Another Tax Question

[tenpercentfirearms]

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!

Just one problem with that idea, I as the retailer am responsible for collecting sales tax. I can't just tell everyone no tax and you are responsible for paying it. I am liable for taxes paid and if I want I can pass that cost onto the customer, but I don't have to.

[lakai]

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.

****, I just spent like 30 mins typing up about 2 pages and some reason when I pressed submit, I lost everything!!!

Anyways to sum it up,

I have a license to do business in other states, so therefore I am obligated and accountable to pay used tax in states that I deal with. The only reason I have done this is because one of my clients in which gives me 2mil in business requires that I do so. Its a major pain in the ***, but either I do, or say screw that and not get the business.

I am actually thinking whatever information you got about this issue is a bit questionable. The logic is that you as a merchant pays the used tax for the state, or the customer declares it and pays it. That makes sense and is clearly defined. However, you as a third-party which is not in direct sale of the firearm charge tax for reasons in your words "worth me taking on your tax liability". I am in no way judging you on how you do business, and as a business owner myself, by all means do I understand where you are coming from and would I not want reasons to be responsible for another person's obligations, but also as a business owner, I would really question what the BOE has told you to do.

A few reasons for this. The logic of use tax laws applies to those doing business licensed to do business in another state or a consumer making a purchase from another state right ? I don't think anyone is really arguing that. Where I see the grey area is where the dealer in which the firearm was transfered to has nothing to do with the actual transaction in the form of monies for the sale of the firearm. This is where it becomes questionable because nowhere does it clearly define a person in your position right ? However I would caution any response I get from the BOE for this reason.

I called my CPA earlier today and asked him about this entire situation, He used to be an auditor for the BOE before becoming a CPA. His response was "There should be no reason for them to charge any tax what so ever since they are merely an agent holding the firearm and have no legal obligation to collect taxes on the sale of it." Makes perfect sense to me and I'm sure all of you, but he brought up a very good point by saying this. "If he collects taxes on it then he ultimately admits responsibility and obligated to pay taxes that he wouldn't necessarily should have." In essence, you are putting yourself in a position to owe taxes by charging taxes. I asked him if this was definite, and he said he was 99% sure, but would clarify and get back to me on monday.

Another reason that would make me question what the BOE told me is that by charging the taxes on a sale, wouldn't that really mess up your books ? You would have to add it to your sales revenue right ? That would make you look like you made more money on the books than you actually did which is quite an adverse affect. You could be losing out on any deductions and claimed losses for the year by adding a sale that you made absolutely $0 on to your books.

See if you can confirm this with another party. I wouldn't want you to be setup like that. I admit

Either way, I'll let you know what my CPA finds out on monday. I can say he is a pretty credible source and is looking out for me (as his customer) and not the BOE.

I think a good balance between risk of audit and reward of a satisfied and repeat customer would just to charge a higher fee for your service. I think that would be the way to go until you get further definite clarification on your liability to collect taxes.

[tenpercentfirearms]

I think a good balance between risk of audit and reward of a satisfied and repeat customer would just to charge a higher fee for your service. I think that would be the way to go until you get further definite clarification on your liability to collect taxes.

LOL. If I charge a higher fee for my service, then the customer is not going to be happy. If I charge sales tax, the customer is not going to be happy. No matter what, the customer is not going to be happy.

Transfers are not a way to make money. They are a way to help out a few people and get people in the door. So far my method seems to be working. $25 is cheap for a transfer and everyone seems to accept the fact the BOE considers me the retailer. I honestly do not want to do transfers enough that it warrants me to take on a possible tax liability. Again, the only reason a customer would get upset that I am collecting sales tax is if they do not plan on paying their use tax at the end of the year. I do not mind if people who plan on cheating their taxes don't like what the BOE has told me.

Take the info below to your CPA as well as this has been discussed many times before.

http://www.calguns.net/calgunforum/showthread.php?t=51391&highlight=boe+retail

http://www.calguns.net/calgunforum/showthread.php?t=74622&highlight=retail+boe

[johnny_22]

Small claims court

Just one problem with that idea, I as the retailer am responsible for collecting sales tax. I can't just tell everyone no tax and you are responsible for paying it. I am liable for taxes paid and if I want I can pass that cost onto the customer, but I don't have to.

This test equipment company was ready to charge me for that sales tax after the fact, until I proved that I had paid it already. If a customer is willing to stick you with the sale tax and fines, the court will quickly rule in your favor.

You will lose that customer, but, if they are sticking you with the tax, they aren't the best customer.

[tenpercentfirearms]

This test equipment company was ready to charge me for that sales tax after the fact, until I proved that I had paid it already. If a customer is willing to stick you with the sale tax and fines, the court will quickly rule in your favor.

You will lose that customer, but, if they are sticking you with the tax, they aren't the best customer.

Are you sure about that? What part of the tax code says customers have to pay sales tax?

http://www.boe.ca.gov/sutax/faqpurch.htm

2. Who is responsible for paying sales tax to the Board of Equalization?
As a seller, you owe the sales tax and are responsible for paying the correct amount to the Board. If you do not pay the correct amount, you are subject to additional tax charges plus applicable penalties and interest charges.

Who is responsible for paying the BOE? I am.

Can I collect sales tax from my customer?
Yes. Although you are required to pay and report sales taxes to the Board, you may be reimbursed by your customer for the amount of tax you owe on a sale. For example, if you are required to pay $1.75 in sales tax on a sale, you may pass that cost on to your customer, provided it is agreed to as part of the sale. It is presumed that the customer agrees to pay the addition of the tax if:

You list a separate amount of sales tax reimbursement on your receipts or invoices;
You post a sign on your premises stating that sales tax reimbursement will be added to all prices of taxable merchandise, or make a similar statement on price tags, advertising material, and other printed material directed to the purchaser; or
The sales agreement specifically calls for the addition of sales tax reimbursement.
If you include sales tax reimbursement in your prices, rather than itemizing it separately on your invoices or receipts, you must inform the buyer that tax is included. You can post this information at your premises in a location that is visible to purchasers; or you can include it on a price tag or in an advertisement (whichever is applicable). Use one of the following statements:

All prices of taxable items include sales tax reimbursement computed to the nearest mill; or
The price of this item includes sales tax reimbursement computed to the nearest mill.

Who is not required to pay Sales Tax? The customer. Note that is says I may pass the tax on to you. However, I am still responsible for it.

So again, I can't just decide to make all of my prices without tax and just rely on my customers to pay it. I am responsible for paying sales tax and if it isn't properly paid, I am responsible and I pay the fines.