Tax on FFL fee for CCW handgun?

[jakemccoy]

I bought 2 guns over the Internet. One FFL dealer did not charge a CA tax on the FFL fee. Another FFL dealer applied the tax to his FFL fee. I think this is blatantly improper. I have not paid for the second gun yet. It's a minor issue (difference of about $5), but I just don't like dealing with slimy people who try to get over wherever they can.

[BonoVox]

Originally Posted by jakemccoy

I bought 2 guns over the Internet. One FFL dealer did not charge a CA tax on the FFL fee. Another FFL dealer applied the tax to his FFL fee. I think this is blatantly improper. I have not paid for the second gun yet. It's a minor issue (difference of about $5), but I just don't like dealing with slimy people who try to get over wherever they can.

Way I understand it they should not charge tax on the FFL fee. From what I here a chain of stores starting with the letter T DO charge tax on it.

Now there is the $25 state fee. That is the one I am referring to. If they mark that fee up, to DROS an out of state purchased gun, maybe they should charge tax on the marked up part of the fee.

[DVSmith]

Well, if you look here:
Frequently Asked Questions - Firearms Dealer - Bureau of Firearms - California Dept. of Justice - Office of the Attorney General bd72#40G

you find this statement:
May I charge sales tax on the DROS fees?

No. On January 1, 1999, the state Board of Equalization ruled that the DROS fees are not subject to retail sales tax. Firearms dealers licensed pursuant to Penal Code section 12071 shall not charge sales tax on the DROS fees. Questions regarding firearms transfer fees can be directed to the DOJ through this website or by calling (916) 263-4887. Questions regarding sales tax can be made to the California Board of Equalization at its website California State Board of Equalization.

[CCWInstructor]

They State Board of Equalization says tax must be charged on all purchases. On your state tax form you are suppose to pay tax on all your internet puchases too.

The State charges Tax on SWAG bags at the
Academy awards. You pay the FULL sales tax on a discounted cell phones. Why do you think guns should be any differnt.


FOR THE RECORD:
The FFL is the California agent handling the transaction, they MUST charge sales tax. San Gaberal Valley Gun Club, got hit for 32,000 in back sales tax about two years ago. They said our members buy the guns out of state, we don't. The State told them they are the California Agent.

Any Store that has been through a Adit now charges sales tax. Every Dealer was told this at the last DOJ/ATF&E meeting 12 months ago AGAIN!

The 25.00 DROS fee is NOT Taxable

[jakemccoy]

Originally Posted by CCWInstructor

They State Board of Equalization says tax must be charged on all purchases. On your state tax form you are suppose to pay tax on all your internet puchases too.

The State charges Tax on SWAG bags at the
Academy awards. You pay the FULL sales tax on a discounted cell phones. Why do you think guns should be any differnt.


FOR THE RECORD:
The FFL is the California agent handling the transaction, they MUST charge sales tax. San Gaberal Valley Gun Club, got hit for 32,000 in back sales tax about two years ago. They said our members buy the guns out of state, we don't. The State told them they are the California Agent.

Any Store that has been through a Adit now charges sales tax. Every Dealer was told this at the last DOJ/ATF&E meeting 12 months ago AGAIN!

The 25.00 DROS fee is NOT Taxable

You misinterpreted this thread. I understand the tax on the Internet purchase - no issue there. My issue is the FFL dealer going further and applying the state tax to the FFL fee after the gun has been purchased and shipped to the FFL dealer. Because the FFL dealer did not participate in the sale (merely a transferring middle party), the FFL dealer should not apply a tax to the FFL fee. That's tantamount to a double tax. Here are examples:

PROPER:
Internet Gun Price: $100
Tax at 8.25%: $8.25
FFL Fee: $50
DROS Fee: $25
Shipping: $15
Total: $198.25

IMPROPER:
Internet Gun Price: $100
FFL Fee: $50
Tax at 8.25%: $12.38
DROS Fee: $25
Shipping: $15
Total: $202.38

Again, the FFL dealer did not participate in the sale.

[GunSlut]

He must tax you on everything except the DROS FEE. Those charges are normally build into the purchase of a gun if you buy it from the dealer.

The only thing the don't charge sales tax on is labor. You did not list labor.

[jakemccoy]

Originally Posted by GunSlut

He must tax you on everything except the DROS FEE. Those charges are normally build into the purchase of a gun if you buy it from the dealer.

The only thing the don't charge sales tax on is labor. You did not list labor.

Again, the FFL dealer did not participate in the sale. He's merely transferring.

[CCWInstructor]

Originally Posted by jakemccoy

You misinterpreted this thread. I understand the tax on the Internet purchase - no issue there. My issue is the FFL dealer going further and applying the state tax to the FFL fee after the gun has been purchased and shipped to the FFL dealer. Because the FFL dealer did not participate in the sale (merely a transferring middle party), the FFL dealer should not apply a tax to the FFL fee. That's tantamount to a double tax.

Sorry about that. It's been a very busy day. I did a post and run.

[hbliam]

So the guy wants to charge you tax on tax? That would bug me too. (Fee is just another word for tax)

[jakemccoy]

UPDATE:

I just checked with the Board of Equalization and have seen the proper state law Annotation (495.0843). The FFL dealer is correct to tax the FFL fee in certain situations. If the tax paper work is handled by the FFL dealer, the FFL fee is taxable because then California consideres the FFL fee as part of the gun and considers the FFL dealer to be the retailer. If the gun sale and state taxation are handled by the retailer (not the FFL dealer), the FFL fee is NOT taxable because California then considers the FFL fee as NOT part of the gun. I had a somewhat lengthy conversation with a tax specialist at the Board of Equalization and found out that state sales tax is not a simple thing, but it makes sense now.

Normally, I wouldn't worry about all these fees. However, obviously, there are a lot of fees involved with getting just a plain old firearm. After awhile, it gets to a point where I have to check everything. I just bought a plain old used gun for $250. It's coming to about $380 after everything's all said and done...irks me. The fees and taxes are slowing my purchasing of guns - probably what Cali wants.

[CCWInstructor]

Now I'm confused and I'm a dealer with a resale lisc. ALL guns must got thru a FFL. So, why two answers? What am I missing?

[jakemccoy]

There are two different answers. Check out Annotation 495.0843:

Business Taxes Law Guide Search - Board of Equalization

That annotation lays out the exact example I described in the original post. If it's still confusing, call 800-400-7115, go through the prompts and ask to speak to a tax specialist.

Basically, if the retailer (who is not the FFL dealer) handles the state tax, the FFL dealer does not apply a tax to the FFL fee. If the FFL dealer handles the state tax, the FFL dealer is supposed to apply the state tax to the FFL fee.

I really wish I was wrong though.

[CCWInstructor]

Okay, That is for all products, not just guns. With firearms we only have the one option. Thanks!

[jakemccoy]

Originally Posted by CCWInstructor

Okay, That is for all products, not just guns. With firearms we only have the one option. Thanks!

According to the Board of Equalization website, Annotation 495.0843 applies to "Deliveries by California Firearm Dealers for Out-of-State Retailers."

If I were an FFL dealer, I'd make sure to apply the state tax to my FFL fee if I were handling the state tax paperwork. If the prior retailer applied the state tax, I would not.

[CCWInstructor]

Yes, but to be a California Firearms Dealer (CFD), you must have a resale lisc.

http://ag.ca.gov/firearms/forms/pdf/...2406539809d93c

Which make their two options moot. You only have one.