Laws & Technicalities, regarding inter-state FFL transfers and taxes...


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grndslm
July 18, 2009, 05:57 PM
OK... So I'm hearing different things from different people.

Essentially, I'm trying to find out if I buy a $330 pistol in New Hampshire and ship it to my local FFL in Mississippi... what is my end result gonna be?? Taxes may be collected in either state, correct?

$330 (for gun) + $20 (s&h) + $21.40 (FFL transfer fee + 7% tax).... $371.40 should be the total, right?

This person in NH is frustrating me by telling me I need to pay sales taxes in either state, but how is my bill even seen by my local FFL anyway? If the bill is inside the box, listing the $330 price for the gun, will the FFL be able to see that bill??

Will my local FFL likely even care about collecting taxes on the gun itself, since he's assuming it's already been paid for? Will the shipper (a dealer) and FFL have to discuss the gun taxes before hand?

ALSO... Why are all the local FFLs telling me that they need to charge sales tax for a "transfer fee" which is a service. It was my impression that services were not taxed.

Taxes are a huge PITA, but I'm sure somebody here knows the technicalities behind interstate gun sales from a private individual or a dealer in a pawn shop. Hopefully, you guys can help me understand what REALLY needs to be done, and if there is a way I can ignore the taxes on the gun, even if I must pay the extra $1.40 tax for the transfer. (It all seems so unfair to me).

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nalioth
July 18, 2009, 06:02 PM
You pay taxes where you buy it.

Your FFL dealer who transfers it should not charge tax on the item, since s/he didn't sell it (some crooked FFLs do this, however). FFL holders should charge tax on their service, but usually it's rolled into the 'friendly fee'.

Oro
July 18, 2009, 06:59 PM
Your FFL dealer who transfers it should not charge tax on the item, since s/he didn't sell it (some crooked FFLs do this, however).

Yes, this is true. I've heard of (but not personally experienced) dealers trying to "tax" guns they did not sell. Seems to happen more back East than out west, but that's anecdotal.

Your described scenario:

$330 (for gun) + $20 (s&h) + $21.40 (FFL transfer fee + 7% tax).... $371.40 should be the total, right?

Almost. If I buy an out of state modern handgun from a non-FFL, this is what I expect to pay:

base price + $25 out-of-state transfer fee + $20 shipping fee + $25 local FFL transfer fee. All that equals purchase price + $70, or in your case $400. $25 of which goes to your local FFL, not the out of state guy. If I purchase from a dealer FFL, then I expect to pay only $40 as he is the seller and there should be no "out of state" transfer fee.

Taxes may be collected in either state, correct?

No. There would only be sales taxes on the pistol if the seller also had a business address in MO, for example, if the seller is Cabela's or somebody like that. Interstate commerce is free from state taxes unless the seller has a domicile in both states in the transaction. A tax on the service fee of the transfer may indeed be applied in some states, but not in most.


There are only three things you should be charged:

1) Out-of-state FFL transfer fee, but only if the seller is a non-FFL
2) Shipping ($20 is reasonable - FFL's can use a USPS flat rate box that private parties can not use.)
3) Local FFL transfer fee - the guy in NH can't mail it to you. My local guy charges me $30 for non C&R guns.

It's all a bit confusing, but that's basically what it breaks down to.

nalioth
July 18, 2009, 10:06 PM
Your FFL dealer who transfers it should not charge tax on the item, since s/he didn't sell it (some crooked FFLs do this, however).
Yes, this is true. I've heard of (but not personally experienced) dealers trying to "tax" guns they did not sell. Seems to happen more back East than out west, but that's anecdotal. It's happened to me right here in Houston. Needless to say, I no longer visit the dealer in question.

Oro
July 18, 2009, 10:41 PM
It's happened to me right here in Houston. Needless to say, I no longer visit the dealer in question.

That's disappointing to hear. We like to think the people in the gun business are a cut above, but there still are bad apples.

grndslm
July 18, 2009, 11:09 PM
$330 (for gun) + $20 (s&h) + $21.40 (FFL transfer fee + 7% tax).... $371.40 should be the total, right?

Almost. If I buy an out of state modern handgun from a non-FFL, this is what I expect to pay:

base price + $25 out-of-state transfer fee + $20 shipping fee + $25 local FFL transfer fee. All that equals purchase price + $70, or in your case $400. $25 of which goes to your local FFL, not the out of state guy. If I purchase from a dealer FFL, then I expect to pay only $40 as he is the seller and there should be no "out of state" transfer fee.

There would only be sales taxes on the pistol if the seller also had a business address in MO, for example. A tax on the service fee of the transfer may indeed be applied in some states, but not in most.
OK... So, I actually have a couple guns I'm looking at in a few different states. I just threw NH out there as an example, but you bring in another part of the equation I wasn't considering...

In which cases (states?) would a private individual NOT be allowed to ship directly to an out-of-state FFL?

All of the scenarios I'm considering involve me buying a gun from an individual or a FFL in another state: a used one from individual, a used one from a dealer, and a new one from a dealer. In ALL of these scenarios, I should not have to pay sales tax, correct?!? That's the clincher for me, really.

As for my local FFLs charging a tax on top of their transfer fees... I don't think that's legal (or is it optional?) in Mississippi, but I'm not 100%. I could care less about this... it was paying the sales tax on the product, which I thought didn't happen because of interstate commerce moratoriums and whatnot.

I only got in touch with two local FFLs, both which stressed that if I paid their $20 or $30 fee PLUS TAX... they didn't care about tax on the gun. I'm wondering why they're stressing the tax on the service part? ... and why the out-of-state FFL that's trying to sell me the gun is stressing that I must pay taxes for interstate commerce (I asked about an "internet sale", and she said taxes must be paid on that too... but to either state, not necisarily hers).

Hope this all makes sense now.

Art Eatman
July 18, 2009, 11:39 PM
It's all gonna vary with state law.

If the money is paid by the buyer to the seller, the dealer in the receiving state isn't party to the financial transaction, and therefore collects no sales tax on the firearm.

It may be that an FFL in a sending state who makes the sale must collect sales tax. I don't know; that's a state-by-state thing.

Some states have sales taxes on some services. It may be that a dealer in the receiving state must collect a sales tax on his fee. That's another state-by-state thing.

Individuals rarely if ever collect sales taxes, whether or not they should. In some states, there is no sales tax on used items.

nalioth
July 18, 2009, 11:40 PM
In which cases (states?) would a private individual NOT be allowed to ship directly to an out-of-state FFL? There are no states with such restrictions that I know of.

An individual may ship to any FFL, anywhere.

It may be that an FFL in a sending state who makes the sale must collect sales tax. I don't know; that's a state-by-state thing. So for instance, grndslm comes to Houston and I sell him a rifle. We do it at the local gun shop, so a legal transfer can be made. You're saying that the FFL is supposed to take sales tax for a sale between myself and grndslm?

I don't think so.

grndslm
July 19, 2009, 02:13 AM
So for instance, grndslm comes to Houston and I sell him a rifle. We do it at the local gun shop, so a legal transfer can be made.Not to get too far off-topic, but why would we go to the local gun shop for a "legal transfer"? I thought that a bill of sale was legal enough.

I actually sold my last gun to a guy from Texas who moved here. Wrote up a bill of sale with make, model, serial no., the guy's name DL#, witness, date, etc... There's nothing else I needed to do, right?

nalioth
July 19, 2009, 03:07 AM
So for instance, grndslm comes to Houston and I sell him a rifle. We do it at the local gun shop, so a legal transfer can be made.
Not to get too far off-topic, but why would we go to the local gun shop for a "legal transfer"? I thought that a bill of sale was legal enough.

I actually sold my last gun to a guy from Texas who moved here. Wrote up a bill of sale with make, model, serial no., the guy's name DL#, witness, date, etc... There's nothing else I needed to do, right?Your Texan moved to Mississippi. That made him a Mississippian and intrastate Xfers legal.

Unless you plan on moving to Texas, all interstate transfers (that is, between residents of two different states) must go through an FFL on one end or the other.

grndslm
July 19, 2009, 03:14 AM
He had no MS license, tho, only TX ID and DL. He is a friend of a friend that is taking over my friend's lease.

I'm assuming this is still acceptable, as he is a "resident" of the state now?

grndslm
July 19, 2009, 03:16 AM
Laws are a b!tch, man.

danbrew
July 19, 2009, 11:39 AM
All of the scenarios I'm considering involve me buying a gun from an individual or a FFL in another state: a used one from individual, a used one from a dealer, and a new one from a dealer. In ALL of these scenarios, I should not have to pay sales tax, correct?!? That's the clincher for me, really.

The reality is that a sales tax (or use tax) is often due, regardless of where you purchased the gun, in your state - payable by you. Most folks ignore this through ignorance or because it's almost impossible to enforce. Your state department of revenue may have guidelines on what tax is due as the result of an out of state transactions. Some states have minimums, some state have no minimums. Consider a used car, for example. If you buy a car in State A and bring it back to your home State, State B. Tax is due in State B but not in State A. The reason you are taxed on cars is because you must register the car in your home state and it's easy for the Department of Motor Vehicles to collect the tax. It's not so easy for internet purchases or other stuff that you may buy from a private individual (or dealer) in another state as the taxing authority generally has no way to learn of the transaction.

A dealer in a state other than your own that is selling a gun to you is not required to collect sales tax as he has shipped the gun out of state. You can't even pick the gun up in person (which would mean that the transactions took place in state in person and is thus taxable). Some dealers don't know this and will tax every transaction. Some dealers are screwing you intentionally.

The easy solution for the OP is to say "ok, I'll pay sales tax with my local dealer." You're right, how is your local dealer going to know what you paid? How the seller responds will tell you whether he is ignorant or whether he is screwing you. If he says "Oh, I collect the tax that you're supposed to pay in your home state", he's screwing you.

You can do one of a few things - if the gun in question is desireable enough and is at the right price, just pay what the guy wants and be done with it. Or you can walk. Or if you really want to kick the guy in the balls, have him prepare an invoice that says he's collecting tax on behalf of your home state and then turn him in to both the Department of Revenue in your state and his state.

For most firearm purchases, the tax is a relatively small amount, yet I've run across this issue in the past coming from dealers that were selling machineguns that might cost $20,000 or so. Now tax is not such an insignificant issue.

Chance are good that the guy just doesn't know any better. You'll be unlikely to change his mind, so decide whether you want the gun or whether you want to keep shopping. I recently attempted to buy a pistol from a guy out of state and he wanted a signed copy of my dealer's FFL. Non-licensed individuals are not required to obtain a copy of the FFL in order to send them a firearm. I asked if the guy would be happy using the ATF FFL EZ Check System to verify that he was sending to a licensed dealer, but he wouldn't do it. Rather than try to convince him he was wrong, I kept shopping and had the same thing for about the same price a few days later.

:D

natman
July 19, 2009, 12:23 PM
In the California dealership where I work, we charge a transfer fee and no tax on either the gun (transaction took place out of state) or on the fee (non taxable).

grndslm
July 19, 2009, 04:01 PM
The reality is that a sales tax (or use tax) is often due, regardless of where you purchased the gun, in your state - payable by you. Most folks ignore this through ignorance or because it's almost impossible to enforce.Yes, I just learned this yesterday while researching this stuff. Most income tax forms have a line for Use Tax, but Mississippi is not one of them. Either way, you're supposed to pay sales tax for ALL products you've purchased (even from individuals)... but let's try not to spread that around too much.

The easy solution for the OP is to say "ok, I'll pay sales tax with my local dealer." You're right, how is your local dealer going to know what you paid? How the seller responds will tell you whether he is ignorant or whether he is screwing you. If he says "Oh, I collect the tax that you're supposed to pay in your home state", he's screwing you.The seller was actually right in saying that I had to pay sales tax in either or. I was just wondering what the laws & technicalities were, obviously. It's nice to know the details of how things like this work. Looks like I'll be able to get outta paying tax since my receiving FFL will not know what I paid.

BTW... can the FFL open the box??

You can do one of a few things - if the gun in question is desireable enough and is at the right price, just pay what the guy wants and be done with it. Or you can walk. Or if you really want to kick the guy in the balls, have him prepare an invoice that says he's collecting tax on behalf of your home state and then turn him in to both the Department of Revenue in your state and his state.The gun is one of a kind, brand NIB. The only problem is that it was only $200 2 years ago, $300 recently, and now it's not even being imported AFAIK. No supplier has seen it in over 4 months, plus there's still a line of people on waiting lists. It just sucks that I have to pay a minimum of $40 to transfer it here... and I'm supposed to pay sales tax, too.

Thanks for all the advice, guys!!

nalioth
July 19, 2009, 07:09 PM
BTW... can the FFL open the box??To do his job, he has to open the box, yes.

How else is he gonna get the make, model and serial number for his books?

danbrew
July 19, 2009, 07:30 PM
I'd be very surprised if your local dealer wanted to charge you sales tax on the gun. You already own it - it was never part of his stocking inventory and he won't know the selling price of the gun. I suppose he could see the receipt in the box, but this is coming in to his FFL as a transfer, not as part of his inventory.

Will be interesting to hear back from you as to how both FFL dealers address the situation.

:)

grndslm
July 21, 2009, 02:51 PM
Am finally ordering today (after contemplating color schemes :rolleyes:)... so we'll see in a few days.

I think neither of them will ask for taxes on the gun, but we shall see.

grndslm
July 23, 2009, 10:42 PM
OK... I finally got the gun ordered as there were some delays and the gun shop in Florida was closed yesterday. I was quoted the price of the gun + $20 for shipping, which is reasonable. I had to fax a copy of my DL, my mother's DL, and her credit card info, since I have bad credit and she gets cash back. I thought that was pretty foolish to have to fax both sides of the credit card, but the guy promised to shred it as soon as the transaction is complete.

So the guy in Florida quotes me a price with no tax, but he's still saying that I'd have to pay tax on the gun when I go to my local FFL to pick up the gun. I doubt the local guy will ask for those taxes for the same reasons mentioned above (gun's already mine; it was never part of his inventory)... but we'll see next week.

I have two more inter-state sales questions while we're waiting, tho :o :

(1) Back to my story earlier of selling a handgun to a guy that was "residing" in my state (MS) by renting an apartment and house, but he had a Texas DL & ID. Is he still considered a "legal" resident or not? This worries me a great deal since the gun has already been sold...

(2) If I were to travel to a gun show in a neighboring state, would I not be able to purchase the gun outright at the show? ... or would I need to get that guy to ship to a local FFL in MS??

Thanks in advance!

nalioth
July 24, 2009, 11:49 AM
(1) Back to my story earlier of selling a handgun to a guy that was "residing" in my state (MS) by renting an apartment and house, but he had a Texas DL & ID. Is he still considered a "legal" resident or not? This worries me a great deal since the gun has already been sold... Be careful what you think about, grndslm, or the thought police will be along to arrest you.

Have we gotten so far down into the depths of paranoia here?

If he was renting an "apartment and house", it's quite apparent he was "residing" there. Lots of folks have property and reside in two states, but have ID from only one.

This has been covered many times here before.

dirt_j00
July 24, 2009, 12:39 PM
but he's still saying that I'd have to pay tax on the gun when I go to my local FFL to pick up the gun. I doubt the local guy will ask for those taxes

I don't see how the local FFL can collect the tax. That is not his responsibility in this instance, as you said, since this was not a part of his inventory.

NavyLCDR
July 24, 2009, 01:56 PM
OK... I finally got the gun ordered as there were some delays and the gun shop in Florida was closed yesterday. I was quoted the price of the gun + $20 for shipping, which is reasonable. I had to fax a copy of my DL, my mother's DL, and her credit card info, since I have bad credit and she gets cash back. I thought that was pretty foolish to have to fax both sides of the credit card, but the guy promised to shred it as soon as the transaction is complete.

Ummmm...... straw purchase?!? It looks like you are giving your mother the money, and she is putting the gun on her credit card, and then the gun is getting transferred to you?

dogtown tom
July 24, 2009, 02:33 PM
It is only a straw purchase if he has her pay and complete the 4473 because he is ineligible to purchase a firearm himself.

waterhouse
July 24, 2009, 04:58 PM
Ummmm...... straw purchase?!? It looks like you are giving your mother the money, and she is putting the gun on her credit card, and then the gun is getting transferred to you?

This is fine. He is buying the gun for himself, and he is filing out the 4473.

A similar case would be if I went to the post office and handed them cash and they gave me a money order that I sent to the seller. The post office helped me convert my funds into a form acceptable to the seller, but they are not buying anything.

His mom is merely acting as a middle man for a funds transfer, but he is buying it and filling out the 4473, and thus is the actual purchaser.

As to the original topic, as mentioned, you are responsible for reporting and paying the sales tax to your home state, but neither dealer should be collecting sales tax on the gun price. The receiving dealer likely will collect sales tax on the transfer service.

grndslm
July 24, 2009, 05:15 PM
Be careful what you think about, grndslm, or the thought police will be along to arrest you.

Have we gotten so far down into the depths of paranoia here?Hey... it was my first gun sale!! That's why I used the embarrassed smiley. I had seen somebody mention "legal resident" elsewhere on this forum, and I had to know what exactly a legal resident is. The thought police help me from getting in trouble with the real police. ;)

His mom is merely acting as a middle man for a funds transfer, but he is buying it and filling out the 4473, and thus is the actual purchaser.Exactly... I will be filling out the paperwork at the FFL transfer spot.

NavyLCDR
July 24, 2009, 07:22 PM
It is only a straw purchase if he has her pay and complete the 4473 because he is ineligible to purchase a firearm himself.

That is incorrect Dogtown Tom. It is only a straw purchase if he has her pay with his money, and she fills out the 4473 when it is actually him buying the gun. Whether or not the final recipient of the gun is ineligible or not has absolutely no bearing on a straw purchase.

dogtown tom
July 25, 2009, 01:51 AM
NavyLT Quote:
Originally Posted by Dogtown Tom
It is only a straw purchase if he has her pay and complete the 4473 because he is ineligible to purchase a firearm himself.

That is incorrect Dogtown Tom. It is only a straw purchase if he has her pay with his money, and she fills out the 4473 when it is actually him buying the gun. Whether or not the final recipient of the gun is ineligible or not has absolutely no bearing on a straw purchase.


You need to read Page 4 of the Form 4473,"Question 11.a "

Or see:

http://www.dontlie.org/FAQ.cfm

What is a straw purchase?

A straw purchase is an illegal firearm purchase where the actual buyer of the gun, being unable to pass the required federal background check or desiring to not have his or her name associated with the transaction, uses a proxy buyer who can pass the required background check to purchase the firearm for him/her. It is highly illegal and punishable by a $250,000 fine and 10 years in prison.

NavyLCDR
July 25, 2009, 01:59 AM
dogtown tom,

You need to read page 165 of the Federal Firearms Regulations Reference Guide published in 2005 by the BATFE which is the latest version, and the definition of straw purchase has not changed. Especially the bolded and underlined parts below. (BTW, that is page 165 of the paper copy, but page 166 of the pdf file.)

There are two SEPARATE felonies. The straw purchase is purchasing a firearm on behalf of another and lying on the 4473 WHETHER OR NOT that other person is eligible themselves to purchase that firearm.

The second felony, IF the actual purchaser IS prohibited, is providing a firearm to an ineligible person. Two SEPARATE felonies that can occur each one by themselves or can both occur at the same time depending on the act.

But, as CLEARLY spelled out by the ATF on their OFFICIAL .gov website, the eligibility of the actual recipient of the firearm to possess/purchase that firearm is IMMATERIAL to the straw purchase.

Comments?

http://www.atf.gov/pub/fire-explo_pub/2005/p53004/p53004.pdf

15. STRAW PURCHASES
Questions have arisen concerning the
lawfulness of firearms purchases from
licensees by persons who use a "straw
purchaser" (another person) to acquire
the firearms. Specifically, the actual
buyer uses the straw purchaser to execute
the Form 4473 purporting to show
that the straw purchaser is the actual
purchaser of the firearm. In some instances,
a straw purchaser is used because
the actual purchaser is prohibited
from acquiring the firearm. That is to
say, the actual purchaser is a felon or is
within one of the other prohibited categories
of persons who may not lawfully
acquire firearms or is a resident of a
State other than that in which the licensee's
business premises is located.
Because of his or her disability, the person
uses a straw purchaser who is not
prohibited from purchasing a firearm
from the licensee. In other instances,
neither the straw purchaser nor the actual
purchaser is prohibited from acquiring
the firearm.
In both instances, the straw purchaser
violates Federal law by making
false statements on Form 4473 to the
licensee with respect to the identity of
the actual purchaser of the firearm, as
well as the actual purchaser's residence
address and date of birth. The actual
purchaser who utilized the straw purchaser
to acquire a firearm has unlawfully
aided and abetted or caused the
making of the false statements. The
licensee selling the firearm under these
circumstances also violates Federal law
if the licensee is aware of the false
statements on the form. It is immaterial
that the actual purchaser and the straw
purchaser are residents of the State in
which the licensee's business premises
is located, are not prohibited from receiving
or possessing firearms, and
could have lawfully purchased firearms
from the licensee.
An example of an illegal straw purchase
is as follows: Mr. Smith asks Mr.
Jones to purchase a firearm for Mr.
Smith. Mr. Smith gives Mr. Jones the
money for the firearm. If Mr. Jones fills
out Form 4473, he violates the law by
falsely stating that he is the actual buyer
of the firearm. Mr. Smith also violates
the law because he has unlawfully aided
and abetted or caused the making of
false statements on the form.
Where a person purchases a firearm
with the intent of making a gift of the
firearm to another person, the person
making the purchase is indeed the true
purchaser. There is no straw purchaser
in these instances. In the above example,
if Mr. Jones had bought a firearm
with his own money to give to Mr. Smith
as a birthday present, Mr. Jones could
lawfully have completed Form 4473.
The use of gift certificates would also
not fall within the category of straw purchases.
The person redeeming the gift
certificate would be the actual purchaser
of the firearm and would be properly
reflected as such in the dealer's records.

dogtown tom
July 25, 2009, 02:30 AM
NavyLT: There are two SEPARATE felonies. The straw purchase is purchasing a firearm on behalf of another and lying on the 4473 WHETHER OR NOT that other person is eligible themselves to purchase that firearm.

The second felony, IF the actual purchaser IS prohibited, is providing a firearm to an ineligible person. Two SEPARATE felonies that can occur each one by themselves or can both occur at the same time depending on the act.

Neither of which is the situation as outlined by grndslm.

Earlier you made the statement:

NavyLT: Ummmm...... straw purchase?!? It looks like you are giving your mother the money, and she is putting the gun on her credit card, and then the gun is getting transferred to you?

His mother is NOT mentioned as the one who is the actual purchaser of the firearm. The instance mentioned is not a straw purchase AS HE IS THE ACTUAL PURCHASER AND WILL COMPLETE A FORM 4473- not her.

His mother can even pay for it, complete a 4473 and gift it to him- still not a straw purchase.

Art Eatman
July 25, 2009, 11:32 AM
OT's bad enough; answering OT's worse.

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