Sales tax on transfers?

[Irish-Dannyboy]

Do we pay CA sales tax during pick up at our FFL? Its added on to the total price of gun? So for example we pay $600 online for gun now at FFL we pay the transfer fee plus the 9.5 sales tax on 600?

Thanks

[Rakso]

Originally Posted by Irish-Dannyboy

Do we pay CA sales tax during pick up at our FFL? Its added on to the total price of gun? So for example we pay $600 online for gun now at FFL we pay the transfer fee plus the 9.5 sales tax on 600?

Thanks

Yes. Assuming online retailer didn't charge tax.

[Irish-Dannyboy]

Originally Posted by Rakso

Yes. Assuming online retailer didn't charge tax.

Also is it added to the gun price or is it added to everything, transfer fee and DROS etc?

Thanks

[kemasa]

Sales tax is typically due on the transfer of a firearm, with some limited exceptions. If the seller isn't considered a CA retailer, then the CA FFL transfer dealer is. If the seller is a CA retailer, then they are also supposed to collect sales tax on the FFL transfer fee, as well as the shipping since the item isn't sent directly to the buyer.

Sales tax is based on the total cost of the firearm, including shipping, and the FFL fee. The DROS isn't subject to sales tax.

[JCHavasu]

Originally Posted by Irish-Dannyboy

Also is it added to the gun price or is it added to everything, transfer fee and DROS etc?

Thanks

Transfer fee and DROS are not taxable.

[acespawnshop]

The transfer fee is taxable. Maybe your FFL doesn't charge tax on it but they're (or at least SHOULD) paying it. For example....Us, we charge $25 but we really are less than that due to the couple bucks tax on it.

[kemasa]

Originally Posted by JCHavasu

Transfer fee and DROS are not taxable.

Only half correct.If the firearm is subject to sales tax, so is the transfer fee.

[kemasa]

Originally Posted by acespawnshop

The transfer fee is taxable. Maybe your FFL doesn't charge tax on it but they're (or at least SHOULD) paying it. For example....Us, we charge $25 but we really are less than that due to the couple bucks tax on it.

So you include the sales tax as part of your transfer fee? That seems like it could be confusing if the firearm isn't subject to sales tax.

[JCHavasu]

Originally Posted by kemasa

Only half correct.If the firearm is subject to sales tax, so is the transfer fee.

Hmmm, Ok. Not what I understood but thanks for the correction.

[kemasa]

Originally Posted by JCHavasu

Hmmm, Ok. Not what I understood but thanks for the correction.

Talk to the CDTFA (was BOE). I have.

[acespawnshop]

So you’re saying like on the few occasions we have a tax exempt transfer that our fee then is now not taxable?

[DolphinFan]

Not transfers, sales. I don’t think this effects PPT’s. Please correct me if I’m wrong.

[kemasa]

Originally Posted by acespawnshop

So you’re saying like on the few occasions we have a tax exempt transfer that our fee then is now not taxable?

Now? That is the way it has been. If the firearm isn't subject to sales tax, the FFL isn't, according to what I was told by the BOE.

[kemasa]

Originally Posted by DolphinFan

Not transfers, sales. I don’t think this effects PPT’s. Please correct me if I’m wrong.

Sales are subject to sales tax, some transfers are not, such as a gift, even from out of state (as long as it is a real gift and not a fraud).

PPTs can be subject to sales tax if the FFL gets involved in finding the buyer or seller or get involved in the price of the firearm.

[acespawnshop]

Originally Posted by kemasa

Now? That is the way it has been. If the firearm isn't subject to sales tax, the FFL isn't, according to what I was told by the BOE.

You probably told me that 8 years ago but I didn't listen.

[kemasa]

Originally Posted by acespawnshop

You probably told me that 8 years ago but I didn't listen.

And it is likely you won't listen this time either :-).

[acespawnshop]

When I ask again in 2026 don’t hold it against me.

[kemasa]

Originally Posted by acespawnshop

When I ask again in 2026 don’t hold it against me.

:-)

It will be the same then as it is today, plus I forget that I said it to you anyhow.

[mmaaka]

I just have to throw this out there but how are you obligated to charge sales tax when
1. you are not the reseller of the firearm.
2. your tax ID was not used for record that you will carry down the tax to the purchaser.

if you are only the middle man from the seller to the purchaser ?

[RoundEye]

Originally Posted by mmaaka

I just have to throw this out there but how are you obligated to charge sales tax when
1. you are not the reseller of the firearm.
2. your tax ID was not used for record that you will carry down the tax to the purchaser.

if you are only the middle man from the seller to the purchaser ?

California considers the delivering FFL to be the transfer agent, and thus responsible for paying sales tax. California law allows for retailers to seek reimbursement of said tax from the buyer. So, while they don’t “have” to charge it, they are responsible for paying for it.

[Tyke8319]

What he said...^^^

[kemasa]

To be a bit more specific, if the out of state seller, either a business or a private party, isn't a CA retailer, then CA considers the CA FFL transfer dealer to be the retailer and the one responsible for submitting the sales tax. The CA FFL transfer dealer is an easy target for CA since they are a CA business. As said, the CA FFL transfer dealer isn't required to collect the money, just submit the money, but since they are a business and are supposed to make money, they tend to have to collect the money.

There is no requirement that your reseller permit be used for out of state sellers. That is a CA thing.

You could say that it isn't right and all that, which is true, but convince the government of that. If you have a ton of cash, then you could sue and see if you can get it corrected, but even that is unlikely. Look at the recent SC case where is was said that a state could force an out of state seller to collect the sales tax for them. Their only crime was to ship products using a common carrier to that state. To me, the sales tax should be based on where the item was sold, not where it was delivered to.

[sigguy552]

How does a dealer/FFL determine the tax $? What if I say I bought this gun for $100?

[edgerly779]

^^ Then they chose a book value and tell you do not come back. If you want to scam you may not be trusted in any firearm transaction.(LOL) TRy it.

[kemasa]

Originally Posted by sigguy552

How does a dealer/FFL determine the tax $? What if I say I bought this gun for $100?

There are several options. Lying about what you paid is tax evasion. They could guess on the value if you refuse to provide proof, to be safe they should use a very high value. Then again, they could not want to get involved with your crime and just turn over the gun to the police. Good luck getting it back. In the end, it could cost you a lot more.

[Oldmandan]

Originally Posted by sigguy552

How does a dealer/FFL determine the tax $? What if I say I bought this gun for $100?

When the firearm arrives to the transferring FFL it generally comes with a receipt from the selling FFL. I’ve had a few times where it did not, my FFL asks that I email the sales receipt to them.

Actually just had this happen last week...

But, With today’s technology, it’s really easy....

[acespawnshop]

We will not do the transfer unless I get an invoice from the shipper. If you are unable to provide one, or they are not able to provide one then I would suppose that we would find a couple websites selling the same thing, estimate shipping costs and go from there to determine a value.

If you're trying to tell us that you paid $100 for a $900 firearm its not going to fly and that's a quick way for us to tell you that we will not proceed and to make arrangements with your seller to have the firearm returned. In extreme cases as Kemasa said that may be a situation where we just turn it over to PD if we are unable to return it to the seller. Don't try and fudge your tax on the thing. Its not worth your headache.

[Nardo1895]

Comment and a question.

Comment first - I don't question that BOE told Kemasa the transfer fee its taxable, but in my mind the transfer fee is labor and should not be taxable. I talked to my BOE rep about what, if anything, is taxable when I ship a firearm for a customer. He agreed that the shipping cost itself was not taxable, and that my fee wasn't taxable since it was labor. The only thing taxable would be the sale of packing materials. So if my labor to ship a gun isn't taxable, why would my labor to transfer a gun be taxable? Would it make a difference if I don't call it a fee but instead charge by the hour? I know its a bit silly - the tax on the transfer is very small. Its just a principal thing.

Question - An out of state retailer charges CA sales tax on a direct sale to one of my customers (7.25% I think). I live in a county that has a couple of sale tax overrides so tax here is 7.975%. I assume I have to charge him the difference when I do the transfer. Sounds like maybe I also have to charge him the full tax rate on the transfer fee. I have no idea how to report that when I file my quarterly sales tax payments. Have you encountered this? Any advise?

[kemasa]

Originally Posted by Nardo1895

Comment and a question.



Comment first - I don't question that BOE told Kemasa the transfer fee its taxable, but in my mind the transfer fee is labor and should not be taxable. I talked to my BOE rep about what, if anything, is taxable when I ship a firearm for a customer. He agreed that the shipping cost itself was not taxable, and that my fee wasn't taxable since it was labor. The only thing taxable would be the sale of packing materials. So if my labor to ship a gun isn't taxable, why would my labor to transfer a gun be taxable? Would it make a difference if I don't call it a fee but instead charge by the hour? I know its a bit silly - the tax on the transfer is very small. Its just a principal thing.



Question - An out of state retailer charges CA sales tax on a direct sale to one of my customers (7.25% I think). I live in a county that has a couple of sale tax overrides so tax here is 7.975%. I assume I have to charge him the difference when I do the transfer. Sounds like maybe I also have to charge him the full tax rate on the transfer fee. I have no idea how to report that when I file my quarterly sales tax payments. Have you encountered this? Any advise?

Shipping a firearm for a person is different than shipping to a person for transfer.

Sales tax applies to shipping when the item isn't directly shipped to the customer. This means that the TOTAL cost to get the item to the person is subject to sales tax when the item isn't shipped directly to the person.

The CA retailer is responsible for paying the correct sales tax. The rate is based on where the item is shipped. If they don't, it isn't your problem. The CA retailer is also responsible for the sales tax for any transfer fees, even though they don't have a clue as to what it is. I am not sure if you submit it whether it will get them off the hook, it might, so it is nice to try.

Labor is sometimes subject to sales tax. In this case the BOE has ruled that the transfer fee is subject to sales tax if the firearm is subject to sales tax.

Read:

CA Sales Tax Firearms Information 495.0843 & 495.0848

CA Sales Tax Firearms Information 295.1675.600

See 475.0055 & 295.1675.600

The bottom line mistake you are making is that you think that it all should make sense.

[kemasa]

https://www.cdtfa.ca.gov/lawguides/v.../495-0843.html

[Nardo1895]

Originally Posted by kemasa

Shipping a firearm for a person is different than shipping to a person for transfer.

Sales tax applies to shipping when the item isn't directly shipped to the customer. This means that the TOTAL cost to get the item to the person is subject to sales tax when the item isn't shipped directly to the person.

The CA retailer is responsible for paying the correct sales tax. The rate is based on where the item is shipped. If they don't, it isn't your problem. The CA retailer is also responsible for the sales tax for any transfer fees, even though they don't have a clue as to what it is. I am not sure if you submit it whether it will get them off the hook, it might, so it is nice to try.

Labor is sometimes subject to sales tax. In this case the BOE has ruled that the transfer fee is subject to sales tax if the firearm is subject to sales tax.



The bottom line mistake you are making is that you think that it all should make sense.

A couple of clarifications that don't really change the bottom line.

I get that the shipping cost a seller charges to a buyer is taxable. I don't think its right, but I get it. My shipping example was only to illustrate that labor isn't (usually) taxable.

As to the sales tax rate, the seller is out of state without an in-state presence. I assume they are charging tax based on the Wayfair decision. However, I guess that same logic applies. They are the one submitting the sales tax to BOE so its their problem if they didn't use the correct rate.

... and that last line is spot on. Silly me, thinking it should all be logical and consistent.

[kemasa]

Originally Posted by Nardo1895

...
I get that the shipping cost a seller charges to a buyer is taxable. I don't think its right, but I get it. My shipping example was only to illustrate that labor isn't (usually) taxable.

The point is in your last comment with the word "usually", which means it isn't always the case and that sometimes labor is taxable.

Look at the big picture in regards to shipping. If you go to a store and buy an item there was a cost to ship it there, but that isn't split out, and you pay the total for the item and the sales tax on the cost of shipping, but it is a bit hidden. There are also labor costs to get the item to the store..

As to the sales tax rate, the seller is out of state without an in-state presence. I assume they are charging tax based on the Wayfair decision. However, I guess that same logic applies. They are the one submitting the sales tax to BOE so its their problem if they didn't use the correct rate.

They are incorrectly charging the sales tax rate, which is one of the major problems with the SC decision. Yes, it is their problem. That is one of the nice things about the CDTFA (was BOE) in that a transfer dealer isn't the retailer when the seller collects the sales tax.

... and that last line is spot on. Silly me, thinking it should all be logical and consistent.

:-)

[Nardo1895]

Look at the big picture in regards to shipping. If you go to a store and buy an item there was a cost to ship it there, but that isn't split out, and you pay the total for the item and the sales tax on the cost of shipping, but it is a bit hidden. There are also labor costs to get the item to the store..

Ya I get it. I just don't like it :-) I do (begrudgingly) tax the shipping.

Not a big deal for new firearms, but it irritates me for my C&R customers shipping me C&R firearms and me having to tax the whole enchilada. I feel bad for the customer and the State ends up making more off these than I do. Sour grapes tho, not like I can do anything about it.

[kemasa]

Originally Posted by Nardo1895

...
Not a big deal for new firearms, but it irritates me for my C&R customers shipping me C&R firearms and me having to tax the whole enchilada. I feel bad for the customer and the State ends up making more off these than I do. Sour grapes tho, not like I can do anything about it.

If it is from a business, it is subject to sales tax.

If the C&R firearm is from a private party, it is an occasional sale and the buyer has a C&R FFL, then it isn't subject to sales tax. I have posted a letter from the BOE regarding this.

Yes, it is annoying when you are a free collection service for the government and the government gets more than you do and you are doing the work. Transfer dealers shouldn't have to deal with sales tax at all.

[OCArmory]

Also something to note when you are doing transfers. Last April more businesses out of state were classified as being required to collect California sales tax so check the receipt. Palmetto was a big one and a few others.