Yet Another Tax Question for OS Transfers

[TheRaspyRabbit]

Hello and sorry if this issue has been addressed but we are a new dealer just starting up in Palmdale and we have signed up with Gunbroker to do out of state transfers as a service to our customers....BTW, we charge $65 which seems pretty fair and competitive.

My question is on used private party sales coming from out of state to our shop. Do we have to charge sales tax on used private party sales? I think I have a handle on the new sales coming from out of state dealers (we charge tax) but the issue I see as problem is once we do our first quarterly BOE filling how do we show that we own the sales tax if the taxable amount is not shown in our gross reportable income?

Anyway, sorry if this is old hat but I thought some of the long time dealers may have the answers....thanks

Dennis

[EBR Works]

Yes, BOE has stated their new position on this recently.

We create a separate line item in Quickbooks called "Interstate Tax" and have it flow into a liability account "Sales Tax Due on Interstate Transfer". We just combine this with our normal sales tax liability when it comes time to pay.

[TheRaspyRabbit]

Thanks for the response...that makes perfect sense and sounds like a good way to manage it

[kemasa]

Yes, you would collect sales tax. The only exception is for a C&R handgun which is coming from a private party, is an occasional sale and not from a business and the buyer has a C&R FFL. The CA BOE is using the excuse that sales tax has to be collected because Federal law requires that the firearm be shipped to a CA FFL, but in the case of the C&R handgun, it is State law which requires it.

In reality, you should not have to collect sales tax on firearm coming from private parties, but unless you have a lot of time and money (to pay for attorneys), you had best do what the BOE says. The law has not changed, but the BOE view has.

The sales tax return is basically bogus since you have to claims sales which really don't exist since you have not paid the money nor received the money for the firearm.