When CA FFLs should collect SALES TAX from consumers.

[kemasa]

It really depends on your system and how it need to be entered.

Yeah, the BOE is worse, especially if you are a CA FFL and sell and ship a firearm to a CA FFL since you are responsible for the sales tax on the transfer fee of the other FFL.

[Eddy's Shooting Sports]

Originally Posted by Mrs Rabbit

Soooo, after a few hours and the overwhemling desire to slam my head on my desk a few times, I have one question.

Example: I am shipped a gun for dros etc purchased by my customer from an out of state dealer. I really don't see the 'issue' that some dealers have with this. Takes 10 minutes to compare serial numbers/ check the roster/A&D it and pop it in my safe. Anyway... The above mentioned customer comes in for dros etc assuming the firearm is exactly what he expected etc. Now, I go to ring up his 'sale'. How do I show the invoiced price to tax?

My thoughts: Put that gun in my system for the price he paid making it taxable, then discount that amount? I need to show in my system that he paid the tax but obviously I didn't take in those monies.
or do I simply calculate the tax amount and enter it as an 'extra' charge?

I agree with the majority here, this one issue regarding the BOE is more 'difficult' to interpret than our Cali gun laws.

I use quick books point of sale and what I'd was to create a non-inventory item that is not taxed and called it "sales tax on transfer". It is mapped to a holding account I created in quick books. When I file my return to BOE I simply run a report on monies collected in this account and list them on the return as "additional tax collected".

[Mrs Rabbit]

Thank you Greg,

I use Quickbooks POS as well. Hope you do not mind me 'borrowing' your way of doing this.

[Eddy's Shooting Sports]

Originally Posted by Mrs Rabbit

Thank you Greg,

I use Quickbooks POS as well. Hope you do not mind me 'borrowing' your way of doing this.

Glad I could help. QB POS can be a bit frustrating for me. I'm still learning the ins and outs after 15 months using it.

What I'm really waiting for is Coloseum Software to release the new version of their AIME bound book program. It is supposed to integrate with QB POS. This would sure reduce the data entry time when setting up a new customer.

Do you have any special tricks you use?

Cheers!

Greg

[Mrs Rabbit]

Special tricks? Does turning it on and hoping it works count? or coming here and searching for other dealer's trial and errors? j/k... kinda, this forum has been a godsend for me.

We have only been open for 3 weeks now. Doing well but still getting accustomed to how everything has to work etc. Good thing I learn really fast. My husband is the 'go to' guy for the more detailed questions but I'm able to hold my own in 'general' questions and I manage the orders etc. Love it.

Kelly, AKA Mrs Rabbit.

[Eddy's Shooting Sports]

Is your shop in Palmdale? If so, I will send you a customer of mine. He lives in Santa Cruz but is working in Palmdale on the Sophia 747 observatory.

Name of the shop?

[Mrs Rabbit]

We are in Palmdale:

39450 Third Street East Unit 101 (cross streets are Ave P and Third street East)
Palmdale Ca 93550

If he needs directions he can call me at 661-273-3452

[glock_this]

I admit I did not read all 8 pages as it seems the main topic here is collecting sales tax on the firearm sales and my question is totally different, but related

My FFL charges a $40 transfer fee and sales tax on the $40. Is that right? The transfer fee is a service, not a tangible product so I was caught a bit off guard. Not major as it is a few dollars, but I did not think they could charge tax on the fee?

[kemasa]

Originally Posted by glock_this

My FFL charges a $40 transfer fee and sales tax on the $40. Is that right? The transfer fee is a service, not a tangible product so I was caught a bit off guard. Not major as it is a few dollars, but I did not think they could charge tax on the fee?

Sales tax on the FFL fee is required if the firearm is subject to sales tax, which in the case that you describe applies. So, you should be paying sales tax on the $40, as well as the total cost of the firearm, including shipping.

Sometimes there is tax on labor/fees per the CA BOE.

[glock_this]

Originally Posted by kemasa

Sales tax on the FFL fee is required if the firearm is subject to sales tax, which in the case that you describe applies. So, you should be paying sales tax on the $40, as well as the total cost of the firearm, including shipping.

Sometimes there is tax on labor/fees per the CA BOE.

Thanks for the education on that. Nickel and mofo dimed living here in CA. They exact their pound of flesh from us at every turn.

[kemasa]

The worst part is that we have people elected to the BOE board, but they don't respond and don't do anything to represent us. I sent email regarding the change in view of the BOE with respect to forcing dealers to collect sales tax on firearms from out of state private parties, but the person did not respond. This change is just pure theft since there is nothing in the CA BOE code which says that if it goes through a FFL that sales tax has to be collected and it also conflicts with their response when the handgun is a C&R and the buyer has a C&R FFL as it still has to go through a FFL, but it might be exempt from sales tax.

[shooter5]

Ok, so i officially have a headache..

If State law dictates (in-state shipping of) handguns must be shipped from one FFL to another FFL,

Its still a PPT (tax exempt) right?, has NOT been imported (out of state "use" or whatever),

So what Is taxable here and why? please..

too many different answers for too many scenarios to follow this madness..

[kemasa]

CA State law does not require firearms be shipped from one FFL to another FFL.

A PPT is where BOTH parties go to the same FFL. A firearm which has been shipped can not be a PPT.

The CA BOE regulations don't actually talk about sales tax when it is forced to go through a FFL, so that excuse is bogus when the firearm comes from a private party.

Currently the view from the CA BOE is that a firearm coming from in-state from a private party, which is an occasional sale and not from a business (not how it is shipped), then it is sales tax exempt. In the case of a C&R firearm where the buyer has a C&R FFL and the seller is a private party out of state and it is an occasional sale, it is not subject to sales tax.

If the firearm is subject to sales tax, then the FFL is also subject to sales tax. The TOTAL cost for the firearm, including shipping, is subject to sales tax.

If you really want a headache, realize that if a CA FFL sells a firearm and ships the firearm to another FFL to do the transfer, the selling FFL owes sales tax on the transfer fee for the other FFL even though the selling FFL does not know what the fee might be or anything else.

[shooter5]

Well that's what I thought and echoed by CGF, but I've had 2 FFLs say otherwise.. One specifically say it was CA law for handguns. (again in state)

I understand the FFL can choose to except only from another FFL, however the Tax debate its still up in the air in this case..

I have located FFLs who state EVEN if shipped from another FFL they will not charge TAX if the seller includes basically a written bill of sale declaring it is a private sale and he is not a dealer, only shipping through one..

Yet some will charge TAX.. WTF?

I know this is just more redundant California nonsense, but there really is no reason for this not to be cleared up by now...

[kemasa]

If they say it is the law, then they can provide the Code Section.

The sales tax is pretty clear, although it is not right.

It is not really a matter of if the other FFL ships the firearm, it is whether they are selling it or involved in the sale. If it comes from a private party within CA and it is an occasional sale and the FFL is not involved in the sale, then it is exempt from sales tax. If it comes from out of state, then with the exception of a C&R handgun going to a C&R FFL holder, it is subject to sales tax.

Part of the problem is that while the law did not change, the view of the CA BOE did. Another part is that some FFLs did not know what the law was before, or even now.

[swamp2]

I am in the process of purchasing a rifle from an occasional non-business seller out of state (bought private party through gunbroker). My local FFL (first time with this particular FFL) insist that in letters and meeting(s) as recently as the last 2-3 months with the BOE that in this case they must collect sales tax. This is absolutely contradictory to the statement in the original post. I don't want to "bully" or pester my FFL but I sure as heck don't think I should be paying sales tax on this purchase. Can anyone clarify very recent updates on this particular situation? Perhaps even a way I can relay this information convincingly to my FFL. Thanks kindly.

[halifax]

See post 146. The rules have changed.

[kemasa]

Originally Posted by swamp2

I am in the process of purchasing a rifle from an occasional non-business seller out of state (bought private party through gunbroker). My local FFL (first time with this particular FFL) insist that in letters and meeting(s) as recently as the last 2-3 months with the BOE that in this case they must collect sales tax. This is absolutely contradictory to the statement in the original post. I don't want to "bully" or pester my FFL but I sure as heck don't think I should be paying sales tax on this purchase. Can anyone clarify very recent updates on this particular situation? Perhaps even a way I can relay this information convincingly to my FFL. Thanks kindly.

As said, things have changed. Your FFL is correct, sales tax is to be collected on the total cost of the firearm, including shipping.

The first post was before the BOE changed their view and what was true then is not true today. I have a letter from the BOE from 2009 which says the other view and a letter from 2012 which has the new view.

[swamp2]

Thanks kemasa and halifax! Much appreciated. OP should update 1st post...

[kemasa]

Readers should read ALL of the posts :-).

[SoCal Bob]

Hi, I have read through all the posts and hopefully have a quick question. I am buying a C&R revolver from another Calgunner, who is also within CA. He is using a local FFL to ship the revolver to my FFL. Confirming that my FFL will not need to collect tax on this transaction. I have an 03FFL if it makes any difference.

[kemasa]

Originally Posted by SoCal Bob

Hi, I have read through all the posts and hopefully have a quick question. I am buying a C&R revolver from another Calgunner, who is also within CA. He is using a local FFL to ship the revolver to my FFL. Confirming that my FFL will not need to collect tax on this transaction. I have an 03FFL if it makes any difference.

Sales from private parties within CA is not subject to sales tax IF it is an occasional sale and not from a business (through a business is not an issue that I am aware of). If a CA business finds the buyer/seller and/or gets involved in the price, then if that CA business does the transfer, they are responsible for collecting the sales tax.

Assuming that the seller documents that he is a private party, it is an occasional sale and he does not have a business, then it would not be subject to sales tax. In this case the fact that it is a C&R does not matter. It is only when the seller is out of state that the C&R comes into play if you have a C&R FFL to have it be exempt from sales tax if it is an occasional sale.

[SoCal Bob]

Thank you kemasa for the quick reply.

[EBR Works]

Let's take another scenario; A person now in CA moved to CA and left several of his firearms in another state. He now wants an FFL in his former state to ship these firearms to a dealer in CA for transfer to him. Is tax due?

[ugimports]

Originally Posted by EBR Works

Let's take another scenario; A person now in CA moved to CA and left several of his firearms in another state. He now wants an FFL in his former state to ship these firearms to a dealer in CA for transfer to him. Is tax due?

If these are all his firearms I think he can ship them direct to himself as part of "moving" into the state.

Assuming he can't do that for some reason I don't think sales tax is due if they are his own firearms already. Seems a waste to have to re-DROS everything though when he can fill out forms for pistols and nothing for long guns otherwise.

[kemasa]

Originally Posted by EBR Works

Let's take another scenario; A person now in CA moved to CA and left several of his firearms in another state. He now wants an FFL in his former state to ship these firearms to a dealer in CA for transfer to him. Is tax due?

My view (the BOE view might vary) would be that the firearms are not being sold, so no tax would be due. You should have some documentation that is the case, not just his word.

He could ship the firearms to himself and fill out the CA new resident form, but that assumes he can go back to where the firearms are.

[WhiskeyHotel2]

Scenario: I have a customer buying a gun on Gunbroker from another FFL in CA and he pays the selling FFL the CA sales tax on the purchase and shipping of the gun. Then when I receive it I charge my transfer fee plus the sales tax for my "service" and the $25 DROS fee. Is this correcti?

[kemasa]

Originally Posted by WhiskeyHotel2

Scenario: I have a customer buying a gun on Gunbroker from another FFL in CA and he pays the selling FFL the CA sales tax on the purchase and shipping of the gun. Then when I receive it I charge my transfer fee plus the sales tax for my "service" and the $25 DROS fee. Is this correcti?

Well, it is not quite correct, although it tends to work to make it easier. The CA retailer, in this case the other CA FFL, is supposed to collect the sales tax on your transfer fee, but the problem is that many FFLs don't know that and don't know what your fee is, so it is often easier to just collect the sales tax and then if the seller ever has an issue, you can show that the tax was paid. The BOE can't force you to collect the sales tax as a transfer dealer, so they force the retailer. In the case of the firearm coming from out of state, you are considered the retailer, so then they can force you to pay the sales tax.

[WhiskeyHotel2]

Originally Posted by kemasa

Well, it is not quite correct, although it tends to work to make it easier. The CA retailer, in this case the other CA FFL, is supposed to collect the sales tax on your transfer fee, but the problem is that many FFLs don't know that and don't know what your fee is, so it is often easier to just collect the sales tax and then if the seller ever has an issue, you can show that the tax was paid. The BOE can't force you to collect the sales tax as a transfer dealer, so they force the retailer. In the case of the firearm coming from out of state, you are considered the retailer, so then they can force you to pay the sales tax.

Ok so I would just charge my transfer fee and DROS fee and not worry about any sales tax since it isnt my responsiblity.

[kemasa]

You could, but if you know that the seller did not collect sales tax, it is better to just collect the sales tax. We don't need issues with the BOE closing down FFLs due to sales tax issues. I am sure that you would prefer that others do what they can to assist you, correct?

[tenpercentfirearms]

Like kemasa said, techinically the shipper should collect everything. When I ship, I just collect sales tax on what I am shipping. Hopefully the other FFL is collecting the rest.

When I receive, I charge sales tax on my $50 transfer fee. I wouldn't if the purchaser could show the other dealer collected the sales tax on my transfer, but that has never happened. Ever.

[WhiskeyHotel2]

Yeah makes sense, so have the shipping FFL include the invoice to see if the sales tax was collected to determine if additional sales tax needs to be collected for the transfer fee. Voila! haha

[dachan]

Anybody seen the letter referenced here?
http://www.calguns.net/calgunforum/s...8&postcount=53

[kemasa]

I suspect it is an old letter. I would be very happy if it was a recent letter.

[plutonium]

Just picked up my savage 12 bvss 308c bought from buds gun shop for a low price but I was charged sales tax at sharpshooters ffl in torrance....but when i bought a gun from gallery of guns it was sent to bain and davis in san gabriel and i did not pay any tax,ffl fee or 10day doj check fee..i think they include all of this in the original price.. which is higher than buds gun...too bad they dont tax all those companies selling cloths in the garment district in los angeles....millions of dolllars not taxed

[CifaldiPrecision]

We are only responsible for collecting tax on the serialized firearm portion of the sale correct? So for instance if someone purchased a stripped lower and a bunch of accessories and it was all shipped to me I don't have to collect tax on everything do I?

[kemasa]

You are responsible for anything which goes through you business. If they don't want to be charged sales tax, the other items should be shipped direct.

If you retain a receipt for the item and it shows other items were shipped with it, who do you think that the BOE would go after, you, a CA business, or some customer?

[CifaldiPrecision]

Ok makes sense. Thanks for clarification.

[headwaters]

I am having a rifle built by an out-of-state shop. I collected (purchased) all the parts over the course of a year, and shipped them to the 'smith. I purchased the receiver from the 'smith, so the completed rifle must be returned through an FFL. Since the labor is not taxable, I should only be taxed on the value of the receiver, correct?

[kemasa]

At a guess, you would owe sales tax on the receiver, shipping and the FFL fee. You might have to provide proof that you provided the parts and had paid sales tax on those items. Labor can be taxable and in this case it might be. The receiver was not transferred to you, so the total cost could be included for the sales tax, so sales tax on what you paid might be appropriate. It is really something that you would need to ask the BOE about. The FFL is not going to want to get stuck if there is an audit.

To be honest, it would have been easier if you transferred the receiver and then sent that back to get the work done.