When CA FFLs should collect SALES TAX from consumers.

[Mike's Custom]

The real problem of buying from a out of state private party is that a CA resident can not do a PPT in CA. The DOJ says the "sale" takes place in CA and on the DROS there is no place to do a out of state PPT. It is done as a Dealer Sale and as a sale it is taxable.

[kemasa]

The real problem of buying from a out of state private party is that a CA resident can not do a PPT in CA. The DOJ says the "sale" takes place in CA and on the DROS there is no place to do a out of state PPT. It is done as a Dealer Sale and as a sale it is taxable.

Incorrect. If the firearm is a private sale, an occasional sale and not coming from a business (from actual seller, it does not matter if a FFL is used to ship it), then there is no sales tax to be collected. It does not matter where the firearm comes from. It can be shipped from a private party within the state and you can't process it as a PPT, but it is still not subject to sales tax. It is best to document it though. It is not required to be a PPT and remember, a PPT can be required to have sales tax collected if the FFL finds the buyer or gets involved with the price.

[kemasa]

Recent letter from the BOE regarding sales tax and FFLs:

http://www.calguns.net/calgunforum/attachment.php?attachmentid=122062&stc=1&d=1320950409

Note: The DROS amount is incorrect.

[bombadillo]

So what about consignment guns. I've had guys with consignment guns that I was under the impression it was working out to be more or less a PPT and the dealer takes 10% of the purchase price. 2 of the local dealers want tax on the whole thing and it just didn't sound right to me. I was wondering because some collect tax and some don't on that instance.

[kemasa]

In the case of a consignment, sales tax is due since the FFL is finding the buyer and/or negotiating the price of the firearm. It is not really a private sale as it is being done by the FFL. The BOE is quite clear on this aspect. In the case of a seller who talks to a FFL and the FFL finds the buyer, if the FFL does the PPT, they would be required to collect the sales tax, but it would also be hard to prove what actually happened.

[bombadillo]

Right...... Clear as mud.

[kemasa]

Actually, it is pretty clear. Some aspects are a bit confusing, like sales tax on shipping, but it seems that their view is that shipping is not taxable ONLY if the item is shipped directly to the customer. Shipping to the FFL, as required by law, is taxable. I don't think that is right, but that does not make a difference to the BOE.

[kemasa]

Just to add this to this thread from another thread:

I did a search of the responses that I got back from the BOE (I think I am missing one or I never got it back) and I found a response to the specific issue of a firearm from out of state by a private party.

It is attached and hopefully I removed all the personal information.

Assuming this is an occasional sale between the private parties, the transaction is exempt from tax. The use tax that would normally apply when a firearm is purchased outside California and brought into California will only apply when the purchase is from a retailer. A private party is not a retailer.

In the first scenario, if the owner of the firearm and purchaser brings the gun to you and there is no involvement by you in finding the purchaser for the firearm, the sale does in fact qualify as an occasional sale, you would not be regarded as the retailer of the firearm and tax would not be due on the sales price of the firearm or any of the fees associated with the sale of the firearm.

In the second scenario, as long as the owner of the firearm is not a retailer and the owner did not involve you in finding the purchaser the transaction is an occasional sale and tax would not be due on the sales price of the firearm or any of the fees associated with the sale of the firearm.

http://www.calguns.net/calgunforum/attachment.php?attachmentid=125717&d=1323377267

[trashman]

Just to add this to this thread from another thread:

Thanks for this - I recently paid tax on an out-of-state transfer from a private party (a C&R handgun in fact)...didn't think that was right but didn't have the information to argue the point.

--Neill

[gsc3zny]

So does this pretty much kill the online shopping business? That was just about the only reason to buy online, right?

[halifax]

So does this pretty much kill the online shopping business? That was just about the only reason to buy online, right?

Well, you were supposed to be paying use tax on your 540 anyway. For those that were, nothing has changed.

[trashman]

So does this pretty much kill the online shopping business? That was just about the only reason to buy online, right?

It just depends.

For those used to buying CA-legal pistols from Budsgunshop.com, yeah - it's now not going to be worth the hassle for most commonly available pistols (i.e.,CA-legal Glocks, Sigs from budsgunshop.com or a similar bulk retailer) to save less than $40.

For C&R handgun purchases from a non-dealer/retailer out of state, it looks like you shouldn't have to pay sales tax and so nothing in that equation has really changed. (I'd point out that I was recently incorrectly charged sales tax on a non-dealer C&R piece that I had transferred, so not all FFLs are reading the BOE letter the same way).

For folks doing SSE's, or other transfers from out of state, it just means we'll start paying attention to whether or not sellers are FFLs.

--Neill

[dexter9659]

Sportsmen's Supply has been reportedly been collecting tax on Face to Face PPTs, though Sportsmen's is acting as nothing more than the FFL filing the DROS (non-consignment or assisting in negotiating prices). I would not have known this had a friend of mine just purchased a firearm using them as the FFL. This same person was also told even though they own a gun safe, they must have/purchase a gun lock.

[trashman]

Sportsmen's Supply has been reportedly been collecting tax on Face to Face PPTs, though Sportsmen's is acting as nothing more than the FFL filing the DROS (non-consignment or assisting in negotiating prices). I would not have known this had a friend of mine just purchased a firearm using them as the FFL. This same person was also told even though they own a gun safe, they must have/purchase a gun lock.

They've been overcharging for PPTs for a long time, too...adding a "safety handling demonstration fee" or something like that.

--Neill

[kemasa]

Sportsmen's Supply has been reportedly been collecting tax on Face to Face PPTs, though Sportsmen's is acting as nothing more than the FFL filing the DROS (non-consignment or assisting in negotiating prices). I would not have known this had a friend of mine just purchased a firearm using them as the FFL. This same person was also told even though they own a gun safe, they must have/purchase a gun lock.

If they are charging sales tax on a FTF PPT, then they are wrong and the person should contact the BOE and perhaps the DOJ since they charging additional fees.

As to the lock, that is correct (maybe). There is a Federal law which requires a lock with a handgun, but it has not been properly published as required, so there is some question about it. The Federal law mentions a safe, but the claim is that the FFL has to provide it, which clearly is an issue with regards to the safe. The Feds don't accept the gun safe affidavit, well, that is what they say, but since it is not published, it is unknown.