, then no sales tax would be due.

You are incorrect. By law you should be charging/paying sales tax on PPTs as well. Same for items sold on e-bay, craigslist, your garage sale etc.

http://www.boe.ca.gov/lawguides/busi...sutl/6007.html

CHAPTER 1. GENERAL PROVISIONS AND DEFINITIONS
Section 6007

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.

http://www.boe.ca.gov/sutax/faqpurch.htm#2

What is taxable?

Retail sales of tangible personal property in California are generally subject to sales tax. Examples of tangible personal property include such items as furniture, giftware, toys, antiques, clothing, and so forth. In addition, some service and labor costs are subject to sales tax if they result in the creation of tangible personal property.

In some instances, retailers must pay use tax, rather than sales tax, to the Board. The most common example of a purchase subject to the use tax is a purchase of an item for use in California from an out-of-state retailer. Out-of-state retailers who are engaged in business in this state are required to collect the use tax, whenever applicable, from the consumer at the time of making the sale.

The tax rate for sales and use taxes is the same.

Who is responsible for paying sales tax to the Board of Equalization?

As a seller, you owe the sales tax and are responsible for paying the correct amount to the Board. If you do not pay the correct amount, you are subject to additional tax charges plus applicable penalties and interest charges.

Can I collect sales tax from my customer?

Yes. Although you are required to pay and report sales taxes to the Board, you may be reimbursed by your customer for the amount of tax you owe on a sale. For example, if you are required to pay $1.75 in sales tax on a sale, you may pass that cost on to your customer, provided it is agreed to as part of the sale. It is presumed that the customer agrees to pay the addition of the tax if:

You list a separate amount of sales tax reimbursement on your receipts or invoices;
You post a sign on your premises stating that sales tax reimbursement will be added to all prices of taxable merchandise, or make a similar statement on price tags, advertising material, and other printed material directed to the purchaser; or
The sales agreement specifically calls for the addition of sales tax reimbursement.

If you include sales tax reimbursement in your prices, rather than itemizing it separately on your invoices or receipts, you must inform the buyer that tax is included. You can post this information at your premises in a location that is visible to purchasers; or you can include it on a price tag or in an advertisement (whichever is applicable). Use one of the following statements:

All prices of taxable items include sales tax reimbursement computed to the nearest mill; or
The price of this item includes sales tax reimbursement computed to the nearest mill.



Some sales and purchases are exempt from sales and use tax. Examples of exempt sales include, but not limited to, sales of certain food products for human consumption, sales to the U.S. Government, and sales of prescription medicine. For more information on exempt sales, please refer to publication 61, Sales and Use Taxes: Exemptions and Exclusions.

Last edited by bill_k_lopez; 01-01-2013 at 10:20 PM..
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  #7  
Old 01-02-2013, 6:41 AM
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Quote:
Originally Posted by bill_k_lopez View Post
You are incorrect. By law you should be charging/paying sales tax on PPTs as well. Same for items sold on e-bay, craigslist, your garage sale etc.

http://www.boe.ca.gov/lawguides/busi...sutl/6007.html

CHAPTER 1. GENERAL PROVISIONS AND DEFINITIONS
Section 6007

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.

http://www.boe.ca.gov/sutax/faqpurch.htm#2

What is taxable?

Retail sales of tangible personal property in California are generally subject to sales tax. Examples of tangible personal property include such items as furniture, giftware, toys, antiques, clothing, and so forth. In addition, some service and labor costs are subject to sales tax if they result in the creation of tangible personal property.

In some instances, retailers must pay use tax, rather than sales tax, to the Board. The most common example of a purchase subject to the use tax is a purchase of an item for use in California from an out-of-state retailer. Out-of-state retailers who are engaged in business in this state are required to collect the use tax, whenever applicable, from the consumer at the time of making the sale.

The tax rate for sales and use taxes is the same.

Who is responsible for paying sales tax to the Board of Equalization?

As a seller, you owe the sales tax and are responsible for paying the correct amount to the Board. If you do not pay the correct amount, you are subject to additional tax charges plus applicable penalties and interest charges.

Can I collect sales tax from my customer?

Yes. Although you are required to pay and report sales taxes to the Board, you may be reimbursed by your customer for the amount of tax you owe on a sale. For example, if you are required to pay $1.75 in sales tax on a sale, you may pass that cost on to your customer, provided it is agreed to as part of the sale. It is presumed that the customer agrees to pay the addition of the tax if:

You list a separate amount of sales tax reimbursement on your receipts or invoices;
You post a sign on your premises stating that sales tax reimbursement will be added to all prices of taxable merchandise, or make a similar statement on price tags, advertising material, and other printed material directed to the purchaser; or
The sales agreement specifically calls for the addition of sales tax reimbursement.

If you include sales tax reimbursement in your prices, rather than itemizing it separately on your invoices or receipts, you must inform the buyer that tax is included. You can post this information at your premises in a location that is visible to purchasers; or you can include it on a price tag or in an advertisement (whichever is applicable). Use one of the following statements:

All prices of taxable items include sales tax reimbursement computed to the nearest mill; or
The price of this item includes sales tax reimbursement computed to the nearest mill.



Some sales and purchases are exempt from sales and use tax. Examples of exempt sales include, but not limited to, sales of certain food products for human consumption, sales to the U.S. Government, and sales of prescription medicine. For more information on exempt sales, please refer to publication 61, Sales and Use Taxes: Exemptions and Exclusions.
Sorry Bill. You forgot the occasional sales exemption. People who do not hold nor are required to hold a BOE Retail Sales Permit are not required to pay sales tax (remember, even us with a permit are not required to collect sales tax, we are just required to pay it).

http://www.calguns.net/calgunforum/s...d.php?t=366781

Quote:
REVENUE AND TAXATION CODE 6006.5
6006.5. "Occasional sale" includes all of the following:
(a) A sale of property not held or used by a seller in the course
of activities for which he or she is required to hold a seller's
permit or permits or would be required to hold a seller's permit or
permits if the activities were conducted in this state, provided that
the sale is not one of a series of sales sufficient in number,
scope, and character to constitute an activity for which he or she is
required to hold a seller's permit or would be required to hold a
seller's permit if the activity were conducted in this state.

(b) Any transfer of all or substantially all the property held or
used by a person in the course of those activities when after the
transfer the real or ultimate ownership of the property is
substantially similar to that which existed before the transfer. For
the purposes of this section, stockholders, bondholders, partners, or
other persons holding an ownership interest in a corporation or
other entity are regarded as having the "real or ultimate ownership"
of the property of the corporation or other entity.

(c) A sale of property, other than hay, by a producer of hay,
provided that the sale is not one of a series of sales sufficient in
number, scope, or character to constitute an activity for which the
producer would be required to hold a seller's permit if the producer
were not also selling hay.
We have gone over this many, many times before. We definitely know what we are talking about.
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  #8  
Old 01-02-2013, 8:55 AM
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kemasa kemasa is offline
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What people don't realize is that if the FFL gets involved with finding the buyer, seller or gets involved in the price, then sales tax is due, even for a PPT.

A consignment sale can be done as a PPT for off roster handguns, but sales tax is still due since the FFL found the buyer and got involved with the price.

Yes, if a FFL gets firearms in for sale from a private party (not a transfer), then the firearm can not be delivered until after 30 days.
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Old 01-02-2013, 11:30 AM
glorified_welder glorified_welder is offline
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Thanks for info guys it looks like paying tax was the proper way of duing things. If I go in at the end of my ten day wait and purchase a new handgun from the shop will I still have to wait thirty days from the start of my last dros for the used handgun to start drosing the new handgun I am purchasing?
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Old 01-02-2013, 1:47 PM
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Quote:
Originally Posted by glorified_welder View Post
If I go in at the end of my ten day wait and purchase a new handgun from the shop will I still have to wait thirty days from the start of my last dros for the used handgun to start drosing the new handgun I am purchasing?
Unless the last gun was exempt from the 1 in 30, such as a PPT, you need to wait 30 days from the time you submitted the DROS until you can submit another one. If you don't, it will get rejected and so that will cost you money.
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