When CA FFLs should collect SALES TAX from consumers.

[kemasa]

Online is quite different and the mailman is a delivery service, not part of the sale.

The issue is the change of the tax rate, with respect to when it is started. In this case, it is the best interest of the customer since the tax rate is going down.

It is when you pick it up, not when the DROS is submitted.

BTW, I think it is a good thing to charge the reduced sales tax, although it is a pain to re-calculate everything, but consider the other way. If you bought a firearm when the tax was lower, but are forced to wait to pick it up so then you have to pay a higher sales tax which was not in effect when bought it, that is not right. Now, consider if you could pick it up the day before the tax rate went up, but then couldn't, so then suddenly you have to pay more, even if you paid for everything.

[tenpercentfirearms]

BTW, I think it is a good thing to charge the reduced sales tax, although it is a pain to re-calculate everything, but consider the other way. If you bought a firearm when the tax was lower, but are forced to wait to pick it up so then you have to pay a higher sales tax which was not in effect when bought it, that is not right. Now, consider if you could pick it up the day before the tax rate went up, but then couldn't, so then suddenly you have to pay more, even if you paid for everything.

The way I process transactions as a sales order and then when they pick up as a sales receipt makes this easy. When you go to make the sales receipt, it already knows the tax rate is lower and it shows how much I need to refund you.

When the tax rate went up, if you already paid in full, I just paid the extra 1% and took it off the sales price. I didn't want anyone who paid in full to have to pay more.

Since a sale is not complete until the goods are delivered, I will continue to add more long guns onto a DROS. Now the feds and the CA BOE agree with me!

[kemasa]

Well, it really does not matter what the Feds consider a transaction to be since it is clearly different than the CA DOJ. Same is true with the CA BOE, so if you continue to add long guns onto a DROS, you are not following the law. Don't forget the 10 waiting period after the sale of a firearm.

[tenpercentfirearms]

Well, it really does not matter what the Feds consider a transaction to be since it is clearly different than the CA DOJ. Same is true with the CA BOE, so if you continue to add long guns onto a DROS, you are not following the law. Don't forget the 10 waiting period after the sale of a firearm.

Ah, but it isn't. You have yet to show how long a single transaction lasts and you never will. Clearly by Federal and BOE guidelines a single transaction lasts until the seller signs the 4473 and/or the goods are delivered.

And how can you wait ten days if the transaction is not complete until delivery of goods? The firearms is not sold until delivery.

Let's not muck up this thread though. You can read more about this here.

http://www.calguns.net/calgunforum/showthread.php?t=425903

[EBR Works]

A few question:

Are you guys collecting tax on the amount of your dealer fee for out of state transfers? From reading the regs, this appears to be required.

How about for those dealers doing single shot conversions? Would the rental charge for the conversion kit be taxable?
.
.
.

[tenpercentfirearms]

A few question:

Are you guys collecting tax on the amount of your dealer fee for out of state transfers? From reading the regs, this appears to be required.

Yes. It is part of the retail sale.

How about for those dealers doing single shot conversions? Would the rental charge for the conversion kit be taxable

I was going to tax it because it is really part of the retail sale, but now that I think about it, I want to establish that the sale of the SSE pistol is quite separate from the gunsmithing/assembly back into normal configuration after delivery.

We should hash this out.

[nbkvig2]

I have a specific situation that I am wondering about. If I purchase a USED gun from someone that is out of state, he is a private FFL holder that runs his business from his home. But he mentioned that this is from his private collection. Would it depend on how he sells it? If he ships it as a FFL dealer would I have to pay use tax then (even if it's a USED gun)? If he ships as a private party, then I'm guessing I would not have to pay use tax? Should I clarify this with the seller first? Or will it not matter since it's used?

[tenpercentfirearms]

I have a specific situation that I am wondering about. If I purchase a USED gun from someone that is out of state, he is a private FFL holder that runs his business from his home. But he mentioned that this is from his private collection. Would it depend on how he sells it? If he ships it as a FFL dealer would I have to pay use tax then (even if it's a USED gun)? If he ships as a private party, then I'm guessing I would not have to pay use tax? Should I clarify this with the seller first? Or will it not matter since it's used?

I would have him draft a document that states he is a private citizen selling a private gun and no sales tax is due.

Then take that document to the transfer dealer and ask them if that is acceptable. If they say no and they can't give you a good reason why, find a new transfer dealer.

I'd accept it. I'll let the BOE grill you and the seller. I did my part.

[tenpercentfirearms]

Did everyone see this thread?

http://www.calguns.net/calgunforum/showthread.php?t=466199

Don Gussler is a well know transfer dealer in San Diego. A great guy to send transfers to.

Don just went through an audit (I confirmed he went through an audit directly with him, but didn't get a ton of details as it isn't my business) and according to this post...

I've known Don from many years on the Navy Shooting Team.

I was at his shop shortly after the "audit" where a FTB Agent accompanied the DOJ Inspector.

Just concentrating on the last three years of sales (they could have gone all the way back to day one if they wanted), Don's fine was in five figures (lucky for him they offered a 3 year payment plan).

The reason they are focusing on FFL's is because of the meticulous records FFL's are required to keep. Think of it as "low hanging fruit" for the FTB collectors.

If your non-tax collecting FFL hasn't had a visit yet . . . It's just a matter of time. It's just to easy (for the FTB) to ignore.

So rightly or wrongly, that's the way the state of CA want's to play the game and we're stuck in the middle.

he took a 5 figure hit. That means between $10,000 and $99,000!

If you are not collecting sales tax on transfers, you really are taking a huge risk.

This isn't about us competing with each other. I could care less if you are a dealer who doesn't collect taxes on transfers and get all of my transfer business. I like selling my own inventory more.

This is about not getting reamed by the BOE and being stuck with your customer's sales tax liability. Protect yourself fellow dealers.

[nbkvig2]

I would have him draft a document that states he is a private citizen selling a private gun and no sales tax is due.

Then take that document to the transfer dealer and ask them if that is acceptable. If they say no and they can't give you a good reason why, find a new transfer dealer.

I'd accept it. I'll let the BOE grill you and the seller. I did my part.

Thanks! But my second part of the question, does the gun being used have any factor at all? From what I'm understanding is that no matter if it's used or new, if it's coming from a vendor (FFL holder) then use tax must be collected? If it's a private sale, then no use tax should be collected correct?

[EBR Works]

What about shipping charges? If I charge a client for shipping either on an inbound order or outbound to his transfer FFL, is this taxable?
.
.
..

[tenpercentfirearms]

Thanks! But my second part of the question, does the gun being used have any factor at all? From what I'm understanding is that no matter if it's used or new, if it's coming from a vendor (FFL holder) then use tax must be collected? If it's a private sale, then no use tax should be collected correct?

Used has nothing to do with it. Is it a retail sale or not? If a retailer sells it, then yes it is taxed. If a retailer does not sell it, then no it is not taxed and is just an occasional sale.

What about shipping charges? If I charge a client for shipping either on an inbound order or outbound to his transfer FFL, is this taxable?

From the BOE.

http://www.boe.ca.gov/sutax/faqpurch.htm#10

10. Are delivery and handling charges taxable?
Delivery charges.

You have the property delivered directly to your customer using a common carrier, the U.S. Mail, or an independent contractor
Tax does not apply to the delivery charges under these conditions if the charges are clearly stated as a separate entry on the invoice or other bill of sale. If the delivery charges are not stated separately, they are taxable.

Example.

You sell a refrigerator and have it delivered by an independent contract carrier. On the invoice, you show a $750 charge for the refrigerator plus a separately stated $50 charge for delivery (the amount charged you by the carrier). Since the delivery charge is stated separately, tax applies only to the charge of the refrigerator ($750). If the invoice had shown a single charge of $800, tax would apply to the entire amount.

Note: If you charge more for delivery than your actual costs, the added amount is subject to tax. In the example above, if you had charged your customer $60 for delivery, but your actual delivery cost was $50 (the amount charged by the independent contract carrier), tax would apply to the additional $10 charge.

You use your vehicle to make the delivery
Tax applies to the delivery charges if you use your own vehicle, whether or not those charges are separately stated on the invoice.

Example. You sell a refrigerator and deliver it to your customer using your own vehicle. On the invoice, you show a $750 charge for the refrigerator plus a separately stated $50 charge for delivery. Tax applies both to the delivery charge and the charge for the refrigerator.

Note: Tax does not apply to delivery charges using your own vehicle if there is a written contract of sale, signed before delivery, that transfers ownership of the property to the purchaser prior to delivery.

Handling charges. Handling charges are generally taxable.

Combined charges. If you charge a single amount for delivery and handling (for example, the invoice shows a single amount for "postage and handling" or "shipping and handling"), the portion of the charge that represents handling is generally taxable, while the portion that represents delivery may or may not be taxable.

Note: It is important to use terms such as "delivery," "shipping," or "postage" on the invoice to represent delivery charges. A separately stated charge that says only "handling", for example, is not considered a delivery charge and the entire handling charge is taxable--even if postage or shipment charges are indicated on the package.

For more information on delivery charges, or information on how tax may apply to a specific transaction, please see Regulation 1628, Transportation Charges or publication 100, Shipping and Delivery Charges. You can also contact the Board's Information Center 800-400-7115 or your nearest Board office.

So for when you are shipping items, if you charge the exact shipping from your carrier and have that invoiced, it is not taxable. I charge a flat $10 shipping rate for like $100 orders. I simply tax it all as it isn't worth my time to weigh the package, figure out what the shipping is going to be from USPS or UPS, get the box all ready, then run their card and invoice for the extra savings of about 1.4 cents.

If the firearm is coming in on a transfer, if the shipping is invoiced, I don't include it in the transfer sales tax calculations.

[Santa Cruz Armory]

You have to be a friggin' lawyer just to try and make a buck in this state!

[EBR Works]

Thanks Wes......I think

[kemasa]

One thing to remember is that if you sell a firearm to another CA FFL, YOU are responsible for the sales tax on their transfer fee even though you don't know what it is.