How many other FFLs are getting tired...

[tenpercentfirearms]

I just e-mailed my tax man. I am going to bed and will come back to this thread when he gives me his professional opinion.

[aplinker]

These arguments are always informative and fascinating.

I really think it's cool you guys spend the time/energy to do this.

Is taking an "order" defined in the code? It seems key from the sections you guys keep quoting and is ambiguous... is "order" when someone says, "I want that, please give it to me." Or is it referring to GOODS?

In a way, I would equate what Wes does to someone having a PO box. They can't receive the goods so they're shipped there.

(b) WHEN COLLECTION OF USE TAX IS REQUIRED.
(1) DELIVERIES INTO THE DISTRICT. A Retailer engaged in business in the district (except retailers of certain
vehicles, aircraft and vessels as described in paragraph (c)(4) below) shall not be required to collect use tax from the
purchaser of tangible personal property unless the retailer ships or delivers the property into the district or participates
within the district in making the sale of the property, including, but not limited to soliciting or receiving the order,
either directly or indirectly, at a place of business of the retailer in the district or through any representative, agent,
canvasser, solicitor, subsidiary or person in the district under authority of the retailer.

[bruss01]

That is a pretty big stretch considering it clearly states, "When tangible personal property is delivered...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." It is hard to argue I didn't participate in the sale when it is so clear in 6007 that I am considered the retailer. I know you guys don't like it, but when are you going to realize these guys set up the game like they knew how to make money?

Again, using your definition, UPS and FED EX are just as much a party to the "sale" of "tangible goods" as an FFL simply processing paperwork for an individual who completed a "sale" transaction weeks earlier with another party who resides out of state. In order to be the retailer in 6007 money has to change hands, ownership of the "tangible goods" has to change hands. If I owned the goods legally before they EVER EVEN KNEW you were the FFL they would be shipping to, the sale was over and done with before you ever entered the picture. Thus you were never an agent to the sale because the sale was over before you were ever involved.

I believe boe is either misreading the law themselves (no, that NEVER HAPPENS! lol) or they are misrepresenting it to you. They are inferring that you somehow hooked up the buyer and the seller or played some role in facilitating the sale, i.e. acting as an agent of the seller. That does not cover a situation where I make a purchase from Bud's Gun Shop in KY and they accept my payment, presto, the gun is mine. Now they ask me where I want to ship my gun. I tell them Andy's Gun shop. A few days later UPS returns the package to them saying "Andy's Gun Shop burned down, package undeliverable". So I say, Ok, then send it to TenPercentFirearms. You played no role in me obtaining (i.e. becomming the owner of) the firearm, you were not a party to the sale. That firearm, sitting on a shelf in KY, is MINE, bought and paid for. The sale was over and done with last week before it shipped out to the now-defunct Andy's Gun Shop. Now there may be a couple of people employed to put it in my hands (UPS, the FFL, maybe the ffl's wife who signed for it at the door, etc) but they are not parties to the sale.

If you are really and truly concerned, you should talk to an attorney specializing in business tax law. I have a hunch they will agree that boe misunderstood your question or answered it out of context.

[SemiAutoSam]

I could answer this but it may tend to incriminate me.

Did I mention I have a Rather large backhoe ?

tax man tax man what you gonna do when the tax man come for you

[leelaw]

I could answer this but it may tend to incriminate me.

Did I mention I have a Rather large backhoe ?

Yeah, to dig those caves..

[tenpercentfirearms]

My CPA's response.

Here is what my CPA said.

Wes, I reviewed your message boards and the code sections you all mentioned. Combining this with my general understanding of the sales and use tax law as well as my experience in dealing with the State Board of Equalization and Franchise Tax Board, I have come up with the following comments:

At first it seemed very clear to me that Code Section 6007 requires you to collect and remit sales tax on the transfers in questions. I have modified a portion of the code below, to emphasize what is pertinent in this case:

"When tangible personal property is delivered by an owner 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."

This is your exact situation, the owner has delivered the property to you, in order to redeliver the property to a consumer pursuant to a retail sale. There can be no argument that denies this. It is apparent.

But after reading it a little bit closer, I am not so sure, and I think it definitely leaves something up in the air. The last portion of the quoted text above is definitely somewhat ambiguous. "the person making the deliver shall be deemed the retailer of that property". Does that mean the out-of-state retailer, who delivered the property to you? Does it mean you as the person who is delivering it to the consumer? I know they want it to mean you, and the code was written with that in mind, but it seems like there might be some wiggle room if it ever came down to that, though probably not much, as the implication is there because of the reference to the "retailer not engaged in business in this state".

I would also definitely like to see the SBE response to your question concerning a consumer who refuses to give you the purchase price and a situation involving gifts, etc. It seems to me that even with the above cited code section, it would be very difficult to enforce, unless they also have some requirement for you to obtain and verify the actual purchase price. Pending this answer, it is impossible to advise you on the correct path to take.

There are a couple of final points I would like to make. First, your point that the code and laws don't have to make sense, they have to make cents, is a good one, but not exactly correct. The code always makes, sense, as long as you realize that the idea is to tax as much as possible and to collect as much of that tax as possible.

Lastly, the biggest issue that nobody is really mentioning here is that the purchase of these firearms is going to be subject to use tax anyway. I have seen numerous audits of individual tax returns since the beginning of the internet boom (and have heard of them even before in regards to mail-order catalogues), in which the Franchise Tax Board found that individuals were failing to pay use tax on out-of-state purchase. I don't think it is an area of the law that individuals should be trying to flout. Plus, even if you wanted to pay the use tax yourself, it is much more of a hassle than just paying a retailer and letting them take care of it. Basically, the only reason that a customer would want to not pay the sales tax to you, is because they are planning on not paying the tax at all. While I agree with the general idea that we should all do as much as we can to pay as little taxes as legally possible, this is not a gray area. The tax is due one way or another, why should you bear the liability if that is what the SBE says you must do?

So now we wait for the BOE's response to my latest letter.

[leanos]

If a FFL wanted to collect sales taxes, I would ask for a citation from the State.
You have NOT provided evidence, only a poorly supported opinion.

I take offense to 10%'s so-called authority on the matter. You are certainly not an authority on tax matters, and I would never do business with someone as uninformed as you who wishes to collect my dollars.

[metalhead357]

Well HOT DAM! NOW I know why lawyers make so much money.......... and why I only stick to the nerfarlings of the penal code! Tax code is Ludicriously inanely insane

Wes- I feel yer pain. I've oft argued it is NOT your position to collect- and yet have never balked when an FFL HAS asked me to pay. Until there is specific directive that is some tantamount edict from the holy of holies I think this mess will continue. Add in any............any off the reservation intrepretations including field agents for the tax board and I have no doubts why you collect...........

Maybe try what one FFL does; a release of liability form indicating that the persson getting the gun IS required to note the buy/tax on thier OWN tax and that the liability has therefore been essentially passed from the FFL's hand directly back to the consumer.

I know some will say "Fat chance" but I've seen the form; lord only knows if it would stand a courtroom test.....

[metalhead357]

If a FFL wanted to collect sales taxes, I would ask for a citation from the State.
You have NOT provided evidence, only a poorly supported opinion.

I take offense to 10%'s so-called authority on the matter. You are certainly not an authority on tax matters, and I would never do business with someone as uninformed as you who wishes to collect my dollars.

Go easy there tiger; You are talking to one of the original OLL'r that helped bring UP the very question(s) we're talking about. Wes is a good guy....even the umpteen time he and I disagree about how I'm ALWAY right

[Para]

Why does the state (Not the FFL) get to charge taxes in a private party sale?

The FFL is there recording the transfer to make sure it follows CA laws and is reported, there is a fee that goes to the FFL for thier time.

The transactions is still between the 2 private parties at this point.


Bah... the law and common sense are rarely similar....

[hoffmang]

Some follow up. Wes - depending on the answers you get from BOE, I may want to draft a letter for you to send that points out why you don't have an obligation to collect use tax on the BOE's behalf if you aren't the actual seller.

One set of clarifications - You should not charge tax on the DROS, but I think you know that. You also should not charge tax on your service fee as it isn't tangible property. This debate is only about whether you collect use tax (and not sales tax btw.)

All that said, use tax IS DUE from the private party who buys the gun out of state and if the FTB wishes to dislike you, they can come after you for avoiding sales tax when they audit your state income tax return.

-Gene

[CSACANNONEER]

I could answer this but it may tend to incriminate me.

Did I mention I have a Rather large backhoe ?

Reminds me of the no tresspassing sign that I wanted to post: ATTENTION TRESSPASSORS - I HAVE 400 ACRES AND A BACKHOE! But, since this is Ca., I figured that I would have been asking for trouble so, I never posted it.

[glockman19]

I will continue to use FFL's that don't charge tax for items they didn't SELL. I also know many sellers out-of-state that will write on the reciept "all pertinant fee's and taxes have been paid".

This is what I always get and have never and will never pay a sales or use tax on a FFL transfer from out of state.

Just have any out-of-state seller write this on any purchase and the CA FFL CAN NOT tax you twice and it it then the out-of-state FFL who would be liable to the CA tax boards for any payment it they could get it is another question.

[AJAX22]

I looked back through the thread, lotts of interesting stuff... I had to take a break from reading the code... Its a new language all to its own, but its interesting stuff (I love studying systems)

I haven't been able to find an answer to my previous question however.

Any ideas? This acctually happens with me alot, as I have a C&R and love to barter guns. so guns going out will be sent 03 to 03 but newer guns coming in have to go 03 to 01..

Here's a thought... what if I bartered goods for the gun? Say I traded three mosin nagants and a lee enfield for a FAL Receiver... how in the heck would that be taxed?

[hoffmang]

This is what I always get and have never and will never pay a sales or use tax on a FFL transfer from out of state.

Careful there. Your use tax is due to BOE by law. What is at issue is whether the FFL is obligated to collect it. You have to pay it.

-Gene