PPT fees

[kemasa]

When you are involved in the selling price of the firearm, you can get around it. You don't know what the agreement is in terms of who gets what from the purchase price.

Example 1:

Firearm: $1000 (seller gets $800, FFL gets $200)
DROS: $25
FFL Fee: $100
Total $1125
Total to FFL: $300

Example 2:

Firearm: $1090 (seller gets $800, FFL gets $290)
DROS: $25
FFL fee: $10
Total $1125
Total to FFL: $300

As you can see, one way is legal for a PPT, the other is not, but the money to the FFL is the same. It all depends on how you write it up. So, in the case of a consignment, the "fees" are not so black and white.

Does the buyer really care how it is written up? Most likely not, they just care what the total is.

[kermit315]

problem is, we arent talking about a consignment, we are talking about a PPT. If I tell you the selling price of the gun was $50, you can collect the tax on the $50 and the $35 for the PPT, and thats it.

[ke6guj]

problem is, we arent talking about a consignment, we are talking about a PPT.

that might be my fault. We were talking about PPT, and that both parties had to both go to the FFL. I said at the same time, but kemasa mentioned that you could do a "delayed PPT" where the parties come in at different times. I wondered then, what then would be the difference between a delayed PPT and a cosignment, when the dealer can charge a cosignment fee/percentage, but still is considered a PPT by CADOJ.

If I tell you the selling price of the gun was $50, you can collect the tax on the $50 and the $35 for the PPT, and thats it.

how does the FFL justify collecting tax on the sale of a private party firearm that he did not sell, and the seller did not make a business of selling firearms?

[kermit315]

Its a BOE thing, Wes has talked about it before, as far as the BOE putting the tax collection on the FFL. It has been argued about before, and not all FFL's do it, but it is really the only way to get past the $35 max on a PPT, and it cant show up as a dealer charge.

FWIW, I dont agree that they should collect the tax, but Wes showed the BOE code that basically forces their hands as merchants.

Oh, and about the consignment/PPT thing: I will go back into my corner. lol

[ke6guj]

Its a BOE thing, Wes has talked about it before, as far as the BOE putting the tax collection on the FFL. It has been argued about before, and not all FFL's do it, but it is really the only way to get past the $35 max on a PPT, and it cant show up as a dealer charge.

FWIW, I dont agree that they should collect the tax, but Wes showed the BOE code that basically forces their hands as merchants.

But IIRC, BOE does make a distiction between an FFL transfering a firearm for another merchart vs. transfering a firearm for a private party seller.

[kermit315]

But IIRC, BOE does make a distiction between an FFL transfering a firearm for another merchart vs. transfering a firearm for a private party seller.

Honestly, I dont remember what the ins and outs were, just that it had been covered and I remember that a lot of people still werent happy with the result...lol, go figure.

[kermit315]

I cant find the thread where Wes discussed it, but I did find one where jksupply talks about it.

http://www.calguns.net/calgunforum/showthread.php?t=157463

Quote:
Originally Posted by halifax View Post
495.0843 Deliveries by California Firearm Dealers for Out-of-State Retailers. California residents order firearms from out-of-state retailers and the retailers ship the firearms to an authorized California firearm dealer for delivery to the customer. The California firearm dealer charges a fee to register each firearm in California.

When the California firearm dealer completes the registration paperwork and delivers a firearm to a California purchaser for an out-of-state retailer not registered with the Board as a retailer engaged in business in this state, it is presumed that the firearm dealer is the retailer of the firearm under the second paragraph of section 6007. In such a case, the firearm dealer would owe sales tax on the total amount of the retail sales price of the gun to the customer, including the Department of Justice fee if passed on to the customer, and including any service charge made by the firearm dealer.

If the firearm dealer establishes to the satisfaction of the Board that the out-of-state retailer was engaged in business in this state under section 6203, its deliveries for that retailer will not be considered taxable retail sales by the firearm dealer, even if the out-of-state retailer has not registered with the Board as a retailer engaged in business in this state. In such cases, as well as in situations in which the retailer is in fact registered as a retailer engaged in business in this state, the out-of-state retailer has a duty to collect the use tax under section 6203. The retailer should collect use tax on the invoice price of the firearm, plus the service fee, even if paid directly to the firearm dealer by the customer. Also, the Department of Justice fee passed onto the customer should be included in the measure of tax. 12/7/95. (Am. 99–2).

(Note: On and after January 1, 1999, the Department of Justice fee is not includible in the measure of tax, but all other charges remain subject to tax.)


+1000000000 !! I hate to do it, but as a small business, I would CEASE to exist if I got hit for the tax liability of all of the out-of-state purchases that I process. I collect the tax, and it all goes to the state. There is no benefit for me to collect it. I have a copy of this posted in the shop for anyone to read.

ETA: I am misinterpreting this, the more I read it.

Read this link and look at Wes's and Halifax's posts.

http://www.calguns.net/calgunforum/showthread.php?t=192970

[snypz]

this is all so silly.

Technically bottom line is that when i and the seller go to an FFL at the same time to make a deal. The only thing i have to worry about is $35 according to the law correct?

no tax collection
no other fees
no nonsense...........right?

[kermit315]

this is all so silly.

Technically bottom line is that when i and the seller go to an FFL at the same time to make a deal. The only thing i have to worry about is $35 according to the law correct?

no tax collection
no other fees
no nonsense...........right?

As long as you have an approved lock, with the reciept showing purchase in the last 30 days, it would appear yes, by the letter of the law.

[snypz]

As long as you have an approved lock, with the reciept showing purchase in the last 30 days, it would appear yes, by the letter of the law.

a lock? ****, what kind of lock a trigger lock?

how much are these so called locks?

[kermit315]

believe it or not, CA has its own list of approved gun locks. Most common is the blue cable lock that you can get for about $10 bucks. Common theme is to buy it, never open it, use the reciept for the pickup, then return the lock.

[tenpercentfirearms]

Sales tax only applies to retail sales. An out of state transfer from a dealer or retailer is a retail sale (according to the BOE). A PPT or transfer from an individual is an occasional sale and not subject to tax. That should also make the PPT fee not taxable as well. Transfer fees are taxable, if you choose to believe what the BOE says. I do.

I have no idea how consignments work.

[kemasa]

The BOE says that if the FFL gets involved in the selling price and/or finding a buyer, than sales tax must be collected, even if it is from a private seller who does not have a business and that it is an occasional sale (for the seller).

See also:

CA Sales Tax Firearms Information 495.0843 & 495.0848, as well as 295.1675.600

It would be nice if the FFL fee was always treated the same, but it is not. Transfer fees are not taxable if the item is not taxable (per BOE), so for a true PPT the FFL fee is not taxable.

According to the BATF, the FFL must provide for safe storage, so a lock with a receipt does not count if the buyer provides it. If the seller includes it with the firearm, then it counts. I don't agree with this, but the written law is poorly written and states that the transferee is to be "provided" with the safe storage. It does not say who specifically has to provide it. A safe is mentioned, but the BATF says that is ok if the FFL sells it at the same time as the transfer. I don't think that meets with the intent, but ...

It is also the case that if you buy something from out of state that you, personally, owe the sales tax, but it is hard to track down, so they force the CA business (FFL) to collect it and it is a real problem since the seller might not want to tell the FFL what it was sold for.

[botsdots]

believe it or not, CA has its own list of approved gun locks. Most common is the blue cable lock that you can get for about $10 bucks. Common theme is to buy it, never open it, use the reciept for the pickup, then return the lock.

Sorry for the tangent here.

I did a PPT at a shop in Long Beach area which would accept the yellow "save a child" (or something to that effect) locks as well. Found out my local PD has a barrel full of them in the lobby. Is this common?

[kemasa]

Many police stations have the locks, but the problem is that if you bring it in, you need a receipt for the CA law and the Feds won't accept it for you to bring it in since they say that the FFL has to "provide" it. The FFL can get the locks and provide them though. The seller could also bring one in.

One issue is in knowing the brand of the lock to ensure that it is on the certified list of locks. I looked at one and could not find a name or model to match it up with the list.