When CA FFLs should collect SALES TAX from consumers.

[CifaldiPrecision]

We are only responsible for collecting tax on the serialized firearm portion of the sale correct? So for instance if someone purchased a stripped lower and a bunch of accessories and it was all shipped to me I don't have to collect tax on everything do I?

[kemasa]

You are responsible for anything which goes through you business. If they don't want to be charged sales tax, the other items should be shipped direct.

If you retain a receipt for the item and it shows other items were shipped with it, who do you think that the BOE would go after, you, a CA business, or some customer?

[CifaldiPrecision]

Ok makes sense. Thanks for clarification.

[headwaters]

I am having a rifle built by an out-of-state shop. I collected (purchased) all the parts over the course of a year, and shipped them to the 'smith. I purchased the receiver from the 'smith, so the completed rifle must be returned through an FFL. Since the labor is not taxable, I should only be taxed on the value of the receiver, correct?

[kemasa]

At a guess, you would owe sales tax on the receiver, shipping and the FFL fee. You might have to provide proof that you provided the parts and had paid sales tax on those items. Labor can be taxable and in this case it might be. The receiver was not transferred to you, so the total cost could be included for the sales tax, so sales tax on what you paid might be appropriate. It is really something that you would need to ask the BOE about. The FFL is not going to want to get stuck if there is an audit.

To be honest, it would have been easier if you transferred the receiver and then sent that back to get the work done.

[headwaters]

Thanks for the quick response. And yes, it did occur to me (much too late) that purchase of the receiver would have made this all much cheaper and simpler.

I'm getting a little too old to be consoled by the notion of "live and learn" and "I'll know better next time". Then again....

[robojet]

My apologies if this is already addressed. I've read through, and frankly I find the topic confusing. I'm just curious and would like to understand how the rules apply to this situation...

I was visiting family out-of-state (let's say AZ for example). I went to a store that had a handgun I wanted. I purchased the handgun at the store in AZ, where they charged me sales tax. They shipped the handgun to a CA FFL. The CA FFL charged me sales tax. I explained that I already paid sales tax, but the CA FFL said they were required to pay the sales tax. This is so wrong, but so are so many of the rules we deal with here. Can someone point out how this is required?

Quick Edit/Addition: I have the receipt that show that I paid the sales tax in AZ.

[greybeard]

Not a FFl, but I am sure the tax authority here in CA does not care about AZ sales tax.

[robojet]

I think I found the answer in an earlier post... this stuff just makes me sad.

Quote:
Last week while visiting relatives in Maine I purchased $200 in stereo equipment for use with my system at home in Sacramento, California. When I purchased the equipment I was charged five percent Maine sales tax. Do I owe California use tax on this purchase?

Yes, however, Revenue and Taxation Code section 6406 allows you to take a credit for sales or use tax paid to another state. Therefore, a portion of the California use tax you owe on the purchase is offset by the sales tax you paid to the retailer in Maine. Since the sales and use tax rate in Sacramento is 8.75%, use tax of $17.50 would be due on your purchase. However, after deducting the $10 in Maine sales tax you paid when you purchased the equipment, you would only owe $7.50 in California use tax on the purchase.

Note: For each purchase you can only take a credit for sales tax paid to another state up to the amount of California use tax you owe on that purchase. If you paid an amount in excess of the California use tax due on a purchase you cannot use this additional tax paid to offset the tax due on another transaction. Using the example above, if the tax rate in Maine were 10% and you paid $20 in Maine sales tax, you could not apply the $2.50 in additional tax you paid to offset California use tax you may owe on another purchase.

[halifax]

My apologies if this is already addressed. I've read through, and frankly I find the topic confusing. I'm just curious and would like to understand how the rules apply to this situation...

I was visiting family out-of-state (let's say AZ for example). I went to a store that had a handgun I wanted. I purchased the handgun at the store in AZ, where they charged me sales tax. They shipped the handgun to a CA FFL. The CA FFL charged me sales tax. I explained that I already paid sales tax, but the CA FFL said they were required to pay the sales tax. This is so wrong, but so are so many of the rules we deal with here. Can someone point out how this is required?

Quick Edit/Addition: I have the receipt that show that I paid the sales tax in AZ.

I think I found the answer in an earlier post... this stuff just makes me sad.

Quote:
Last week while visiting relatives in Maine I purchased $200 in stereo equipment for use with my system at home in Sacramento, California. When I purchased the equipment I was charged five percent Maine sales tax. Do I owe California use tax on this purchase?

Yes, however, Revenue and Taxation Code section 6406 allows you to take a credit for sales or use tax paid to another state. Therefore, a portion of the California use tax you owe on the purchase is offset by the sales tax you paid to the retailer in Maine. Since the sales and use tax rate in Sacramento is 8.75%, use tax of $17.50 would be due on your purchase. However, after deducting the $10 in Maine sales tax you paid when you purchased the equipment, you would only owe $7.50 in California use tax on the purchase.

Note: For each purchase you can only take a credit for sales tax paid to another state up to the amount of California use tax you owe on that purchase. If you paid an amount in excess of the California use tax due on a purchase you cannot use this additional tax paid to offset the tax due on another transaction. Using the example above, if the tax rate in Maine were 10% and you paid $20 in Maine sales tax, you could not apply the $2.50 in additional tax you paid to offset California use tax you may owe on another purchase.

Two problems here: First, the AZ retailer should not have collected AZ sales tax because you weren't taking possession of the firearm in AZ, they shipped it to CA. Second, the BOE is going to hold the CA dealer (not you!) responsible for the full measure of sales tax due. Don't expect the CA dealer to deduct the AZ tax paid in error for you. You will need to work that out on your own when filing your 540 or by asking AZ for a refund.

This is a BOE response for a similar situation where a customer purchased a firearm in NV and paid NV sales tax:

In the situation described in your inquiry, the purchaser is purchasing a firearm from an out-of-state retailer. The out-of-state retailer is transferring the firearm to your location for the purpose of processing the necessary paperwork. Since the transfer of the firearm to the customer is taking place in California, the Nevada tax is not applicable. The location where the property (firearm) is passed to the purchaser determines where the tax is due, not the location where the money changes hands. I assume the Nevada retailer is not engaged in business in this state. Accordingly, you would be liable for the sales tax on the firearm transferred to the purchaser in this state. The purchaser should contact the Nevada retailer for a refund of the Nevada tax paid in error.

[kemasa]

As said, the AZ dealer should not have collected sales tax as you were just paying for the firearm, not actually buying it as it has to be transferred through a FFL. It is the same as if you ordered it over the Internet. Sometimes it is best to walk out the door and call them and order the firearm.

I had a customer who went into a gun shop out of state and it took a bit, but finally I convinced the place to not charge the sales tax. It is easier to deal with this before paying though.

[GentleMinh]

Hey fellow Calgunners. I had a question about cali sale tax. since im about to receive a pistol from an out of state dealer. My question is would i be taxed for the labor? Invoice is 1799.99 for parts kits, 999.99 for labor, 45.00 for S/H/I ? Would i be taxed for the labor of 999.99 and shipping handling and insurence of 45.00? thanks in advance

[halifax]

All costs associated with the firearm are taxable including a CC fee if you also paid that. The DROS is the only non-taxable item.

[kemasa]

Hey fellow Calgunners. I had a question about cali sale tax. since im about to receive a pistol from an out of state dealer. My question is would i be taxed for the labor? Invoice is 1799.99 for parts kits, 999.99 for labor, 45.00 for S/H/I ? Would i be taxed for the labor of 999.99 and shipping handling and insurence of 45.00? thanks in advance

Sales tax would be based on the total that you paid, including shipping.

FYI, you might be better off (in the future) to have the firearm transferred, then send it to have the work done on it as the firearm could be sent directly back to you and would not be subject to sales tax.

[kemasa]

I would rather have sales tax than income tax. The problem is that you really need to do it one way, otherwise people will find ways around it. If there was a Federal sales tax instead of income tax, then all the illegal businesses would be taxed.

There is also the problem of how you would get there from here since you money was already taxed. I also don't think that people realize how they get taxed again and again. The dollar that you earn is taxed, then the remainder is taxed on sales tax, as well as property tax, etc.