When CA FFLs should collect SALES TAX from consumers.

[bombadillo]

Right...... Clear as mud.

[kemasa]

Actually, it is pretty clear. Some aspects are a bit confusing, like sales tax on shipping, but it seems that their view is that shipping is not taxable ONLY if the item is shipped directly to the customer. Shipping to the FFL, as required by law, is taxable. I don't think that is right, but that does not make a difference to the BOE.

[kemasa]

Just to add this to this thread from another thread:

I did a search of the responses that I got back from the BOE (I think I am missing one or I never got it back) and I found a response to the specific issue of a firearm from out of state by a private party.

It is attached and hopefully I removed all the personal information.

Assuming this is an occasional sale between the private parties, the transaction is exempt from tax. The use tax that would normally apply when a firearm is purchased outside California and brought into California will only apply when the purchase is from a retailer. A private party is not a retailer.

In the first scenario, if the owner of the firearm and purchaser brings the gun to you and there is no involvement by you in finding the purchaser for the firearm, the sale does in fact qualify as an occasional sale, you would not be regarded as the retailer of the firearm and tax would not be due on the sales price of the firearm or any of the fees associated with the sale of the firearm.

In the second scenario, as long as the owner of the firearm is not a retailer and the owner did not involve you in finding the purchaser the transaction is an occasional sale and tax would not be due on the sales price of the firearm or any of the fees associated with the sale of the firearm.

http://www.calguns.net/calgunforum/a...7&d=1323377267

[trashman]

Originally Posted by kemasa

Just to add this to this thread from another thread:

Thanks for this - I recently paid tax on an out-of-state transfer from a private party (a C&R handgun in fact)...didn't think that was right but didn't have the information to argue the point.

--Neill

[gsc3zny]

So does this pretty much kill the online shopping business? That was just about the only reason to buy online, right?

[halifax]

Originally Posted by gsc3zny

So does this pretty much kill the online shopping business? That was just about the only reason to buy online, right?

Well, you were supposed to be paying use tax on your 540 anyway. For those that were, nothing has changed.

[trashman]

Originally Posted by gsc3zny

So does this pretty much kill the online shopping business? That was just about the only reason to buy online, right?

It just depends.

For those used to buying CA-legal pistols from Budsgunshop.com, yeah - it's now not going to be worth the hassle for most commonly available pistols (i.e.,CA-legal Glocks, Sigs from budsgunshop.com or a similar bulk retailer) to save less than $40.

For C&R handgun purchases from a non-dealer/retailer out of state, it looks like you shouldn't have to pay sales tax and so nothing in that equation has really changed. (I'd point out that I was recently incorrectly charged sales tax on a non-dealer C&R piece that I had transferred, so not all FFLs are reading the BOE letter the same way).

For folks doing SSE's, or other transfers from out of state, it just means we'll start paying attention to whether or not sellers are FFLs.

--Neill

[dexter9659]

Sportsmen's Supply has been reportedly been collecting tax on Face to Face PPTs, though Sportsmen's is acting as nothing more than the FFL filing the DROS (non-consignment or assisting in negotiating prices). I would not have known this had a friend of mine just purchased a firearm using them as the FFL. This same person was also told even though they own a gun safe, they must have/purchase a gun lock.

[trashman]

Originally Posted by dexter9659

Sportsmen's Supply has been reportedly been collecting tax on Face to Face PPTs, though Sportsmen's is acting as nothing more than the FFL filing the DROS (non-consignment or assisting in negotiating prices). I would not have known this had a friend of mine just purchased a firearm using them as the FFL. This same person was also told even though they own a gun safe, they must have/purchase a gun lock.

They've been overcharging for PPTs for a long time, too...adding a "safety handling demonstration fee" or something like that.

--Neill

[kemasa]

Originally Posted by dexter9659

Sportsmen's Supply has been reportedly been collecting tax on Face to Face PPTs, though Sportsmen's is acting as nothing more than the FFL filing the DROS (non-consignment or assisting in negotiating prices). I would not have known this had a friend of mine just purchased a firearm using them as the FFL. This same person was also told even though they own a gun safe, they must have/purchase a gun lock.

If they are charging sales tax on a FTF PPT, then they are wrong and the person should contact the BOE and perhaps the DOJ since they charging additional fees.

As to the lock, that is correct (maybe). There is a Federal law which requires a lock with a handgun, but it has not been properly published as required, so there is some question about it. The Federal law mentions a safe, but the claim is that the FFL has to provide it, which clearly is an issue with regards to the safe. The Feds don't accept the gun safe affidavit, well, that is what they say, but since it is not published, it is unknown.

[Cranium]

Originally Posted by dexter9659

Sportsmen's Supply has been reportedly been collecting tax on Face to Face PPTs, though Sportsmen's is acting as nothing more than the FFL filing the DROS (non-consignment or assisting in negotiating prices). I would not have known this had a friend of mine just purchased a firearm using them as the FFL. This same person was also told even though they own a gun safe, they must have/purchase a gun lock.

I can tell you it's not "reportedly"
They just did it to me. Handed me the letter from the BOE, then looked surprised and agitated when I actually read it, and pointed out that everything in the letter refers to "Out of State." I also felt like mentioning that since they're such sticklers for this letter from the BOE, my DROS should only be $19, but whatever.
So I paid the $19 "tax" on my transfer. With luck, I can get a letter from the BOE stating this was incorrectly collected, and get my tax back and buy some grips and a holster from them with the $$ (well, obviously kicking in some more...) I'd planned to today, but I was put ill at ease, and $19 lighter in the wallet, so it wasn't going to happen.
I'm not holding my breath that I'll be getting my money they incorrectly took from me back.

[Anchors]

So out of state guns shipped in from private parties are not taxed? Right? Only from retailers.

[EBR Works]

Originally Posted by RyanAnchors

So out of state guns shipped in from private parties are not taxed? Right? Only from retailors.

Correct.

[joefrank64k]

Originally Posted by RyanAnchors

So out of state guns shipped in from private parties are not taxed? Right? Only from retailors.

Originally Posted by EBR Works

Correct.

Nice...this should save me about $20 on an incoming CZ-50 transfer.

[Anchors]

Retailers* (sorry about that).

But that is good to know, though I suspect it will still be muddy for a few months while FFLs around the state transition into compliance.
It seems to have a lot of people upset with FFLs instead of the politicians/bureaucrats in Sacramento.

[kemasa]

Originally Posted by RyanAnchors

But that is good to know, though I suspect it will still be muddy for a few months while FFLs around the state transition into compliance.

Actually, I suspect it is going to get worse before things clear up. If you call the BOE on the phone, they will say that ANY firearm coming from out of state has to have sales tax collected on it, but they also say to get it in writing, which is a problem for them. I made a request and they have not responded. I have (posted) a letter from the BOE from 2009 which says that sales tax is NOT to be collected on a firearm from a private party from out of state. This means that the written letter should be followed unless and until a different written document says otherwise. This would also create a problem since they admitted that the laws have not changed, only their view.

I have to wonder if they are actively trying to confuse FFLs into collecting sales tax when it is not required.

It seems to have a lot of people upset with FFLs instead of the politicians/bureaucrats in Sacramento.

Yep, that seems to be the case. They, FFLs and customers, also don't seem to realize that the requirement to collect sales tax on a firearm coming from an out of state retailer is nothing new, just that some (many?) were not aware of it for some reason.

[trashman]

Originally Posted by kemasa

I have to wonder if they are actively trying to confuse FFLs into collecting sales tax when it is not required.

My thoughts exactly.

--Neill

[MGM Tactical]

Here is a scenario I have come accross a few times lately and I am not sure if it's been answered, but I would appreciate any help on this.

Lately, I had several customers leave the state on vacation and purchase firearms from a shop out of state, then have it shipped to me for transfer upon their return. During transfer, they provide a sales receipt indicating they paid for the gun in full at the actual shop and also paid sales tax on the firearm in the sending state. As the CA FFL in this scenario, do I still need to collect CA sales tax?

Thanks in advance!

[Bobula]

I had to pay tax on the purchase price of a used gun and the $10 dealer charge for a ppt'd shotgun.

[keenkeen]

Originally Posted by Bobula

I had to pay tax on the purchase price of a used gun and the $10 dealer charge for a ppt'd shotgun.

Did the dealer bring the buyer and seller together? (like a consignment) or did you just walk in with a seller you found to do a PPT?

If the first, yes, tax is collected.

If the second, no, tax is not collected.

[kemasa]

Originally Posted by MGM Tactical

Here is a scenario I have come accross a few times lately and I am not sure if it's been answered, but I would appreciate any help on this.

Lately, I had several customers leave the state on vacation and purchase firearms from a shop out of state, then have it shipped to me for transfer upon their return. During transfer, they provide a sales receipt indicating they paid for the gun in full at the actual shop and also paid sales tax on the firearm in the sending state. As the CA FFL in this scenario, do I still need to collect CA sales tax?

I am not 100% sure of what the BOE would said, but they say that a firearm coming from an out of state retailer has to have CA sales tax paid on it, so the answer would be Yes, you would need to collect sales tax on it.

I have had to deal with this in the past. The out of state FFL should not be charging sales tax since the firearm is not actually being sold to the person, they are only paying for it. The firearm is being shipped to another business and the actual sale is considered to occur in CA. The out of state FFL does not show that the firearm was sold to the customer in their bound book, nor did they fill out the 4473. It is the same as if the customer called them and ordered it on the phone.

The customer should request that the money they paid for sales tax in the other state should be refunded.

[tenpercentfirearms]

Originally Posted by MGM Tactical

Here is a scenario I have come accross a few times lately and I am not sure if it's been answered, but I would appreciate any help on this.

Lately, I had several customers leave the state on vacation and purchase firearms from a shop out of state, then have it shipped to me for transfer upon their return. During transfer, they provide a sales receipt indicating they paid for the gun in full at the actual shop and also paid sales tax on the firearm in the sending state. As the CA FFL in this scenario, do I still need to collect CA sales tax?

Thanks in advance!

Here is a USE TAX answer. I have no idea if it translates over to SALES TAX.

http://www.boe.ca.gov/sutax/faqusetax.htm#14

Last week while visiting relatives in Maine I purchased $200 in stereo equipment for use with my system at home in Sacramento, California. When I purchased the equipment I was charged five percent Maine sales tax. Do I owe California use tax on this purchase?

Yes, however, Revenue and Taxation Code section 6406 allows you to take a credit for sales or use tax paid to another state. Therefore, a portion of the California use tax you owe on the purchase is offset by the sales tax you paid to the retailer in Maine. Since the sales and use tax rate in Sacramento is 8.75%, use tax of $17.50 would be due on your purchase. However, after deducting the $10 in Maine sales tax you paid when you purchased the equipment, you would only owe $7.50 in California use tax on the purchase.

Note: For each purchase you can only take a credit for sales tax paid to another state up to the amount of California use tax you owe on that purchase. If you paid an amount in excess of the California use tax due on a purchase you cannot use this additional tax paid to offset the tax due on another transaction. Using the example above, if the tax rate in Maine were 10% and you paid $20 in Maine sales tax, you could not apply the $2.50 in additional tax you paid to offset California use tax you may owe on another purchase.

Which the whole thing makes no sense. You would think CA would want their sales tax and screw the other states.

[kemasa]

Originally Posted by tenpercentfirearms

Which the whole thing makes no sense. You would think CA would want their sales tax and screw the other states.

Yes, but in that example the person went out of state and purchased the item, so it does not seem to me that CA is due anything at all. How does CA justify it? Just because you are a CA resident?

For firearms, the BOE says that the CA FFL has to collect the sales tax on the full purchase price, including shipping. There is nothing about reducing it because other sales tax has been paid and it item was not picked up in the other state.

[Bobula]

The second. We walked in to pot a shotgun, dealer asked what I paid the seller for it and charged me tax on that amount.

[MGM Tactical]

So, in my scenario I would collect CA sales tax on a firearm which the buyer bought and paid for while out of state which includes the price of the firearm, out of state sales tax already paid on the firearm, and the cost of shipping that firearm to CA...all of which are on the customers receipt? Talk about a cluster...

[kemasa]

Originally Posted by Bobula

The second. We walked in to pot a shotgun, dealer asked what I paid the seller for it and charged me tax on that amount.

The dealer was incorrect and should contact the BOE about this.

Originally Posted by MGM Tactical

So, in my scenario I would collect CA sales tax on a firearm which the buyer bought and paid for while out of state which includes the price of the firearm, out of state sales tax already paid on the firearm, and the cost of shipping that firearm to CA...all of which are on the customers receipt? Talk about a cluster...

I would not collect sales tax on the amount of sales tax that they paid, but on the firearm and the shipping. I would hope that you would get a receipt.

I had to explain to a store that they should not collect sales tax just because the person was standing there since they were actually shipping it to a business. They finally got it. I also told the customer that if they didn't get it, to use his cell phone to call and order it :-).

[halifax]

Originally Posted by MGM Tactical

Here is a scenario I have come accross a few times lately and I am not sure if it's been answered, but I would appreciate any help on this.

Lately, I had several customers leave the state on vacation and purchase firearms from a shop out of state, then have it shipped to me for transfer upon their return. During transfer, they provide a sales receipt indicating they paid for the gun in full at the actual shop and also paid sales tax on the firearm in the sending state. As the CA FFL in this scenario, do I still need to collect CA sales tax?

Thanks in advance!

Don't know how much this helps but it's from the BOE:

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.

[keenkeen]

Originally Posted by Bobula

The second. We walked in to pot a shotgun, dealer asked what I paid the seller for it and charged me tax on that amount.

He is wrongoooo...

Not sure the $ amount or if it's worth it but take a look a this thread and then maybe try to get a refund?

http://www.calguns.net/calgunforum/s...d.php?t=516991

Edit:
Wait a minute...that thread just links to THIS thread that clearly states about 8 times that in the situation you describe no tax should be charged. So I guess just read this thread from the begining and you will have your facts!

[Cranium]

Personally, I didn't bother asking for my tax back, it wasn't worth it (cheap gun) for the headache I'm sure I would've gotten out of it.
I just chalked it as a learning experience, and the final reason not to go to Sportsmen's Supply.

[tenpercentfirearms]

Originally Posted by kemasa

Yes, but in that example the person went out of state and purchased the item, so it does not seem to me that CA is due anything at all. How does CA justify it? Just because you are a CA resident?

USE TAX must be paid even if you physically take possession out of state, but then bring it in for primary use in CA. That is exactly what the scenario and answer says. Seems pretty clear to me.

However, logically speaking, the out of state retailer should not be charging sales tax on a firearm that is being delivered out of state. I don't charge sales tax on firearms I ship out of state, even if the customer comes in and pays for it at my store. The location of delivery is what matters.

And that is what halifax's answer seems to indicate. So that makes our lives easier. If your customer wants a partial tax collection because they paid tax in another state, inform them they need to seek a refund from the out of state retailer that charged them sales tax on an out of state sale.

[kemasa]

Perhaps they should charge sales tax based on where you live, even if you are out of state.

If I went out of state and decide to buy an item on a trip, to use on the trip, but brought it back with me and then continue to use it, should I be forced to pay use tax?

Should people who move here be forced to pay use tax on items recently purchased?

If you have two houses, one in CA and another in another state, should you pay sales tax if you bring an item from one house to another?

In some cases it is clear, but still not right. I should not have to pay sales tax in another state, especially if they demand I pay CA use tax when I return.

Halifax said the same thing that I did :-).

[tenpercentfirearms]

Originally Posted by kemasa

Perhaps they should charge sales tax based on where you live, even if you are out of state.

If I went out of state and decide to buy an item on a trip, to use on the trip, but brought it back with me and then continue to use it, should I be forced to pay use tax?

Should people who move here be forced to pay use tax on items recently purchased?

If you have two houses, one in CA and another in another state, should you pay sales tax if you bring an item from one house to another?

In some cases it is clear, but still not right. I should not have to pay sales tax in another state, especially if they demand I pay CA use tax when I return.

Halifax said the same thing that I did :-).

I don't make the rules, I just follow them.

http://www.boe.ca.gov/sutax/faqusetax.htm#16

16. My company assigned me to work in Portland, Oregon for nine months. When I first arrived in Portland, I purchased a personal computer and software from a local retailer. Oregon does not have a sales or use tax and I was not charged tax. Do I owe California use tax on the personal computer and software when I return to California?

You would not owe use tax on this purchase since the personal computer was used in Oregon for nine months. Tangible personal property (excluding vehicles, vessels, and aircraft) is not considered to have been purchased for use in this state when:

A person uses the item outside of California for more than 90 days after the purchase, exclusive of any shipping or storage time; or
A person first uses the item outside of California, brings it back into California within 90 days of purchase, and then uses the item outside of California for more than half the time during the next six months.

[kemasa]

Wes, I don't think that you could make up this kind of stuff :-).

Gotta love the sales tax rules. Quite strange. So if you have two houses and you buy a TV at the other house, but only go there on the weekends, does the rest of the counts a storage time? :-)

90 magic days. I wonder if this applies if a person buys an item within 90 days of moving to CA.

[SPaikmos]

I've got a question to add to the mix.

Let's say I buy a gun from a supplier out of state (TX). I also buy some accessories from the supplier, and he gives me an invoice that looks like this:

GUN $500
ACCESSORIES $100
SHIPPING $50

I then have the supplier ship the gun to an FFL in WA to perform a SSE on the gun. The FFL in WA then ships the gun + SSE parts to a CA FFL, and he also ships the accessories directly to me.

Now, the WA FFL gives me another invoice:

SSE Fee $100

When I bring these two invoices into my CA FFL to do the transfer on the gun, what does he charge me tax on? Is it:

a) Tax on the total of both invoices ($650 + $100) for a total of $750
b) Tax on everything but the accessories ($550 + $100) for a total of $650
c) Tax on the gun + SSE and prorated on the shipping for the accessories.
d) Something else?

Conversely, when I show the invoices to the CA FFL, can I simply black out the accessories line item? Say, I don't want him to see the sex toy attachment for my gun (basically, what else I buy is none of his business)...

[kemasa]

The FFL should charges sales tax on all the items that goes through the business. If items are shipped directly, then it would not have gone through the business. It would be easier if the receipts only include what is going through the business.

The SSE is a strange one, so there are multiple ways it could be viewed. I believe you would be taxed on the full amount, which would be your item B.

I would not black out anything as that would make the FFL wonder about what was being hidden. If you want it to be none of the FFL's business, get a separate receipt.

[FLAWLS1]

I read a few posts and I'm a little confused. Here's my dilemma... I'm going to be buying a gun from my uncle who's a FFL dealer in Florida and he said he'll give me a good deal. So, lets say I'm going to buy a BRAND NEW gun from him that retails for $1,200 in FL, but he sells it to me for $800. He ships it to a local FFL here and I pay dros and what else? Also, how does my local FFL determine how much tax to charge me? Do they charge me tax on the Florida retail price of $1,200 or tax on the $800 he sold it to me for?

[SFgiants105]

Originally Posted by ugimports

I've "won" prizes before. The organization doing the giveaway sends a tax form in with the value of the item and you should get a small post card with a tax form number on it stating the value of your prize. When you do your taxes there's a form you'd fill out for "gifts" or "prizes" which I think is at a different tax rate then your normal taxes. When I won this I was a kid so I was exempt from paying it ($500 monitor).

What they should do instead is take the gun out of the box, fire one shot, and label it as a used gun and say that it's worth $5.

[kemasa]

Originally Posted by FLAWLS1

I read a few posts and I'm a little confused. Here's my dilemma... I'm going to be buying a gun from my uncle who's a FFL dealer in Florida and he said he'll give me a good deal. So, lets say I'm going to buy a BRAND NEW gun from him that retails for $1,200 in FL, but he sells it to me for $800. He ships it to a local FFL here and I pay dros and what else? Also, how does my local FFL determine how much tax to charge me? Do they charge me tax on the Florida retail price of $1,200 or tax on the $800 he sold it to me for?

You would pay the FFL a transfer fee in addition to the DROS and sales tax. Since you bought it for $800, that is what you would pay tax on. The FFL might have an issue with that, but if you tell the FFL it is from your Uncle and he is making you a deal, then it should be fine. A credit card receipt might also help to show what you paid, but of course you could make two payments so it would not show the total.

[FLAWLS1]

Originally Posted by kemasa

You would pay the FFL a transfer fee in addition to the DROS and sales tax. Since you bought it for $800, that is what you would pay tax on. The FFL might have an issue with that, but if you tell the FFL it is from your Uncle and he is making you a deal, then it should be fine. A credit card receipt might also help to show what you paid, but of course you could make two payments so it would not show the total.

Ok, thanks for the reply!

[BigMac]

if you know your going to be charged tax and you know oyu got a smoking deal, why not include an invoice so no questions??