A question for FFLs: Do you charge sales tax on out of state transfers?

stonehorses

stonehorses

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I hope I'm not opening a can of worms.............but, I picked up an internet purchase yesterday and my FFL asked me if the seller had charged sales tax. I said no as it was an out of state transaction. He then stated that he may have to start charging sales tax on any firearm that is transfered through him. :eek:
Thoughts, comments......
 
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I know of one that doesn't. For example, if someone buys something off of Gunbroker, he didn't sell it. He just performs a service by transferring it, and charges his applicable fee(s).
 
Mine doesn't, but this brings up a sticky situation. If you buy something out of state and have it shipped to your state, most states require that you declare it and pay sales tax. So I guess if your FFL charges you sales tax, he's actually helping you be a law abiding citizen.
 
I buy a lot of stuff online and I've never paid sales tax on anything that came from out of state.
 
One of my favorite FFLs does!

Our sales tax folks say that the gun is "sold" when the customer fills out the 4473, and the background check says the customer can take the firearm.

So, since that's the point of the sale, and it's in Florida, there's sales tax to be collected.

Two other FFLs, both personal friends, don't.

But, with the shortage of moneys at the state level, they figure they are just living (or the customers are) on borrowed time and, when the sales tax folks come calling, they'll be forced to change their policies.

Now, any of us can beat on our chests and swear the sale took place in the state where the original seller lived and got the money for the gun, but, as to the FFLs, if the sales tax folks threaten them with penalties, etc., they are gonna collect the tax.

Our state already "requires" places like Lands End to collect sales tax (though I don't know if they still do since I haven't bought anything from them for about ten years).

Bob
 
A very interesting point. One of the several local FFL holders in the transfer business charges $20 plus sales tax new or used, claiming the state (FL) makes her do it. The others do not attempt to collect “use tax”.
Certainly as truckemup says, it is my responsibility to convey the tax on an out of state purchase to FL whether it’s a gun or TV.
Face to face; for used guns, a private purchase is not taxed, on a purchase from a business, tax is paid as it is on a new gun.

So this FFL is taking the position that she is selling me the gun for tax purposes. I choose not to deal with her.

My position is that it is my responsibility to pay any tax, not the business of the FFL. I ask that any invoices enclosed with the gun on shipping not show any price. The FFL is as far as he knows, handling a no charge transaction.
 
How can a business collect sales tax on a sale they did not make?

The only sale the transfer dealer is making is the transfer fee, and usually that is not taxable.

The purchaser is required to pay the sales/use tax on out of state purchases to their state, but as we well know this rarely happens.

My take on charging sales tax where it is not applicable is a way to boost profit, and is unethical and or illegal.

If you purchase an item that is shipped from a business that also has a presence in your state then they will charge sales tax.

PC945
 
The way I understand tax law is that the only "sale" at the time of the 4473 is filled out is the FFL transaction fee. So sales tax on $20 is all that should be collected.

But heck, I am not a tax attorney, so I guess my opinion is worthless.
 
Got to agree with PC945, the only 'sale' should be on the transfer fee if at all. Unless the seller has a presence in your state. But some dealers will charge the tax even on the NICS check. Do you suppose they report all of it to the state? I doubt it.
 
I don't disagree with any of you that say the sale takes place where the seller resides. Sadly, my state says differently, at least some of the time.

BUT-when your local state revenue guys come in, see the transfer, and ask about the tax, the FFL has, really, two choices.

Collect the tax or fight the revenue service in Court.

As to whether the tax is really remitted to the state, I can't speak for anyone but the single FFL I know who does collect the tax. He certainly sends the money in to Tallahassee.

Others in the business may not be so honest.

And, BTW, though I do deal with him a lot, I don't use him for out of state transfers.:D

Bob
 
amanda66 said:
ok... might be a stupid question or I'm having a blonde moment... what does FFL stand for?
Click to expand...

Hi, amanda. FFL = Federal Firearms License. Often, as in the title of this thread, it refers to the license-holder him or herself.

Andy
 
I agree with straightshooter that the State of FL puts the FFL in a very tough spot. Does he want to fight Tallahassee on this? On the other hand he is not in a position to show the transaction as a sale in his records or on his P&L Statement.

Since I am most likely to be buying a used gun from someone on the forum, it is very difficult for me to see how Florida can determine how much I paid for it. If the shipper/invoice does not show a price.....how much should the tax be on an obsolete chunk of iron?
 
When an FFL...

...does a transfer, the fee is for the FFL's labor, and not materials.

Taxes on goods are generally lumped into two categories:
  • Sales Tax - This is a tax on goods sold within a jurisdiction (state, county, city, etc.). When you go to your local gun shop and buy that new or used S&W, you are liable for a stated amount of sales tax. The seller acts as an agent for the taxing jurisdiction in collecting the tax.
  • Use Tax - This is a tax collected on goods imported to a taxing jurisdiction from outside the taxing jurisdiction. If you live in Michigan, and have a gun delivered to your FFL from Ohio, you will owe use tax on the gun, since it will be "used" in Michigan. The dealer may, or may not have to collect use tax on the gun. The taxing jurisdiction's statute will detail the requirements for remitting the use tax. The user is ultimately responsible for payment of the use tax. The dealer is acting only as a collection agent for the state. If the dealer does not collect use tax, you will still be liable for that tax to the taxing jurisdiction. This is much the same as remitting use tax to the state for "etail" or mail order goods. A lot of states allow you to remit that tax annually, on your state income tax return.
Unless stated to the contrary, services are generally not taxed. Services are generally considered labor, therefore not taxable. Performing the FFL transfer is a service, and not goods. Therefore, you need to check with your taxing jurisdiction to determine if sales tax is required on services. The user is ultimately responsible for payment of the use tax. The dealer is acting only as a collection agent for the state. If the dealer does not collect use tax, you will still be liable for that tax to the taxing jurisdiction. This is much the same as remitting use tax to the state for "etail" or mail order goods. A lot of states allow you to remit that tax annually, on your state income tax return.

As an example: Your S&W revolver needs a repair. Most shops spell out the value of parts and labor separately. Again, unless the law states to the contrary, sales tax should be charged only on parts.

If your FFL is charging sales tax for only the transfer, you need to check with the state and find out if the dealer is in compliance. It's your money.
 
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Gee, I didn't know there was something called a sales tax until I went down to Colorado. Sure glad I live in Montana where there is no such thing. -Ed.
 
Varies by state. TN requires sales tax to be paid on goods & services. Also requires use tax to be charged on items bought from out of state. FFL holders are "supposed" to charge sales & use tax on any firearm rec'd from out of state. States want someone to pay the tax. If it isnt taxed in the state item is sold in then its supposed to be taxed in the state goods are rec'd. That is why you see more and internet/catalog sales companies charging sales tax on items shipped out of state.
 
I picked up a gun on Monday night from an out of state transfer and this dealer charged me tax on the transfer. He is a fairly new dealer and I am not sure if he is supposed to or not. It is only a couple dollars and he does have my gun, I can't really argue about it. He is doing me a favor. My other dealer that just recently closed his shop, had never charged me tax on a transfer. Joe
 
My dealer charges a $25 fee for transfers, either in or out. His cash register automatically adds sales tax (7%-$1.75) to the fee. It's really not worth arguing about since I get a reduced rate on shipping.
 
The last one I had sent from Texas was $40.00 with the tax. He did collect the tax.
 
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