Sales tax on a used gun

[Mbauer67]

When buying a used long gun from a private party by going through FFL's, does the buyer have to pay sales tax again? Like when you are buying a used car.

I live in southern California for area specific rules.

Thanks for the help

[TeamGE]

Yes,

What we usually call "sales tax" is actually termed "use tax" by the CA State Board of Equalization. Personal items are "taxed" each time it is sold.

[Dan Hefta]

That sucks!!!

[BigTinVA]

Yes,

What we usually call "sales tax" is actually termed "use tax" by the CA State Board of Equalization. Personal items are "taxed" each time it is sold.

Wow that seems crazy. What is the "use tax" percentage and how is a private party seller expected to transmit the funds collected to the government? How would the government even know that a private party sale even took place?

Edit to add: I am talking about the sale of any private party sale of personal items not just firearms.

Edited June 14, 2010 by BigTinVA

[TeamGE]

Yes,

What we usually call "sales tax" is actually termed "use tax" by the CA State Board of Equalization. Personal items are "taxed" each time it is sold.

Wow that seems crazy. What is the "use tax" percentage and how is a private party seller expected to transmit the funds collected to the government? How would the government even know that a private party sale even took place?

Edit to add: I am talking about the sale of any private party sale of personal items not just firearms.

If you privately sell something to someone else (read: people meet, exchange items and cash) then the government does on get involved (though they wish they were), and no "use tax" is collected and sent to the "tax collector". If you go through a retail merchant (read: FFL, DMV, Pawn Shop, or any other government controlled criteria), to conduct the sale of an item, then the merchant is required by law to charge, collect and send the "use tax" to the tax collector. The percentage of tax varies from county to county because it is based on state and county taxes combined. In Orange Co., CA the "use tax" is 8 3/4% of the sale. There are some counties that are as high as 10%.

[sfinney]

Use tax a CA thing?

No FFL dealer around here I've dealt with (many in TX/LA), or any other state I've lived in (many), charges tax to just receive an item to their books and then transfer it to you. Now, if they are selling you a used gun, then of course they do charge tax.

[TeamGE]

Use tax a CA thing?

No FFL dealer around here I've dealt with (many in TX/LA), or any other state I've lived in (many), charges tax to just receive an item to their books and then transfer it to you. Now, if they are selling you a used gun, then of course they do charge tax.

Yes, this is a CA thing.

It has been in affect for many many years (I don't know when it started). Every state can make up there own rules. Oregon for instance has no "sales tax" or "use tax".

[entropic]

You are supposed to pay a sales tax to your state when you buy a gun from an out of state dealer (anywhere with sales tax I believe, not just CA). I don't think many people do though.

Edited June 14, 2010 by entropic

[Mbauer67]

Thanks for the great info everyone.

Let's make sure I have this straight. One must pay sales tax on a gun even if it is purchased from an out of state party. Maybe I should have been a little more specific with my question

For example if you buy a widget from an out of state party, that is exempt from sales tax because it was purchased out of state then shipped in. No sales tax due, right?

But this is not the case with guns?

Edited June 14, 2010 by Mbauer67

[dsmw5142]

You are supposed to pay a sales tax to your state when you buy a gun from an out of state dealer (anywhere with sales tax I believe, not just CA). I don't think many people do though.

Yup... this is correct. You are supposed to pay sales tax to your state on most any internet purchase where tax is not collected, not just guns.

[Torogi]

so if i buy reloading stuff from midwayusa, im from CA, how do i pay sales tax to my state?

and i have done at least 3 PPTs and ive never asked to submit or pay tax. either selling or buying.

[Kevin G.]

Not sure about CA, but in AL you are expected to report on your state income tax return the value of all items purchased out of state tax free. Then the applicable rate is applied and added to your tax due.

Edited: looked up CA form 540, 540EZ, and 540A. None of them asked for out of state purchases.

Edited June 18, 2010 by MoreBrassPls

[elenius]

Not sure about CA, but in AL you are expected to report on your state income tax return the value of all items purchased out of state tax free. Then the applicable rate is applied and added to your tax due.

Edited: looked up CA form 540, 540EZ, and 540A. None of them asked for out of state purchases.

It's the same in CA.

Some FFLs here charge salex tax on FFL transfers (at least on new stuff coming from out of state), some don't. If they don't you're supposed to declare it on your tax forms.

[ChuckS]

Use tax a CA thing?

No FFL dealer around here I've dealt with (many in TX/LA), or any other state I've lived in (many), charges tax to just receive an item to their books and then transfer it to you. Now, if they are selling you a used gun, then of course they do charge tax.

Yes, this is a CA thing.

It has been in affect for many many years (I don't know when it started). Every state can make up there own rules. Oregon for instance has no "sales tax" or "use tax".

Beven,

The tax was put into effect July 1935. Some folks complain about this being an "internet sales tax". If so, it shows amazing foresight...

Later,

Chuck

[Jim Norman]

What happens in almost every state is this. You buy a product, either privately in state, or maybe over the net out of state, the seller does not collect sales tax on the sale/purchase as he is not really a merchant. So at the end of the year when you file your state tax return, there is a question regarding purchase you have made through out the preceding year and you are supposed to calculate the amount due and remit it to the state. Many items are essentially untraceable, but in the case of anything that is required to be registered, Cars, Trucks, Boats, etc. they will collect the tax at the time of registration. Other big ticket items are a bit more difficult.

This generally does not apply to an interstate purchase where you paid the tax in the jurisdiction where the purchase was made, unless the tax rate there is lower than at home, then they usually want to collect the difference.

Now understand I am not, nor have I ever played a tax attorney nor an accountant on TV or in the movies, so take all this with a grain or two of salt. If the purchases were large and likely to show up some how, you might want to check with your tax people just to keep out of trouble.

[PeterMor]

This certainly true in WA state, according to the gun shop came into effect in WA Jan 1, 2010. Here is the law that covers it for WA you should be able to find the CA law online.

http://dor.wa.gov/Content/GetAFormOrPublication/PublicationBySubject/TaxTopics/FirearmTransfers.aspx

Is the transfer of a firearm subject to tax?

In an interstate transfer of firearms the Washington gun dealer is required to collect use tax from the Washington resident on the purchase price of the firearm. Use tax is collected from the Washington customer at the time the customer takes possession of the firearm. Use tax is collected on the total selling price, including freight and/or delivery charges and other amounts added, such a an amount for insurance coverage.

If the selling price is not evident, it is up to the gun dealer to obtain this price by either requiring the purchaser to show the purchase price or to obtain that information from the out-of-state dealer. If, for whatever reason, the dealer is still unable to obtain the original purchase price, RCW 82.08.010 provides that the fair market value shall be used. It is the responsibility of the Washington gun dealer to determine the price in order to report and pay the use tax due.

[PeterMor]

That sucks!!!

Amen Brother!

[BLUTO]

I ship quite a few shooters into Kalifornia (to FFL's of course) and from what I understand most are charging the guy who picks it up sales tax.

Really kinda screws up the whole point of internet sales.

Of course if the invoice says you paid $200 for a $500 item, I guess you just got a h**l of a deal and the tax isnt that big of a deal.

I so love the rules in Kali

[BLUTO]

This certainly true in WA state, according to the gun shop came into effect in WA Jan 1, 2010. Here is the law that covers it for WA you should be able to find the CA law online.

http://dor.wa.gov/Content/GetAFormOrPublication/PublicationBySubject/TaxTopics/FirearmTransfers.aspx

Is the transfer of a firearm subject to tax?

In an interstate transfer of firearms the Washington gun dealer is required to collect use tax from the Washington resident on the purchase price of the firearm. Use tax is collected from the Washington customer at the time the customer takes possession of the firearm. Use tax is collected on the total selling price, including freight and/or delivery charges and other amounts added, such a an amount for insurance coverage.

If the selling price is not evident, it is up to the gun dealer to obtain this price by either requiring the purchaser to show the purchase price or to obtain that information from the out-of-state dealer. If, for whatever reason, the dealer is still unable to obtain the original purchase price, RCW 82.08.010 provides that the fair market value shall be used. It is the responsibility of the Washington gun dealer to determine the price in order to report and pay the use tax due.

Looks like WA is taking a page out of the Kali rulebooks - bummer...

[h2osport]

Taxes? We dont have no stinking taxes! At least no sales/use taxes in Montana.

Randy

[NuJudge]

so if i buy reloading stuff from midwayusa, im from CA, how do i pay sales tax to my state?

and i have done at least 3 PPTs and ive never asked to submit or pay tax. either selling or buying.

Here in Michigan, with 9 million residents, and the requirement to pay either Sales or Use tax on everything purchased, the last number I heard for the number of people who bother to pay the Use tax on their yearly Income Tax return was 45 people. My CPA believes I'm a sissy for paying it, but I sleep better at night.

The only sold items that States have had any success collecting the Use tax is when the Internet/Mailorder seller is in the same State, and items such as boats, cars & airplanes that are registered.

[twodownzero]

I have serious doubts as to the constitutionality of this under the dormant commerce clause doctrine, but I don't know enough about it to opine any further. Perhaps the lawyers of the board can explain further.

[Mbauer67]

Thanks to all for the great comments, this topic has certainly made it clear to me, that a person in California will end up paying about the same cost for a used gun as a new one. Based on today's resale prices. Unless the item being sold is drastically under-priced.

[BLUTO]

Thanks to all for the great comments, this topic has certainly made it clear to me, that a person in California will end up paying about the same cost for a used gun as a new one. Based on today's resale prices. Unless the item being sold is drastically under-priced.

Not necessarily. I know of several online retailers who sell new and used items at price points well below. The general thought is that your local shop is paying rent with his items and has a limited market. Folks that sell on the internet and such are forced to have (often) lower prices based on a far larger market and folks like Bud's who sometimes have items with a delivered price well over 100 less than shop like mine can even buy them - volume I guess.

To illustrate - a M&P15T went to a Kali citizen for $310 less than available in "country" so even with taxes applied (the dealer there has you sign a statement that you are responsible for taking care of the tax) it still came out considerably less.

Like everything that costs, creative shopping rules

[gohuskers]

Unfortunately we're at a point where cities, municipalities, states, and the federal government can tax the same product several times. Just think of the estate tax - tax everything a person has worked for their whole life: farm implements, house, acreage, and then tax it again - at near usurious rates (50-80%) upon death. It's a sad fact and even sadder if you're in one of the more "progressive" states like California, Massachusetts, et al. Someone mentioned the Dormant Commerce Clause - it has few if any justices that are willing to deal with it and its effects on things like state double taxation, internet tax and the like. Scalia and Thomas are more than willing to say it's court interpreted clause with no legitimacy but it's unclear whether Roberts or Alito would be willing to address it - i'm guessing not until there's a significant split in the circuits and to date there isn't. Man I hated tax law classes.