Charity Event

[Nardo1895]

I was asked by one of my regulars to purchase a couple of firearms for a fund raiser silent auction. First time for me doing this so I have a few questions.

1. If the firearms are to be present at the event, I believe they need to remain under my control which means I have to be there. Correct?
2. The winning bidder will need to come to my place of business to process the 4473 and DROS. I assume I would process this as a dealer sale between me and the winning bidder, much like I'd do an internet transfer?
3. I believe the group is a 401c. Is there a way to transfer ownership to them so they can display the firearms without me there, and then after the auction transfer to the winning bidder as a PPT?
4. I am not donating these to the auction, although I am furnishing them, "at cost". I think I collect sales tax on what I charge them for the firearms, and not what they receive as a high bid. Correct?

Anything else I should know about?

[Tyke8319]

I was asked by one of my regulars to purchase a couple of firearms for a fund raiser silent auction. First time for me doing this so I have a few questions.

1. If the firearms are to be present at the event, I believe they need to remain under my control which means I have to be there. Correct?
2. The winning bidder will need to come to my place of business to process the 4473 and DROS. I assume I would process this as a dealer sale between me and the winning bidder, much like I'd do an internet transfer?
3. I believe the group is a 401c. Is there a way to transfer ownership to them so they can display the firearms without me there, and then after the auction transfer to the winning bidder as a PPT?
4. I am not donating these to the auction, although I am furnishing them, "at cost". I think I collect sales tax on what I charge them for the firearms, and not what they receive as a high bid. Correct?

Anything else I should know about?

Nardo
I've done quite a few of these for DU, CWA, Wild Turkey and RMEF.

1. If the guns are to be on display, yes, you must be there. They must be under your care, custody and control.

2. Yes. The winner completes all paperwork at you place of business. That's the easiest way. (Keep it simple) There is another way but that's a real pain.

3. NO, you do not want to get into the hassle of trying to register to the 501c3. You are the dealer in possession until they get reg'd to winner(s).

4.You charge tax to the winner at the time of reg...or the 501c3 can pay the tax as a good will gesture. Best to have the winner pay the tax on the amount you donated them for[U]...if that makes sense.

5.Good to give the winner a receipt listing the firearm and serial number.

[Nardo1895]

Thanks!

[Skip_Dog]

If you do not want to be there, they can provide detailed picture and description of said firearms.

[Tyke8319]

If you do not want to be there, they can provide detailed picture and description of said firearms.

I've found that really doesn't work very well. Virtually all bidders or prospective winners want to see the actual item and maybe pick it up and examine it.
Pictures just don't work if you really trying to raise bids to the highest price.
Would not be my recommendation...

[BOBGBA]

Here's how I've seen it handled at the Fundraiser that I've volunteered at for the past several years.

The organization holding the event collects the sales tax at the same time they collect the silent auction payment.

The sales tax amount is based on the sales price paid by the winner, not what you charge the 501c3.

The sales tax rate that is used should be based on where the transfer takes place (brick and mortar store or home based FFL, whichever it is).
The tax rates can differ between the location of the fundraiser and the location of the FFL transfer.

[Nardo1895]

I've found that really doesn't work very well. Virtually all bidders or prospective winners want to see the actual item and maybe pick it up and examine it.
Pictures just don't work if you really trying to raise bids to the highest price.
Would not be my recommendation...

I agree. I think you get better impulse buying if people can see and hold it. Unfortunately I am out of town on the day they scheduled the event. That is why I asked about transferring them to the 501c.

What if I transferred them to the event organizer and then they do the PPT after the event? Sometimes it isn't crystal clear where the fine line of a straw purchase is. I know a gift isn't considered a straw purchase, but I'm not sure in this case. The event organizer is buying one of the firearms from me to donate to the event, but I think the organization is paying for the second one. Just to be clear, I want to comply with the law, I'm not looking for a shady way around it.

These are not high end firearms so maybe it wont matter.

As far as sales tax; an auction is different than a raffle, right? I have transferred a raffle winner's firearm and as I recall there was no sales tax on that, although I didn't supply the firearm in that case so I'm not sure what the dealer who sold/donated it did about sales tax.

[BOBGBA]

...As far as sales tax; an auction is different than a raffle, right? I have transferred a raffle winner's firearm and as I recall there was no sales tax on that, although I didn't supply the firearm in that case so I'm not sure what the dealer who sold/donated it did about sales tax.

I have never seen sales tax collected on a raffle winners prize. My guess is because they are purchasing a "chance", not the actual item. The actual item was not sold to them.

I don't believe that lottery ticket winners pay sales tax on the amount they win.

[Tyke8319]

I agree. I think you get better impulse buying if people can see and hold it. Unfortunately I am out of town on the day they scheduled the event. That is why I asked about transferring them to the 501c.

What if I transferred them to the event organizer and then they do the PPT after the event? Sometimes it isn't crystal clear where the fine line of a straw purchase is. I know a gift isn't considered a straw purchase, but I'm not sure in this case. The event organizer is buying one of the firearms from me to donate to the event, but I think the organization is paying for the second one. Just to be clear, I want to comply with the law, I'm not looking for a shady way around it.

These are not high end firearms so maybe it wont matter.

As far as sales tax; an auction is different than a raffle, right? I have transferred a raffle winner's firearm and as I recall there was no sales tax on that, although I didn't supply the firearm in that case so I'm not sure what the dealer who sold/donated it did about sales tax.

As you mentioned, if you transfer to the 501c3 it must be to an individual, not the entity (sometime nobody wants to do that for various reasons). Now you have the added situation of the transfer from the 501c3 individual to the winner being a Private Party Transfer; just another headache. Trying to coordinate a time when both can be available can be a problem.

Don't worry about the straw purchase thing. It really doesn't come into play in this situation.

An announcement of some sort, maybe written on the winners receipt, that the winner must be lawfully able to receive and possess a firearm. I've run into that situation where the winner was not eligible to receive a firearm (say a minor or ex-felon).

Typically, tax in collected by the entity for auction items and you would collect on raffle items based on the price you sold the firearm for to the entity or the entity could collect tax in raffle items based on the price they paid for it.

[taperxz]

I have never seen sales tax collected on a raffle winners prize. My guess is because they are purchasing a "chance", not the actual item. The actual item was not sold to them.

I don't believe that lottery ticket winners pay sales tax on the amount they win.

[Tyke8319]

^^^Correct

[BOBGBA]

Lottery winners do in fact get taxed on their substantial winnings...

The OPs question was about sales tax, not income tax.

No where did I say that Lottery winners pay no tax.