When CA FFLs should collect SALES TAX from consumers.

[kemasa]

Originally Posted by CA Gun Laws Suck

My question is: if a customer is purchasing a firearm from an out of state retailer is the FFL fee taxable?

I just read through the 9 pages of this thread and from everything I read it says yes. I found the link to a BOE publication from 2011. I want to confirm that it is still correct.

Yes.

[CA Gun Laws Suck]

I have a customer who purchased a lower from an out of state dealer/manufacturer. The location on their invoice is Nevada and they collected sales tax. When I received the lower I collected sales tax, because we are required to. When I contacted the company, they stated that they collected sales tax and still operate in CA so we did not need to. Basically they said, "it's not an issue". Now my customer has paid tax twice and I am trying to cover myself and resolve this issue. Thoughts?

[Gowking]

Originally Posted by CA Gun Laws Suck

I have a customer who purchased a lower from an out of state dealer/manufacturer. The location on their invoice is Nevada and they collected sales tax. When I received the lower I collected sales tax, because we are required to. When I contacted the company, they stated that they collected sales tax and still operate in CA so we did not need to. Basically they said, "it's not an issue". Now my customer has paid tax twice and I am trying to cover myself and resolve this issue. Thoughts?

Ask them for a copy of their California seller's permit. If they have one then you should refund the tax you collected on the purchase price and note that CA tax was already collected and by whom.

[kemasa]

Originally Posted by CA Gun Laws Suck

I have a customer who purchased a lower from an out of state dealer/manufacturer. The location on their invoice is Nevada and they collected sales tax. When I received the lower I collected sales tax, because we are required to. When I contacted the company, they stated that they collected sales tax and still operate in CA so we did not need to. Basically they said, "it's not an issue". Now my customer has paid tax twice and I am trying to cover myself and resolve this issue. Thoughts?

You are only required to collect sales tax if the seller does not have a presence in CA. When you see that they collected sales tax, you need to ask if they made a mistake and collected sales tax from their state or whether they collected CA sales tax. If they are the retailer, they are required to collect the sales tax on the FFL transfer fee. You can collect it if you feel nice, but I am not sure if it would help them.

You should refund the customer the sales tax that you charged on the firearm as you are not the retailer.

[CA Gun Laws Suck]

My issue was that their FFL and invoice is in Nevada and they say that they operate out of CA still. If that doesn’t change anything, I will call my customer today and get him his refund.

[kemasa]

Originally Posted by CA Gun Laws Suck

My issue was that their FFL and invoice is in Nevada and they say that they operate out of CA still. If that doesn’t change anything, I will call my customer today and get him his refund.

It doesn't matter, if they have a presence in CA, then they have to collect sales tax and they are considered the retailer, not you.

[CA Gun Laws Suck]

That answers my questions then. Thank you!

[patriot_man]

So I am in a bit of a conundrum.

I bought a rifle from a store in AZ and it is going to Audiophil to be converted. Audiophil also happens to be in AZ so the store is charging me sales tax since it is being shipped to another AZ address.

Does this exempt me from paying tax during DROS when the rifle arrives in CA? My FFL states that he needs to collect tax when it arrives.

[kemasa]

Originally Posted by patriot_man

So I am in a bit of a conundrum.

I bought a rifle from a store in AZ and it is going to Audiophil to be converted. Audiophil also happens to be in AZ so the store is charging me sales tax since it is being shipped to another AZ address.

Does this exempt me from paying tax during DROS when the rifle arrives in CA? My FFL states that he needs to collect tax when it arrives.

The AZ transfer should be exempt as it is dealer to dealer. Audiophil should be able to provide an exempt letter or whatever they use there.

CA sales tax has to be paid.

[yrs]

I've read a few pages of this thread but am just getting confused with all the permutations discussed.
So, I hope I can get a direct answer for my situation.
I plan to buy a handgun from an out of state acquaintance. The handgun is on the roster (not C&R if that matters). The seller is a private individual, not FFL nor a business/retailer. I'm buying from him directly, not through any auction or online website.

Since the gun needs to be shipped into CA, there are two possible methods:
1. my friend ships directly to my FFL as a private individual (assuming my FFL accepts shipment from non-FFL individuals), or
2. he uses his FFL to ship the gun to my FFL.

If it is method 1, would I be charged sales tax by my FFL here? How about if it's method 2?
I've been getting different answers from different people lately, so I just want to get a definitive answer on whether sales tax is collected or not for out of state on roster handgun purchase from private seller.

[ugimports]

Originally Posted by yrs

I've read a few pages of this thread but am just getting confused with all the permutations discussed.
So, I hope I can get a direct answer for my situation.
I plan to buy a handgun from an out of state acquaintance. The handgun is on the roster (not C&R if that matters). The seller is a private individual, not FFL nor a business/retailer. I'm buying from him directly, not through any auction or online website.

Since the gun needs to be shipped into CA, there are two possible methods:
1. my friend ships directly to my FFL as a private individual (assuming my FFL accepts shipment from non-FFL individuals), or
2. he uses his FFL to ship the gun to my FFL.

If it is method 1, would I be charged sales tax by my FFL here? How about if it's method 2?
I've been getting different answers from different people lately, so I just want to get a definitive answer on whether sales tax is collected or not for out of state on roster handgun purchase from private seller.

Yes

[yrs]

Originally Posted by ugimports

Yes

Well, that sucks... But I do thank you for the definitive and quick answer.

[kemasa]

Originally Posted by yrs

The handgun is on the roster (not C&R if that matters).

A C&R firearm from an out of state private party, which is an occasional sale and not from a business and the buyer has a C&R FFL would not be subject to sales tax, so yes, whether it is a C&R FFL can matter.

Otherwise it is subject to sales tax.

[kemasa]

Ammo sales tax questions and answers from CDTFA (used to be BOE):

F18-01-009 Sales and Use Tax Information

Reference #: F18-01-009

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

You are a California Firearms Dealer (FFL) and are aware that as of January 1, 2018 ammunition purchases will have to be made through a licensed ammunition vendor unless certain circumstances exist to exclude this provision. You are seeking guidance on how sales tax applies to these transactions. In your email inquiry you ask who is required to submit the tax and is tax due on the ammunition, shipping and transfer fee under several different scenarios. You state each scenario involves a private buyer who pays the seller directly and the California ammunition dealer is only doing the transfer. Therefore, I will restate each scenario followed by my response.

Scenario 1

The ammunition is sold from an out-of-state private party seller.

Response

In situations where an out-of-state private party is selling ammunition to a California (CA) private party and they agree to the sale of the ammunition without any assistance from you (you simply process the transfer without taking title to the ammunition at any time) you would not be considered the retailer and would not be responsible for the tax. The private party seller would be liable for the tax unless the transaction was otherwise exempt. The transfer of ammunition from a private party seller located outside of CA and being shipped to a licensed ammunition vendor may be treated as an occasional sale (Regulation 1595). When a sale qualifies as an occasional sale, the shipping and transfer fee would not be subject to tax.

Scenario 2

The ammunition is sold from an out-of-state business who does not have a presence in California.

Response

For sales and use tax reporting purposes, when you transfer ammunition on behalf of an out-of-state retailer that is not engaged in business in this state you are considered the retailer of the ammunition and are responsible for reporting and paying the sales tax, unless the sale is otherwise specifically exempted or excluded by statute or type of transaction. As the retailer, your gross receipts would include the sale of the ammunition, the shipping charges from the out-of-state retailer to your place of business and your transfer fee, but would exclude the Department of Justice Fee.

RTC Section 6007 defines the term “retail sale” "or "sale at retail" to mean a sale for a 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.

On the other hand, if the out-of-state retailer is engaged in business in this state under RTC Section 6203, your deliveries for that retailer will not be considered taxable retail sales made by you. In such transactions, the out-of-state retailer has the duty to collect the use tax under section 6203. That retailer should collect tax on the invoice price of the ammunition, shipping and your transfer fee even if the fee is paid directly to you by the customer, but excludes the Department of Justice Fee. When the out-of-state retailer is engaged in business with California you should maintain satisfactory evidence, such as a valid resale certificate, that the out-of-state retailer has a permit to collect and remit the California sales or use tax.

Scenario 3

The ammunition is sold from an in-state private party seller.

Response

In situations where a California private party is selling ammunition to another California private party and they agree to the sale of the ammunition without any assistance from you (you simply process the transfer without taking title to the ammunition at any time) you would not be considered the retailer and would not be responsible for the tax. The private party seller would be liable for the tax unless the transaction was otherwise exempt. The transfer of ammunition from a private party seller located within California and being shipped to a licensed ammunition vendor can be treated as an exempt occasional sale (Regulation 1595). When the sale qualifies as an occasional sale, the shipping and transfer fee would not be subject to tax.

Scenario 4

The ammunition is sold from an in-state private party where both parties meet at the California Dealer.

Response

See my response to scenario 3 above.

Scenario 5

The ammunition is sold from a California registered business which collects sales tax, is the ammunition transfer taxed and if so who owes it? As well, is sales tax owed on shipping?

Response

The answer is very similar to my scenario two response. When a California registered business sells ammunition to a private party and uses your business to conduct the transfer, the California retailer is responsible for the tax on that sale. You should maintain satisfactory evidence that it was a California registered business making the sale to the private party purchaser.

The answer given is intended to provide general information regarding the application of the tax and will not serve as a basis for relief of liability under Revenue and Taxation Code section 6596.

I hope this information is helpful. If you have any further questions regarding this or any other issue, please call our Customer Service Center at 1-800-400-7115. You may also visit our website at www.cdtfa.ca.gov.

[popawoody]

With the advent of the face-to-face ammunition law now in effect, I have a question for you FFL folks. If I purchase ammunition from an out-of-state vendor and have that ammunition delivered through my local California FFL, is that FFL required to collect sales/use tax on the purchase price of the ammunition? I'm speaking of transactions completed prior to 1/1/2019, at which point I understand the game changes.

[Edit: ]
And... it appears my answer was in the post by kemasa, immediately prior to this one. Thanks!

[CSUS_CRJ]

If I purchase a good or goods in the state of CA, pay taxes on said items and ship them out of state in trade for another firearm, in other words I trade a gun for a gun, no cash involved. The new to me (used) gun shows up at a CA FFL, whilst my old gun is now gone, does the FFL charge me tax? I already got charged but called 3 other FFLs incidental to the transfer and they said they do not collect tax in a similar situation.

[kemasa]

Originally Posted by CSUS_CRJ

If I purchase a good or goods in the state of CA, pay taxes on said items and ship them out of state in trade for another firearm, in other words I trade a gun for a gun, no cash involved. The new to me (used) gun shows up at a CA FFL, whilst my old gun is now gone, does the FFL charge me tax? I already got charged but called 3 other FFLs incidental to the transfer and they said they do not collect tax in a similar situation.

It would be subject to sales tax. While some might make a mistake, they are liable for the money owed to the state, along with interest and penalties. Don't blame the one for doing the right thing. You can confirm that with the BOE (now CDFTA or something) .