Another Tax Question

[dfletcher]

However, this is not a question about whether or not a CA FFL should or should not collect sales tax on a gun transferred through him from out of state. Rather, if sales tax is collected how does the FFL holder know what to base the charge on - I don't believe they get a bill of sale or specifically know the cost of the item. How do they know whether I paid $350.00 for that used Remington Sendero or $1,050.00 for that used Remington Sendero?

[Fjold]

You tell him what you paid

[Californio]

Honor system, just like when you go to the DMV and declare what you paid for an old car.

[hawk1]

However, this is not a question about whether or not a CA FFL should or should not collect sales tax on a gun transferred through him from out of state. Rather, if sales tax is collected how does the FFL holder know what to base the charge on - I don't believe they get a bill of sale or specifically know the cost of the item. How do they know whether I paid $350.00 for that used Remington Sendero or $1,050.00 for that used Remington Sendero?

Exactly. Also, how do you know it is being forwarded to BOE and not kept as profit?

[dfletcher]

Honor system, just like when you go to the DMV and declare what you paid for an old car.

That's what I thought. I have no problem looking him straight in the eye and saying "Well I paid $550.00 for this DSA STG 58.

[8200rpm]

Exactly. Also, how do you know it is being forwarded to BOE and not kept as profit?

You don't.

Get a sales receipt from the transferring FFL indicating the tax you paid. If the franchise tax board ever audits you, your liability is covered by the receipt.

If the transferring keeps the tax as profit, it's their a$s on the line, not yours.

If your worried about a tax-skimming FFL, find a FFL who doesn't insist on collecting the tax from you. You pay the tax directly to the FTB when you file your CA income tax (540) next April.

[Fjold]

Exactly. Also, how do you know it is being forwarded to BOE and not kept as profit?

Because the BOE has the option to audit the business at will. What's the most a business could skim? Maybe one percentage point of his sales? That's a lot of risk because the penalty will be much more severe.

[tenpercentfirearms]

Exactly. Also, how do you know it is being forwarded to BOE and not kept as profit?

Why do you care? You paid your sales tax which means you don't have to pay your use tax, so why do you care if the FFL keeps the money? Your responsibility is over and if someone is cheating the system, that is on them. Why does it matter to you if an FFL goes back after the fact and changes their receipt in order to steal sales tax in what is an easily audited process?

Does it upset everyone that the FFL is cheating the system while you are not (maybe not you specifically Hawk, don't take it personal)? I still find it comical that the only people that care about this is people who obviously going not going to claim their out of state purchase on their use tax at the end of the year. And FFLs are looked at suspiciously because we are following the tax code as the rotten BOE stipulates?

It is true, you can find a dealer who doesn't collect the tax as they are required to by law. I personally have no problems skipping your $25 transfer fee if that is the route you want to take. I know I am not going to take on your tax liability for any amount of money.

As far as the OPs question goes, if the price doesn't sound right, I simply ask for a receipt. I will not be doing the honor system when it is my money on the line. If you don't have a receipt, then I would have to charge retail price. If you don't like it, don't do transfers through me. Again, anyone here who thinks my $25 transfer fee is worth me trying to cheat the BOE is a fool.

I don't mind reducing costs and working within the system. That is why I give away free gun locks from Project Childsafe. That is why I don't charge you sales tax on your transfer shipping price when it is itemized separately on your receipt. I have no problems working with people. I also have no problems following the tax code either.

[zinfull]

I just use the gun digest price and let it go as that. That is the published fair price and the BOE would have a hard time proving it is not correct.

Jerry

[hawk1]

Why do you care? You paid your sales tax which means you don't have to pay your use tax, so why do you care if the FFL keeps the money? Your responsibility is over and if someone is cheating the system, that is on them. Why does it matter to you if an FFL goes back after the fact and changes their receipt in order to steal sales tax in what is an easily audited process?

Does it upset everyone that the FFL is cheating the system while you are not (maybe not you specifically Hawk, don't take it personal)? I still find it comical that the only people that care about this is people who obviously going not going to claim their out of state purchase on their use tax at the end of the year. And FFLs are looked at suspiciously because we are following the tax code as the rotten BOE stipulates?

It is true, you can find a dealer who doesn't collect the tax as they are required to by law. I personally have no problems skipping your $25 transfer fee if that is the route you want to take. I know I am not going to take on your tax liability for any amount of money.

First Wes, I don't care. The previous post was about how would the FFL know what he paid. I just threw out, how would you know he forwarded the money to add speculation to the unknown. That's all. Did that hit a nerve with you? I didn't point a finger at you or your company. In all the written or phone conversations on or off the board that we ever had, I had never once asked if you collect the tax. I actually had no clue that was your business practice until you just said in the above post. I didn't ask any FFL to justify why or what they do. If that's their business model, so be it.
Where in my post did I accuse a FFL of changing receipts, as you allude to me saying,

"Why does it matter to you if an FFL goes back after the fact and changes their receipt in order to steal sales tax"

I didn't say that.
Where in the world do you get off pointing your finger at me saying I cheat on my taxes? You have no clue what I do on my taxes. My concern is for a tax collection system that is uneven and unfair, as far as, one or some FFL doing something that is different from the others. For you to lump me in with "only people that care about this is people who obviously going not going to claim their out of state purchase" is a broad stroke by you about me and others. Very much an elitist attitude.
Frankly, to me, it's the same as if a FFL doesn't want to deal in oll's, I won't do business with them. I take my business to a FFL that is like minded and I'm comfortable doing business with and I want to support.

[johnny_22]

Paper Trail

Some day, the State of California will start working together, and, the BOE will join with the BOF to track these firearm transfers. We'll all get letters from the BOE demanding proof that we paid the sales/use tax

With the state having a record of a firearm transaction, I always send in the use tax on my firearm purchases either with Form 79b

http://www.boe.ca.gov/pdf/pub79b.pdf

or my 540 at the end of the year.

[tenpercentfirearms]

Hawk, I said that my response may not be to you so don't take it personal. You only said one simple line. I was responding to any and all insinuation that dealers are keep sales tax for themself. It just doesn't make sense for the pay out.

I am not sure if being generalistic is necessarily "elitist" as you claim, but my original point stands and that is that my response may not be about you specifically and I cautioned you not to take it personal. I apologize for not making it more clear.

[lakai]

How is it legal for FFL's to charge sales tax on the firearm if it is an out of state purchase, and the transaction of the firearm was not made through them. Isn't the FFL in which the firearm was transfered TO just the middleman and only able to charge their fee's and local sales tax on the fees alone? In the business I own, I have to file sales taxes for 15 states due to one of my clients request for this. When someone from another state orders from me, I have to charge them THEIR state sales tax, but that is the sale was directly with me. I'm just wondering, but I don't understand how it's possible for a third party to charge california, or the other state's sales tax on a purchase in which they are not a direct seller. Can someone fill me in on this ?

[tenpercentfirearms]

How is it legal for FFL's to charge sales tax on the firearm if it is an out of state purchase, and the transaction of the firearm was not made through them. Isn't the FFL in which the firearm was transfered TO just the middleman and only able to charge their fee's and local sales tax on the fees alone? In the business I own, I have to file sales taxes for 15 states due to one of my clients request for this. When someone from another state orders from me, I have to charge them THEIR state sales tax, but that is the sale was directly with me. I'm just wondering, but I don't understand how it's possible for a third party to charge california, or the other state's sales tax on a purchase in which they are not a direct seller. Can someone fill me in on this ?

Why would you ever have to collect another state's sales tax if you do not have a store front in that state? For example, no other business has to collect California sales tax unless they have a location in California. There might be a few exceptions, but I can't remember them off hand, so maybe you are one. I know I do not collect sales tax on any of the shipments I send out of state.

Basically the BOE wants every single cent they can get.

Now there is some argument over what a factor or agent of that owner is and who that person for redelivery is. However, I play it safe because in a letter to the BOE they specifically responded I should collect the tax like it was my retail sale.

Of course it doesn't make logical sense since I have no idea what the purchase price was unless I see a receipt and my sales figures are not going to match because I am reporting a phantom sale to the BOE to account for that extra tax. However, when thinking abuot the BOE, don't use logic. They want to make cents, not sense. It is a revenue game.

So as a retailer you could say screw them and refuse to collect that sales tax from the customer and rely on the customer to pay the use tax. As I stated earlier, I am fairly certain the vast majority of people who go to dealers who do not collect retail sales tax on these out of state purchases are not going to claim these use tax purchases on their income tax form. So if a dealer ever gets audited and the question come up why you didn't collect the sales tax on these items, you will have some explaining to do. I have no idea what the potential cost of fighting this in court might be. It would depend on how many of these transactions you did to determine what the potential owed tax is and possible penalties are. I do know none of that is worth me taking on your tax liability for the measly $25 transfer fee I charge.

So that is how the game is played.

[johnny_22]

If the stores are smart, they just give up the names of the buyers....

Well, if the BOE calls and asks the business where the sales tax is, you can do what one test equipment company did to me: give up the buyer's name and address!

When one East Coast company (with a sales office in CA) was audited by the CA BOE and asked about my purchase, I got a call asking why I had not paid them sales tax. I told the company I paid the use tax on it and had a cancelled check They asked me to fax the check to them (back in the day when the bank returned the original cancelled checks), and that was the end of it.