Double Taxation?

[Bafangoo]

So I was recently the successful bidder of a C&R handgun, in a firearm auction conducted by a Midwest auction house. Their invoice included sales tax which appeared to be calculated on their home state percentage. I of course paid the entire invoice.

When the gun was shipped to my designated SoCal FFL, they invoiced me for their fees, DROS, etc., and imposed CA sales tax on the full amount of the auction house invoice, including “tax on tax,” as the sender-state sales tax was included in the calculation. They told me that IF the Midwest seller had a resale license in CA, they’d refund the CA tax to my card.

Can this be correct? So if the auction house is not remitting to CA, I have to pay double taxation? Am I crazy to think that something is amiss here? Your thoughts please. Thank you.

Michael

[Capybara]

I buy guns off of GunBroker, pay my local sales tax to the seller and when my FFL01 received it here, she verifies I paid the sales tax via the Gunbroker receipt and that's it. If the GB seller didn't charge me, she would collect it. Perhaps GB has a setup where they channel the sales tax to the California State Franchise Tax board? But if you didn't buy from GB, it sounds as if you are somehow getting ripped off. You shouldn't have to pay the state sales tax from where the seller is, only the Ca. sales tax for your county. That auction house should be collecting sales tax on your purchase based upon your county of residence's sales tax rate and forwarding it to the State Franchise Tax Board. The way they are handling this sounds shady, double taxing you. I'd raise a stink over it, not ok.

[oc16]

Originally Posted by Bafangoo

So I was recently the successful bidder of a C&R handgun, in a firearm auction conducted by a Midwest auction house. Their invoice included sales tax which appeared to be calculated on their home state percentage. I of course paid the entire invoice.

When the gun was shipped to my designated SoCal FFL, they invoiced me for their fees, DROS, etc., and imposed CA sales tax on the full amount of the auction house invoice, including “tax on tax,” as the sender-state sales tax was included in the calculation. They told me that IF the Midwest seller had a resale license in CA, they’d refund the CA tax to my card.

Can this be correct? So if the auction house is not remitting to CA, I have to pay double taxation? Am I crazy to think that something is amiss here? Your thoughts please. Thank you.

Michael

You only have to pay the tax once. If you are charged out-of-state California cannot collect sales tax because you have already been taxed on the sale. I would call the auction house and have them invoice the receipt as evidence to your FFL.

[Bafangoo]

Gunbroker is a different animal, I think, from that Midwest auction house. Gunbroker has a resale license to do business in CA, and therefore remits sales tax to CA, when their buyer is located here. I don’t know how it’s handled, sales tax-wise, when the auction house doesn’t regularly do business with CA. Thank you both for your input.

[Nevada Hudson]

Seems that goes on a lot. Just like filling up your car, as you are charged a tax on a tax.

[Mustang]

Originally Posted by Bafangoo

So I was recently the successful bidder of a C&R handgun, in a firearm auction conducted by a Midwest auction house. Their invoice included sales tax which appeared to be calculated on their home state percentage. I of course paid the entire invoice.

When the gun was shipped to my designated SoCal FFL, they invoiced me for their fees, DROS, etc., and imposed CA sales tax on the full amount of the auction house invoice, including “tax on tax,” as the sender-state sales tax was included in the calculation. They told me that IF the Midwest seller had a resale license in CA, they’d refund the CA tax to my card.

Can this be correct? So if the auction house is not remitting to CA, I have to pay double taxation? Am I crazy to think that something is amiss here? Your thoughts please. Thank you.

Michael

I've bought quite a few guns from out of state auction houses. Most will waive their home state sales tax if you request it. A few will not, claiming that they are required by their home state to collect it (looking at you, New York)

When you got the receipt, did you request a waiver?

[Bafangoo]

No. I didn’t know/think to do that. First firearm purchased at auction (outside of Gunbroker), and never heard of such a waiver. Perhaps I’ll call them Monday, and ask them to do it “ex post facto.” I know, I know - good luck with that, lol.

[SonofWWIIDI]

I’ve said it before…

They tax you when you earn it, they tax you when you buy, they tax you when you own it, they tax it when you die, they tax you when you sell, they tax you when you save, they tax you all your life and then say go to hell.

[C&Rtrader]

So.... I dealt with this and won circa 2011 YMMV:

I purchased a rifle in NV. Paid sales tax, paid shipping, sent to Ca 01FFL. 01FFL charged me tax on the rifle, the shipping, and the NV tax.

I tried to argue with 01FFL that:
1. I do not pay tax on shipping so long as a common carrier is used
2. I receive CREDIT for the tax already in Nevada
3. I only owe the DIFFERENCE between what I paid in Nevada and what California sales tax would have been.
by way of illustration:
if the Gun was $500, Nevada Tax was $25, Shipping was $50 the CA 01FFL wanted to charge tax on $575. They cited a DOJ letter that they were to collect tax on out of state purchases.

I had to get the 01FFL on the phone with the california franchise tax board (they are rather helpful actually) to learn:
1. you do NOT charge sales tax on shipping
2. Nevada is one of the states were california recognizes tax paid to another jurisdiction. I was to ONLY pay the difference between CA tax and NV tax.

so instead of paying tax on $575 *.0825 = $47.44
i was to pay the difference between NV sales tax ($500*.05 =) $25 and CA Sales tax ($500 *.0825=) $41.25 .. ie $41.25 - $25 = $16.15

instead of paying $47.44 I ended up paying $16.65

total headache yes. worth the hassle for $30, not really But I like to think i got at least 1 01FFL to stop collecting tax our state was not entitled to based on a DOJ letter that was clear as mud. I figure if what I did saved every buyer $30 over the next 5+ years then 100% worth it. this 01FFL is not longer in business (retired)

I dont think you would deal with the FTB on this anymore, but more likely the CDTFA.. their number is: 1-800-400-7115

note well.. as of the last time i looked at this CA does NOT recognize sales tax paid in another state for every state. NV happen to be on the list at that time.

key take away: you SHOULD get credit for sales tax already paid in another jurisdiction.

[71MUSTY]

Originally Posted by C&Rtrader

So.... I dealt with this and won circa 2011 YMMV:

I purchased a rifle in NV. Paid sales tax, paid shipping, sent to Ca 01FFL. 01FFL charged me tax on the rifle, the shipping, and the NV tax.

I tried to argue with 01FFL that:
1. I do not pay tax on shipping so long as a common carrier is used
2. I receive CREDIT for the tax already in Nevada
3. I only owe the DIFFERENCE between what I paid in Nevada and what California sales tax would have been.
by way of illustration:
if the Gun was $500, Nevada Tax was $25, Shipping was $50 the CA 01FFL wanted to charge tax on $575. They cited a DOJ letter that they were to collect tax on out of state purchases.

I had to get the 01FFL on the phone with the california franchise tax board (they are rather helpful actually) to learn:
1. you do NOT charge sales tax on shipping
2. Nevada is one of the states were california recognizes tax paid to another jurisdiction. I was to ONLY pay the difference between CA tax and NV tax.

so instead of paying tax on $575 *.0825 = $47.44
i was to pay the difference between NV sales tax ($500*.05 =) $25 and CA Sales tax ($500 *.0825=) $41.25 .. ie $41.25 - $25 = $16.15

instead of paying $47.44 I ended up paying $16.65

total headache yes. worth the hassle for $30, not really But I like to think i got at least 1 01FFL to stop collecting tax our state was not entitled to based on a DOJ letter that was clear as mud. I figure if what I did saved every buyer $30 over the next 5+ years then 100% worth it. this 01FFL is not longer in business (retired)

I dont think you would deal with the FTB on this anymore, but more likely the CDTFA.. their number is: 1-800-400-7115

note well.. as of the last time i looked at this CA does NOT recognize sales tax paid in another state for every state. NV happen to be on the list at that time.

key take away: you SHOULD get credit for sales tax already paid in another jurisdiction.

This is technically correct. Should only cost you about $1000. and a couple jars of lube to prevail with CDTFA. Good luck.

[C&Rtrader]

Originally Posted by 71MUSTY

This is technically correct. Should only cost you about $1000. and a couple jars of lube to prevail with CDTFA. Good luck.

Just curious, why would this cost $1,000?
At the time there was a tax code section for "credit paid to another jurisdiction" the woman I spoke with at FTB knew exactly what I was talking about the second I said it. it was pretty easy really. It just took time.

[Bafangoo]

Thank you for the detailed and informative post. I’ll check it all out.