Online firearms purchasing and state sales tax

Some states are requiring on line sales outlets to collect their tax. Seems like some vendors are following the rule, some aren't.

You responsible for paying the tax if the retailer doesn't collect it. Instead of calling it a sales tax, it is called a use tax (and is the same amount). Before the Internet, catalog sales were minuscule compared to local brick and mortar, so states shrugged off on the non-compliance. Now they realize they are losing millions in revenue. Some states have started requiring online collection of sales tax, and most will soon I am betting. Except for the behemoths like Amazon, this can put a serious hurt on small business trying to comply with the thousands of different tax rates

If you're buying a firearm, it has to go through a FFL. Seems odd to me that he would not be collecting the sales tax regardless of what the Seller is doing. How do his books jive with the State when he submits his taxes?

George nailed it you're supposed to be paying your use tax..

They will eventually close all the loopholes so enjoy while you can.

Slater said:

I know that this was inevitable, and it does give a boost to the local gun shop...

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George P said:

...it is called a use tax (and is the same amount).

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May help B&M stores a little- it's a start at least. However, the use tax (for my state at least) is set at the state-level sales tax rate which is only half of the sales tax rate I pay in a local store (with county/city sales tax added in).
On one hand, it's easy to see how people will naturally gravitate toward the less taxed online item- especially since they're often either drop shipped or operate out of a warehouse and don't have a B&M store (which is more costly real estate). On the other hand, people have been driving out of town, to the next county, across state lines, etc to buy things because of lower taxes forever- which is essentially the same thing.
I like the cheaper online prices but I prefer money stay in locally owned businesses. Pick your poison.

81husky said:

If you're buying a firearm, it has to go through a FFL. Seems odd to me that he would not be collecting the sales tax regardless of what the Seller is doing. How do his books jive with the State when he submits his taxes?

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Cant say for all states, but, in Nebraska a transfer is a non taxable service.

I told many a customer who was shopping on gunbroker and asking me to make the purchase for them, that if I made the purchase the gun became inventory and I collected sales tax ( NOTE DO NOT HAVE NEVER CHARGED SALES TAX...ONLY COLLECTED THE AMOUNT THE STATE CHARGES)

On the flipside, if THEY made the purchase I collected no tax on the transfer...I did inform them that they were supposed to pay use tax.....not that I ever really expected them to...but that was not my problem

Buds sent a rifle to my FFL last week and I was not charged sale tax here in GA. I still think it is a state thing. If I can find a particular gun locally I can still beat online prices even with tax included so it is pretty rare for me to order. I paid Buds $447 including shipping and insurance. If I my local store had been able to locate one I could have paid $389 OTD including tax..

Slater said:

After some research, the threshold for my state (Arizona) is $200,000 for any particular vendor for 2019. So that may be a factor. I can see where 50 different state regulations can get confusing pretty quick.

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Try more like THOUSANDS of state and local tax regulations, in Nebraska each and every town has the option of adding a local sales tax on top of the state sales tax of 5.5%, minimal local tax is zero with a max of 2.25%

I have heard of states with different taxes within the same city depending on address.

Aren’t ammo and guns in the same category for this subject?

About four month ago I bought a case of 7.62x39 at The Ammunition Store in OH, shipped to TN.

My final price total, with shipping, had Zero sales tax.
Maybe other businesses in OH won’t charge you state sales tax over the Internet?

81husky said:

If you're buying a firearm, it has to go through a FFL. Seems odd to me that he would not be collecting the sales tax regardless of what the Seller is doing. How do his books jive with the State when he submits his taxes?

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Why odd? The receiving FFL did not sell the gun, he merely performed a Federally-required transfer.

CLP said:

May help B&M stores a little- it's a start at least. However, the use tax (for my state at least) is set at the state-level sales tax rate which is only half of the sales tax rate I pay in a local store (with county/city sales tax added in).
On one hand, it's easy to see how people will naturally gravitate toward the less taxed online item- especially since they're often either drop shipped or operate out of a warehouse and don't have a B&M store (which is more costly real estate). On the other hand, people have been driving out of town, to the next county, across state lines, etc to buy things because of lower taxes forever- which is essentially the same thing.
I like the cheaper online prices but I prefer money stay in locally owned businesses. Pick your poison.

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Technically, if you drive out of state to make a purchase you are still supposed to pay use tax....

newfalguy101 said:

...( NOTE DO NOT HAVE NEVER CHARGED SALES TAX...ONLY COLLECTED THE AMOUNT THE STATE CHARGES)....

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???

Are you trying to say: "I only collect the amount of tax the State charges, so I can pay it to the State on your behalf"?

George P said:

Why odd? The receiving FFL did not sell the gun, he merely performed a Federally-required transfer.

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I see your point, and agree with it, now that I've thought more about. It just seems that everything we do or buy is taxed in my state.We might very well have to pay tax on the transfer fee.

lysanderxiii said:

???

Are you trying to say: "I only collect the amount of tax the State charges, so I can pay it to the State on your behalf"?

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Pretty much..


The state charges the sales tax, retailers collect said sales tax and then submit it to the state....

Semantics really I suppose....I just got realy tired of negotiating a sale and giving the total to be met with " what?? you charge sales tax??" as if I were the only business owner on the planet doing business at a gunshow that collected sales tax.

jmr40 said:

Buds sent a rifle to my FFL last week and I was not charged sale tax here in GA. I still think it is a state thing. If I can find a particular gun locally I can still beat online prices even with tax included so it is pretty rare for me to order. I paid Buds $447 including shipping and insurance. If I my local store had been able to locate one I could have paid $389 OTD including tax..

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The current Georgia threshold for sellers is $250,000 or 200 sales. Starting next year the threshold for a seller drops to $100,000. Anyone who sells more than these amounts “should” get licensed to collect and remit sales tax. I’m guessing Buds meets these thresholds but is either in the process of getting licensed or ignoring the law. I’d guess a gun seller that large won’t go unnoticed for too long.

In the 1980s and '90s, I know that after the ATF audited several shops, they (the ATF) would "suggested" the state audit their books for sales tax, which led to the loss of their state sales licenses and consequently their FFLs. Don't know how the ATF regulations read today, but back then it was clear that the buyer had to pay sales tax to someone. The ATF was and remains, at least in part, a tax collection agency.

George P. wrote:
"Except for the behemoths like Amazon,..."

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Amazon now has "nexus" in all (or essentially all) states that collect a sales tax and have been collecting it for some time.

As far as small businesses complying with charging sales tax in numerous jurisdictions, the only people who have a real problem are the few doing such little business that they can still use manual (including spreadsheet-based computerized) accounting systems. Every automated accounting system worth its monthly charge long ago started offering support for collecting - and paying over - sales taxes.

It’s different from state to state. Some states require it, other have not even addressed it. For example, California requires the transferring FFL to collect sales (use) tax at delivery. In Arizona, it’s the honor system for the individual to compute the tax and include it in their annual tax return.

The problem I see with it is that there is no effective way for a state to enforce it (or even know about the transaction) from an out of state seller. For firearms it could be controlled through the transfer FFL, but how about the millions of online non firearm purchases that are shipped directly to the buyer. And with all the various tax rates for states, counties, and cities, Any but some of the major sellers would never be able to know what the charge.

newfalguy101 said:

Try more like THOUSANDS of state and local tax regulations, in Nebraska each and every town has the option of adding a local sales tax on top of the state sales tax of 5.5%, minimal local tax is zero with a max of 2.25%

I have heard of states with different taxes within the same city depending on address.

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Probably, like everything else, there's an address based app a business can incorporate into their computer system that checks who they have to collect tax for, and the rate.

I sometimes have problems because the USPS lumps all zip codes surrounding the large city I live near into that city for the town in the address. This causes problems because that city has certain local gun and ammo laws that my town does not.

Buying on line, the vendors app will occasional void the transaction because it looks like I live in that city. So I have to call and convince the vendor I don't actually live there.

People will go to great lengths to avoid paying sales tax.

The Costco that sells the most high end jewelry is located 10 minutes from the airport in Portland. People will buy the jewelry, have it sent to that store for pickup, they will then fly into PDX, pick the item and fly back out.

States realized they were losing BILLIONS to online purchases. They want that money. Expect within the next 5 years that EVERY online purchase will be taxed.