When CA FFLs should collect SALES TAX from consumers.

[headwaters]

Thanks for the quick response. And yes, it did occur to me (much too late) that purchase of the receiver would have made this all much cheaper and simpler.

I'm getting a little too old to be consoled by the notion of "live and learn" and "I'll know better next time". Then again....

[robojet]

My apologies if this is already addressed. I've read through, and frankly I find the topic confusing. I'm just curious and would like to understand how the rules apply to this situation...

I was visiting family out-of-state (let's say AZ for example). I went to a store that had a handgun I wanted. I purchased the handgun at the store in AZ, where they charged me sales tax. They shipped the handgun to a CA FFL. The CA FFL charged me sales tax. I explained that I already paid sales tax, but the CA FFL said they were required to pay the sales tax. This is so wrong, but so are so many of the rules we deal with here. Can someone point out how this is required?

Quick Edit/Addition: I have the receipt that show that I paid the sales tax in AZ.

[greybeard]

Not a FFl, but I am sure the tax authority here in CA does not care about AZ sales tax.

[robojet]

I think I found the answer in an earlier post... this stuff just makes me sad.

Quote:
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.

[halifax]

Originally Posted by robojet

My apologies if this is already addressed. I've read through, and frankly I find the topic confusing. I'm just curious and would like to understand how the rules apply to this situation...

I was visiting family out-of-state (let's say AZ for example). I went to a store that had a handgun I wanted. I purchased the handgun at the store in AZ, where they charged me sales tax. They shipped the handgun to a CA FFL. The CA FFL charged me sales tax. I explained that I already paid sales tax, but the CA FFL said they were required to pay the sales tax. This is so wrong, but so are so many of the rules we deal with here. Can someone point out how this is required?

Quick Edit/Addition: I have the receipt that show that I paid the sales tax in AZ.

Originally Posted by robojet

I think I found the answer in an earlier post... this stuff just makes me sad.

Quote:
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.

Two problems here: First, the AZ retailer should not have collected AZ sales tax because you weren't taking possession of the firearm in AZ, they shipped it to CA. Second, the BOE is going to hold the CA dealer (not you!) responsible for the full measure of sales tax due. Don't expect the CA dealer to deduct the AZ tax paid in error for you. You will need to work that out on your own when filing your 540 or by asking AZ for a refund.

This is a BOE response for a similar situation where a customer purchased a firearm in NV and paid NV sales tax:

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.

[kemasa]

As said, the AZ dealer should not have collected sales tax as you were just paying for the firearm, not actually buying it as it has to be transferred through a FFL. It is the same as if you ordered it over the Internet. Sometimes it is best to walk out the door and call them and order the firearm.

I had a customer who went into a gun shop out of state and it took a bit, but finally I convinced the place to not charge the sales tax. It is easier to deal with this before paying though.

[GentleMinh]

Hey fellow Calgunners. I had a question about cali sale tax. since im about to receive a pistol from an out of state dealer. My question is would i be taxed for the labor? Invoice is 1799.99 for parts kits, 999.99 for labor, 45.00 for S/H/I ? Would i be taxed for the labor of 999.99 and shipping handling and insurence of 45.00? thanks in advance

[halifax]

All costs associated with the firearm are taxable including a CC fee if you also paid that. The DROS is the only non-taxable item.

[kemasa]

Originally Posted by GentleMinh

Hey fellow Calgunners. I had a question about cali sale tax. since im about to receive a pistol from an out of state dealer. My question is would i be taxed for the labor? Invoice is 1799.99 for parts kits, 999.99 for labor, 45.00 for S/H/I ? Would i be taxed for the labor of 999.99 and shipping handling and insurence of 45.00? thanks in advance

Sales tax would be based on the total that you paid, including shipping.

FYI, you might be better off (in the future) to have the firearm transferred, then send it to have the work done on it as the firearm could be sent directly back to you and would not be subject to sales tax.

[kemasa]

I would rather have sales tax than income tax. The problem is that you really need to do it one way, otherwise people will find ways around it. If there was a Federal sales tax instead of income tax, then all the illegal businesses would be taxed.

There is also the problem of how you would get there from here since you money was already taxed. I also don't think that people realize how they get taxed again and again. The dollar that you earn is taxed, then the remainder is taxed on sales tax, as well as property tax, etc.

[bufflee01]

Ok, here is my scenario...I apologize if this has already been addressed:

I found & purchased a long gun from a private party seller in CA and he sends the gun to my local FFL also in CA. FFL states that this transaction is not consider a FTF transaction and that he needs to collect CA sales tax on the price I paid for the gun. IS THIS TRUE?

Thanks in advance for your comments!

[kemasa]

It is not considered a FTF transaction, but that does not matter. As long as it is being purchased from a private party in CA and is an occasional sale, not from a business and the FFL did not get involved in finding the buyer/seller or involved in the price, it is not subject to sales tax.

The CA BOE changed their view regarding purchases from out of state private parties in late 2011. The basis for this was that Federal law required it to go through a FFL. In this case, that does not apply since it is CA law.

Read page 2, paragraph 3 of this:

http://www.calguns.net/calgunforum/a...8&d=1340749533

This mainly is about C&R firearm from out of state, but it does talk about your issue. As well, it shows that the transfer can be exempt from sales tax even when it is from out of state (under limited conditons).

[bufflee01]

Thanks, kemasa for the lightning response!

[Matt0matic]

On an out of state firearm purchase, does a FFL need to collect tax on the items purchased along with the firearm? IE collect tax on magazines, holster, ammunition, etc. that were not shipped with the firearm to the FFL?

[kemasa]

If the items go through the FFL, then sales tax should be collected.

If there is only one invoice and the items were shipped separately, then you have a bit of a problem proving that the items did not go through the FFL and the FFL might collect sales tax to protect themselves.

[Matt0matic]

Buds did send an itemmized invoice with only the firearm listed but the FFL insisted it was only a packing slip with prices and demanded the complete invoice.

Well now I'm wiser - do two orders separating the firearms from nonfirearms when ordering out of state.

[kemasa]

BTW, you owe the sales tax regardless of who collects it, although most people don't pay it.

Yes, it is best to do it completely separately so that there are no issues.

If the complete invoice shows that the other items were shipped to you directly, then that would be proof that the FFL is not responsible for collecting the sales tax on those items.

[dpr]

If an out of state friend purchases a rifle on line as a gift to me and has it shipped to a CA FFL for transfer does the the FFL need to collect sales tax?

[kemasa]

Originally Posted by dpr

If an out of state friend purchases a rifle on line as a gift to me and has it shipped to a CA FFL for transfer does the the FFL need to collect sales tax?

As long as it is a gift and it is documented that it is a gift (such as a letter), it would not be subject to sales tax.

[generalpetres]

If I Purchased a handgun from someone online out of state And they use an ffl to ship the firearm. Does my ffl have to collect sales tax on the price of the handgun? need to know cause I'm on my way to stay dros on my handgun

[halifax]

Originally Posted by generalpetres

If I Purchased a handgun from someone online out of state And they use an ffl to ship the firearm. Does my ffl have to collect sales tax on the price of the handgun? need to know cause I'm on my way to stay dros on my handgun

Yes

[Gowking]

Originally Posted by tenpercentfirearms

CA FFLs should collect sales tax on the sale of any tangible personal property sold or delivered in the State of California.

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

FFLs should not be collecting SALES TAX on transfers of occasional or private party sales.


So if a person buys a gun from a private party on Gun Broker, then no SALES TAX should be collected. However, online auctions won from a retailer, SALES TAX must be paid.

Revisiting this thread after reading something to the contrary of the above statement I have in bold italics. Shouldn't this be edited since it is in the first post?

[Sticka]

I was at a LGS the other day and the owner of the store told me that if I did a PPT that he would have to charge me sales tax.
I asked how he would know how much I paid for the gun?
His response was that it would be "market value" if I did not tell him the price.

Doesn't sound right to me.

[kemasa]

Originally Posted by MadRiverArms

Revisiting this thread after reading something to the contrary of the above statement I have in bold italics. Shouldn't this be edited since it is in the first post?

No, since the view of the CA BOE is different and states that a FFL needs to collect the sales tax from firearms from out of state private parties.

What is SHOULD be is very different from what is actually is.

Originally Posted by Sticka

I was at a LGS the other day and the owner of the store told me that if I did a PPT that he would have to charge me sales tax.
I asked how he would know how much I paid for the gun?
His response was that it would be "market value" if I did not tell him the price.

Doesn't sound right to me.

It isn't right. Sales tax is not collected on PPTs unless the FFL gets involved with the selling price of the firearm and/or finding the buyer/seller, or if it is not an occasional sale for the seller. You can check with the CA BOE on that. I have a letter from the CA BOE in regards to sales tax from private seller out of state in which a C&R handgun is being sold to a CA buyer who has a C&R FFL. As long as it is occasional, not from a business, the FFL is not required to collect sales tax. This is a more extreme example of a private sale.

[Gowking]

Originally Posted by kemasa

No, since the view of the CA BOE is different and states that a FFL needs to collect the sales tax from firearms from out of state private parties.

What is SHOULD be is very different from what is actually is.

Maybe you didn't understand my question. In the first post of this sticky tenpercentfirearms wrote:

"So if a person buys a gun from a private party on Gun Broker, then no SALES TAX should be collected."

which is contrary to what you have stated is the position of the BOE.

My point is if the BOE says the tax should be collected on firearms transfers received from out of state private parties then the first post of this sticky should be edited to reflect that. The first post of a sticky it is inherently the most important post in the thread and should only reflect correct information.

[kemasa]

Yeah, it should, but things change over time, so you need to read the whole thread.

[kemasa]

Also read the second post :-).

[BerettaFan]

interesting ....

[CifaldiPrecision]

Looked through the thread and didnt see what to do in this situation.

Customer walked into a store in Washington and bought a firearm. Firearm is being sent to me for transfer to purchaser legally. In essence no different than an online purchase. However Washington store charged him sales tax. Does this effect or not effect our collecting of ca sales tax?

[EBR Works]

Originally Posted by IronWorksTactical

Looked through the thread and didnt see what to do in this situation.

Customer walked into a store in Washington and bought a firearm. Firearm is being sent to me for transfer to purchaser legally. In essence no different than an online purchase. However Washington store charged him sales tax. Does this effect or not effect our collecting of ca sales tax?

The WA store should not collect tax on a shipped transfer. CA tax is due only.

[kemasa]

You still need to collect CA sales tax. The WA store should not have charged him sales tax. It is really a business to business transfer, just like if he happened to call the place and paid for it over the phone.

[CifaldiPrecision]

That is exactly how I understood it too. I just wanted confirmation. I emailed them already.

Thank you,
Brett C.
IronworksTactical.com - owner

[CifaldiPrecision]

So a little follow up. Got a phone call from them today trying to say because he walked in to pay its a wa purchase and not to worry because the receipt says he paid wa state tax already he won't be required to pay ca state tax. I told them that want correct and explained it's the same as if he paid over the phone. It's still be delivered to him in ca through an FFL.


Brett C.
IronworksTactical.com - owner

[kemasa]

It is not a WA sale as it was not given to him. It can take a bit to get them to understand. I went through that with a customer who stopped by shop in another state. They did end up understanding in the end.

[CifaldiPrecision]

Originally Posted by kemasa

It is not a WA sale as it was not given to him. It can take a bit to get them to understand. I went through that with a customer who stopped by shop in another state. They did end up understanding in the end.

Bass pro stepped in and told the customer they would do it as it's a grey area and no ca tax would need to be collected. Uh sure that's on them. I still think this should be treated as kemasa explained.


Sent from my iPhone using Tapatalk

[kemasa]

Originally Posted by IronWorksTactical

Bass pro stepped in and told the customer they would do it as it's a grey area and no ca tax would need to be collected. Uh sure that's on them. I still think this should be treated as kemasa explained.

That is funny as it is not a gray area. The CA BOE says that the CA FFL has to collect sales tax on a firearm if it is coming from out of state and the business does not collect CA sales tax.

The buyer did not take possession when out of state as the firearm can not be transferred to them.

Yeah, an employee can say that they will do it because things won't come down on the employee, but on the business owner.

[CifaldiPrecision]

I agree. I wrote the boe also and will post up what they say once it comes back.


Brett C.
IronworksTactical.com - owner

[mkasda]

Confirming sales tax is collected on price of firearm, shipping to FFL (from out of CA), and FFL transfer fee. The only thing BOE changed guidance on was eliminating the sales tax on $25 DROS fee.

[kemasa]

Yes, for an out of state transfer.

For in-state, the selling FFL is responsible for collecting the sales tax on the transfer dealer's FFL fee, as well as on everything else.

[CifaldiPrecision]

Ok one more that I may have missed here. A firearm that is used and being transferred in state. For instance seller is in nor cal. They ship an FFL the gun directly so purchaser in so cal can do transfer through them. This is technically a person to person transfer so no tax but does it change since the FFL has go run it as a normal sale through the DROS system? I would think that wouldn't change anything because the FFL wasn't involved in negotiating the price, finding the buyer/seller etc.


Brett C.
IronworksTactical.com - owner