Tax on consignment?????

[IrishPirate]

Went and bought an Astra Cub .25acp today since it was on consignment for $150. After all the paperwork was done i was rang up and the total came to $187.38.....I was immediately caught off guard because of the 7.38 part and asked why it wasn't a round number. The lady told me it was $150 for the pistol, $25 for DROS, and $12.38 for tax. I asked why it was taxed and she said it was part of an estate sale. I didn't think much of it because i thought the DROS was going to be $35, so really i was only out an extra $2.38 but I can't help shake the feeling that there shouldn't have been tax on it. $2.38 isn't a big deal if the DROS really was supposed to be $35, but if DROS on consignments is supposed to be $25 then $12.38 could pay for most of a box of ammo for my gun when i go pick it up...

so what's the deal? should it have been taxed? was the DROS correct???

[IrishPirate]

Bueller.......?

[trob]

sales tax...it works in mysterious ways. At a shop i work for, we sell used kayaks without charging tax..but ive always been charged tax when buying a consignment/used gun at a shop.

[IrishPirate]

but i sold a guy my gun at the same shop only minutes before i bought this one and he wasn't charged sales tax. So if consignment and PPT are the same thing, then why did i have to pay tax and he didn't???

[SVT-40]

PPT and consignment are not the same for tax purposes.

In a PPT you directly sell the gun the the buyer WITHOUT any involvement from the store EXCEPT to have them act as the licensed agent who preforms the mandated DROS.

In a consignment sale you contract with the FFL to sell your item in their store at retail. Thus triggering the application of sales tax IN ADDITION to the DROS.

[IrishPirate]

a-ha....got it, thanks!

[jonzer77]

At least is was a $25 dros, markleys charges tax on top of the $35 ppt transfer fee for a consignment sale.

[IrishPirate]

yeah i was expecting a $35 DROS so i guess it's really only another $2.38.......not a big deal.

[den888]

Correct, that has been my experience.

PPT and consignment are not the same for tax purposes.

In a PPT you directly sell the gun the the buyer WITHOUT any involvement from the store EXCEPT to have them act as the licensed agent who preforms the mandated DROS.

In a consignment sale you contract with the FFL to sell your item in their store at retail. Thus triggering the application of sales tax IN ADDITION to the DROS.

[Rob454]

Tax is supposed to be charged in any transaction where you purchase something from a store. in a PPT all you are doing is using the store to hold the weapon until you pass the background check. They are not collecting any money from you except for the DROS fees. A consignment sale basically goes through the gun store since they are the ones actually selling the gun to you and giving the owner his percentage of the sale.

Im pretty sure if the state could charge a tax for a item sold between two individuals and if there was a way to enforce it they would

[halifax]

Here is the applicable BOE annotation (note bolded section)

295.1675.600 Service Charge for Sale of Firearms. Since the change in the law requiring private parties to sell firearms only through licensed dealers, a company asks whether the fee it charges to file the required state paperwork to the Department of Justice is subject to tax.
Whether the company is liable for sales tax on the transaction depends upon
whether the company is the retailer of the firearms. If an owner of a firearm and a purchaser have negotiated the terms of the sale in advance and then bring the firearm to the company to meet the statutory requirements of the Penal Code, the company is not the retailer of the gun and does not owe tax on the fee or any other charges for the firearm. If, however, an owner of a firearm brings the gun to the company and requests the company to find a buyer, the company is the consignee and the retailer of the firearm, and is liable for sales tax on the sale. In that case, the company must include all fees and charges in the measure of tax.

Of course if the dealer is liable for the sales tax he will be collecting it from the buyer usually.

[xenophobe]

This isn't a firearms specific law, this is a tax law. It works this way when you consign ANYTHING in California.

[IrishPirate]

maks sense....guess not all FFL's fully understand since i've bought guns on consignment and not been charged tax before. At least i know what to expect now so when it happens again, it's no big deal, and when they forget it'll make me smile even more

[Rob454]

so, if the store consigns the gun five times, tax will be charged five times?

even though the consigning customer gets the original money anyway?

and that original consigning customer does not have a business license?

and does not have to report profits? or report invoices to the tax board?

Well the gun is being sold five times. Which means for every new sale/owner of the gun there will be tax applied to the sale as long as the gun is being sold on a consignment basis. nothing illegal or shady.
No different than someone buying a car and each new owner sells it to another guy. When they go register it they end up paying tax on the purchase.

The original owner is no longer the owner of the gun. He has absolutely nothing to do with the sale of the gun at this point. The "original" money was paid to him by the then new purchaser. The new purchaser can turn right around and sell it through consignment to the next guy in line who will pay tax on the gun. and so on and on and on.

The original consignment buyer or seller do not need a license of any kind. The store is the licensed seller of the gun.

The store is the one that pays the tax for you. that is the reason they collect it. basically the tax you pay to the store on a item you purchased so actually just collected by the store. They do not get to keep it spend it etc. They have to pay it to the state. it does not go in the shop owners pocket.

[jonzer77]

Tax is supposed to be charged in any transaction where you purchase something from a store. in a PPT all you are doing is using the store to hold the weapon until you pass the background check. They are not collecting any money from you except for the DROS fees. A consignment sale basically goes through the gun store since they are the ones actually selling the gun to you and giving the owner his percentage of the sale.

Im pretty sure if the state could charge a tax for a item sold between two individuals and if there was a way to enforce it they would

Gun stores don't sell guns to be nice though. They are collecting a portion of the sale to sell the gun for the person. If they charge 10-15% plus $35 instead of $25 then that sucks. The extra $10 on the DROS is so the gunshop makes some money for their time for a PPT.