Ks5shooter
Contributing Member
You buy a gun on line. Seller of the gun does not collect sales tax. Is your ffl required to collect the sales tax? Was curious. Thanks in advance for any info.
Not under any Federal law or ATF regulation.You buy a gun on line. Seller of the gun does not collect sales tax. Is your ffl required to collect the sales tax? Was curious. Thanks in advance for any info.
The threshold?TEXAS TAX RESPONSIBILITIES AND RESOURCES FOR SELLERS AFTER WAYFAIR
As a result of the U.S. Supreme Court’s decision in South Dakota v. Wayfair, Texas businesses selling items or services into other states may be required to collect taxes for those states. Additionally, sellers outside of Texas who were previously not required to collect and remit Texas sales and use tax may need to collect Texas tax on their sales into Texas effective Oct. 1, 2019.....
Not all states may have a threshold as does Texas. And I can name at least three very large online firearm retailers that have not been collecting TX sales tax that should be.A remote seller whose total Texas revenue from sales into Texas in the preceding 12 calendar months are less than $500,000 is not required to obtain a permit and collect tax. The dollar amount is based on gross revenue from sales of tangible personal property and services into Texas. The amount includes separately stated handling, transportation, installation, and other similar fees you collect. It also includes sales for resale and sales to exempt entities.
Wholly and completely wrong.The FFL cannot collect sales tax on a transaction in which the seller is in another state or in the same state, for that matter. If the sale took place in another state, you may owe sales tax in that state. If the sale took place in your state, you may be responsible for reporting/paying sales tax in your annual state filing. The FFL may impose sales tax on the transfer, based on your state's tax laws), but has no legal basis whatsoever for collecting tax on a transaction in which he/she was not involved (and the transfer does not constitute involvement for tax purposes).
Wholly and completely wrong.
Read https://en.wikipedia.org/wiki/South_Dakota_v._Wayfair,_Inc.
States where the dealer is required to collect local tax on firearms sold OUTSIDE their state:
Washington https://dor.wa.gov/get-form-or-publ.../sales-and-transfers-firearms-license-dealers
California https://www.cdtfa.ca.gov/lawguides/vol2/suta/495-0848.html
I quoted the laws in two states. Whether or not there is case law does not invalidate those state laws.No. You are wrong and you are citing a case that has no bearing on this issue. Further, the opinions of state revenue agencies that have 1) no basis in law and 2) no test cases to back them up are ultra vires. IN NO STATE IN THE UNION can someone who has not engaged in a sale be required to collect sales tax on a transaction in another state. The fact that a rapacious state revenue agency may wish it done does not make it legal. There is ZERO case law to support this so-called "requirement" by the states of Washington and California. It is an ultra vires action with no support in established law: "When a licensed California firearm dealer completes the registration paperwork and delivers a firearm to a California purchaser for an out-of-state retailer not registered with the Board as a retailer engaged in business in this state, it is presumed that the dealer is the retailer of the firearm. In such a case, the dealer would owe sales tax on the total amount of the sales price of the gun." The state may presume what it wishes, but it may not make it so.
That bolded part? I never made that claim.South Dakota vs Wayfair establishes the right of the state to seek sales tax on out of state transactions. It does not, nor can it, provide the state the right to designate persons who have not engaged in a sales transaction as tax collectors on behalf of the state.
I quoted the laws in two states. Whether or not there is case law does not invalidate those state laws.
So, yeah wrong.
That bolded part? I never made that claim.
Treading on thin ice here, so take my response with a grain of salt.
If you pay the seller your FFL should not be required to collect, he is only providing a service, i.e. the background check. In some states the seller is on the hook for collecting the tax when a buyer pays directly.
If you pay your FFL it is considered a local sale, which is taxable in most jurisdictions.
And I didn't stay at the Holiday Inn last night, so the question is best answered by you state dept of infernal revenue
In state, it is called a sales taxWashington State FFL's must collect a Use Tax on out of state transfers. Though not in state, apparently.
The core of the issue is at what point the merchandise changes hands from a seller to a consumer or buyer. Sales tax is collected at the point the merchandise falls into the hands of the consumer, i.e. they buyer, i.e. you!
Washington State FFL's must collect a Use Tax on out of state transfers. Though not in state, apparently.
@drk1, thanks for taking time to explain that. The state imposed fiction that the sale takes place at point of transfer is of course the only possible explanation for the illegal CA and WA requirements for FFLs to.collect sales tax, although presumably WA seems to get around it by calling it a "use tax", which is nonsense but may aid their legal fiction.
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False. Purchase and transfer of possession are two different acts.We've gone over this several times, evidently without gaining much ground, but I'll try again. The core of the issue is at what point the merchandise changes hands from a seller to a consumer or buyer. Sales tax is collected at the point the merchandise falls into the hands of the consumer, i.e. they buyer, i.e. you! As I hope most folks understand, unless you have an FFL, you cannot "buy" a handgun from someone outside of your state. Yes, you may send the person the money, but you are not actually "buying" the item at that point. The actual "buy" only takes place when you take possession of the merchandise. The point at which the merchandise comes into the hands of the "buyer" is the of the actual point of purchase and sales tax is supposed to be collected at that time. Simply sending someone some money is not a purchase. If it was and you sent someone money for a firearm without having an FFL, you would be breaking the law.
Not until fairly recently. Until South Dakota vs Wayfair that out of state seller was only required to collect sales tax if they had a business nexus in the buyers state of residence.Let's try a different approach. Lets suppose you were allowed to buy a firearm directly from the manufacturer. Do you think that a state would expect the manufacturer to collect sales tax on a "retail" sale whether you walked in the door to do a face-to-face purchase or did it through the mail? Certainly, they would. When a business purchases merchandise from a manufacturer or wholesaler, he/she must include a copy of his/her business license and state tax number. If he/she doesn't do that, the manufacturer/wholesaler will charge sales tax.
First, a "transfer" is not considered a "sale" in many states.....Texas being one. A Texas FFL does not collect any sales or use tax on a firearm that the buyer purchased from out of state. Customer buys a Glockchester from Bud's, there are two possibilities: Bud's collects TX sales sales and remits to Texas or Bud's does not collect TX sales tax and buyer is responsible for paying use tax to the State of Texas.If you live in a state that has a sales tax -- now all but five states -- that state expects you to pay sales tax when you purchase an item (with the exception of food in some states). When your LGS "buys" merchandise from a manufacturer/wholesaler, he/she must include a copy of his/her business license and tax number. If he/she does include that information, he/she will have to pay sales tax. Now, many people contend that you don't need to pay sales tax because a sales tax was collected when the item was new. Huh? When you buy a new car, there is a sales tax; when you buy a used car that a car dealer bought at an auction, there is a sales tax. How is that different from your firearms transfer? It isn't! If you buy a new firearm in a state that collects a sales tax, you are supposed to pay a sales tax. It is the same when you pick up a transfer from your LGS! Your LGS has not paid a sales tax on the item -- he/she knows (or should know) that if they are in a sales tax state, sales tax must be paid on that merchandise. Just because it is a "transfer" does not mean it is exempt from sales tax.
Or just maybe a transfer wasn't considered a taxable transaction....like Texas and other states. You don't show your state or the state where you worked, so its a tossup if your boss was compliant with his states tax code.Many years ago, in the 1970s and even into the 1980's, firearms transfers were not that common. I worked for some LGS did not charge sales tax on transfers because: 1) it was a courtsey he/she was extending to the customer in the hope of future business or 2) he /she didn't understand they were required to collect sales tax.
See, this is where any argument you make fails.Then in the 1990s along came the fed. crackdown on the LGS. The feds. decided there were too many FFLs out there and they actively began a campaign to reduce the number The feds. first line of attack was the dreaded "audit." Agents threatened to take away licenses because dealers were not spelling out the names of states on the 4473.
Horsehockey.I know of another store they closed because it didn't have a fire extinguisher!
Horsehockey again.In the course of a detailed audit, the feds compared your bound book to your sales receipts.
No, for items recorded in the bound book the dealer must either be in possession of the firearm or show the disposition. That disposition is not a sales receipt, but a Form 4473 or the FFL number of the dealer the firearm was shipped/sold/traded or otherwise disposed to. A sales receipt is not proof of lawful disposition. For someone who worked in a LGS you should know that.You had to have a sales receipt or another means of accounting for every item in your bound book.
Sure they did. Being that sales tax records aren't part of the compliance inspection ATF wouldn't know. And not paying his sales tax? He's a cheat.Then, if you got past that step, and the feds. really wanted to shut down a dealer, they would quietly mention to the state tax folks that it appeared that this particular LGS wasn't properly collecting state sales tax. The state sales tax people would then swoop in, do an audit and, sure enough, they often discovered the LGS wasn't properly collecting state sales tax. The result was a hefty fine that the LGS often couldn't afford to pay, so having lost his/her business licence, he/she was out of business which is what the feds wanted in the first place.
True, IF your state considers a "transfer" as a taxable service. Mine doesn't.Now, there is one more important point that has to be brought up. Many folks have pointed out that things have changed in recent years and the states want more sales tax than ever. Some states even expect you to pay it voluntarily on your yearly income tax form. One of the things that has changed in many states is the addition of a tax on services. For example, it used to be that the plumber only charged tax on the parts he/she used, but not on his/her labor and/or services. Now many states require him/her to collect a sales tax on his/her service as well as the parts. So, if your LGS is charging a fee for your transfer, that is a service and if you are in a state with a sales tax on services, your LGS is supposed to be charging you a sales tax on that transfer fee. In my county, for example, sales tax is 7.5 %, so when my LGS charges $20 for a transfer, he really should be collecting $21.50, and if he/she doesn't charge that additon $1.50 in sales tax, he/she will have to take it out of his/her pocket at the end of the quarter or year. Yes, its a small amount, but ultimately at the end of the taxing period, all of those small amounts add up and it can mean the difference between staying in business and closing the doors for your LGS.
Maybe you should move your law practice to California or Washington and argue your theory there.The state cannot howver force a person not engaged in that transaction to collect it on their behalf. And the fiction that the transaction is not completed until transfer is contradicted by their exemption from collection in the event that the seller collected sales tax.