How much $$$ do they tack on?

[hermannr]

Now if you have a C&R license, do you still have to pay this arbitrary use tax on a C&R purchase?

The use tax is supposed to be paid, and is collected by WA state licensed FFLs (dealers need to have a fed FFL and then they also have a WA state business license, When you get your business license (I had one for years, but not for firearms) there are certain things that are taxed at various rates...sales tax is the biggest, but as a business owner, I did not pay sales tax on my purchses...however, if those purchases were not for reasle, then I was required to pay "use" tax on any business consumable, or long term asset I aquired and kept for my business, you file it when you file your B&O Tax to the state.

FFL's in WA did not collect sales tax on items they did not sell prior to a couple years ago, so purchasing online was a good way to save 7% or 8%. Well, the State started looking at where they could collect more tax revenue without "raising" taxes and the state decided to tell the FFLs....you want to do business in WA? well you WILL collect sales or "use" tax on all purchases that run through your books...or you will loose you business license. An FFL with no business license you can't legally do business in WA (ATF rules as well as state law)

So, now to your question. You are not in the firearms "business" and do not have a WA business license, though with a C&R you can have eligible weapons sent directly to you....so, does the state have a lever they can use to make you comply? No...is the tax there? yes? are you going to file that tax on C&R items...that is up to you.

Maybe I should add another thing...Does the state care? Well yes and no. When you have a business license and do less than $25K business a year ($250 worth of B&O tax in my case) you did not have to file with the state...UNLESS you had ANY sales tax you collected. Why the difference? I don't know. they would give you a $250 exemption on your B&O tax but absolutely NO exemption on sales/use tax. I have no idea why, but they will audit businesses for sales tax in an instant..

 

[Thebastidge]

We have to go with fair market value of the firearm. If you report a purchase price to me (as and FFL) that is in line but a little low, I can deem that fair market value, since you simply got a good deal in the open market. If you report a $1 purchase price to me, I am going to look up the blue book value on it and charge that for use tax. Most of the time, I am going to see the paperwork from the selling FFL and know what you paid.

Sorry brother, but either you pay the Use Tax, or I lose money, my license, my business, and possibly my freedom. I'm required to remit it, I'm not going to pay it for you. It's the same deal when you register a vehicle you purchased out of state. They're going to charge you fair market value. The state compels us to do it, and I know several table top dealers have gone out of business, forfeited their license in lieu of prosecution because they were not collecting use tax and the state came down HARD on the issure about 3-4 years ago (hmmm, wonder what's significant about that time frame?)

You might just consider that not every Internet deal is such a good deal, and you might just want to purchase from a local FFL instead. Firearms are one of the lowest-margin items in my shop. If I sold nothing but firearms, I couldn't stay open, there's simply not enough profit in it. People complain about transfer fees a lot. We charge $30. Many people charge up to $50. Some FFLs will give you crap about not transferring certain brands they disapprove of, or won't transfer a gun that they sell locally. (C&C in Vancouver did that to me before I became an FFL, and Mike Feiss at Brightwater Ventures stopped doing transfers completely for a while before he retired and sold the business to Nick, who now does them cheerfully, I'm told. I was in Iraq, had a couple guns transferred through Brightwater to pick up while on R&R, went back to them with a 3rd purchase and he told me he wouldn't do them any more.) I won't do that.

When you consider it takes dedicated time for one of my employees respond to email and phone calls asking about transfers, send a copy of our FFL to the sending FFL, to physically receive and check in the firearm, a second employee comes over to verify serial numbers, then they record it, and store it... Then when the customer comes in to pick it up, we have to verify the purchase, run the NICS check, and record the transfer (and if the NICS check doesn't go smoothly, we may have to tell them to come back later and spend even more time on it) I don't even make ANY profit on performing a transfer. I do it as a community service and for the good will involved in having you come into my shop. Hopefully you'll buy a holster, a cleaning kit, or some ammo for your new purchase, maybe browse our gun selection, and come back to be a customer another day.

Just a little perspective from the other side of the gun counter.

 

[Thebastidge]

Herman, probably the difference between sales tax and B&O tax is you're passing the sales tax on the the consumer. For a very small business, the $250 B&O tax added in with other expenses may make the enterprise unprofitable enough to discourage people to try.

 

[optiontrigger]

Herman, probably the difference between sales tax and B&O tax is you're passing the sales tax on the the consumer. For a very small business, the $250 B&O tax added in with other expenses may make the enterprise unprofitable enough to discourage people to try.

But unlike all other items sold new in Washington, sales tax on transferred firearms is based on the total value paid including shipping. With close to 10% sales tax in King County, that shipping charge just got even more expensive.

 

[badclam]

So you believe it's OK to flaunt the laws and not pay taxes to your state of residence?

Yes! Our state government is out of control. As a business owner and employer I can tell you Wa. state is putting people out of work by driving up the cost of doing business in this state. There are only 2 states with higher L&I and employment security taxes. All State licenses and fees are climbing. As I have to learn to make do with less, the State wants more and more. I have to become more and more efficient to try to keep my employees employed. The State keeps finding new ways to waste our hard earned money they steal from us in forced fees and taxes....In the absence of any way to make the State accountable for their fiscal irresponsibility and dishonesty. With a complete loss of the notion of them working for the good of us, we have to fight back any way we can. Our founding fathers were criminals that disagreed with the laws and taxes of the day. How do you judge their "flaunt" of the laws?

 

[davemata]

No sales tax in Montana. So just like Washington residents buying things in Oregon are required to pay use tax to Washington. Oregon and Montana residents can show their ID and not pay sales tax in Washington.

?!?!? That's really odd. I also think that's part of the problem. If you make a purchase in a location, your origination shouldn't matter. You pay the sales tax of the location you are in and it's done.

If you're in a no tax state, no sales tax paid. If you're in a sales tax state, then sales tax is paid. Any state wanting you to pay a use tax on something you bought out of state can go screw. THAT is abusive, particularly when the state is the one making the valuation of the item, and then holding the gun pointed at you in order to take the revenue.

PDXSparky - do you have to show a Montana or OR id to run that game? I wouldn't mind a small discount on my next ammo purchase.

 

[davemata]

The use tax is supposed to be paid, and is collected by WA state licensed FFLs (dealers need to have a fed FFL and then they also have a WA state business license, When you get your business license (I had one for years, but not for firearms) there are certain things that are taxed at various rates...sales tax is the biggest, but as a business owner, I did not pay sales tax on my purchses...however, if those purchases were not for reasle, then I was required to pay "use" tax on any business consumable, or long term asset I aquired and kept for my business, you file it when you file your B&O Tax to the state.

FFL's in WA did not collect sales tax on items they did not sell prior to a couple years ago, so purchasing online was a good way to save 7% or 8%. Well, the State started looking at where they could collect more tax revenue without "raising" taxes and the state decided to tell the FFLs....you want to do business in WA? well you WILL collect sales or "use" tax on all purchases that run through your books...or you will loose you business license. An FFL with no business license you can't legally do business in WA (ATF rules as well as state law)

So, now to your question. You are not in the firearms "business" and do not have a WA business license, though with a C&R you can have eligible weapons sent directly to you....so, does the state have a lever they can use to make you comply? No...is the tax there? yes? are you going to file that tax on C&R items...that is up to you.

Maybe I should add another thing...Does the state care? Well yes and no. When you have a business license and do less than $25K business a year ($250 worth of B&O tax in my case) you did not have to file with the state...UNLESS you had ANY sales tax you collected. Why the difference? I don't know. they would give you a $250 exemption on your B&O tax but absolutely NO exemption on sales/use tax. I have no idea why, but they will audit businesses for sales tax in an instant..

Very interesting information, thank you. Been thinking of starting a small side gig, and it looks like if I do a lot, I'll need to keep immaculate books.

 

[hermannr]

Very interesting information, thank you. Been thinking of starting a small side gig, and it looks like if I do a lot, I'll need to keep immaculate books.

Use tax is based on the price paid, (if you have a receipt) and fair market value if there is no receipt. I used QuickBooks...makes life much simpiler. For firearms, they have a book, kind of like the dealers NADA book for cars.

On of my online purchases was from a private person, no receipt...I told Dave (my FFL) what I paid, but he said if he could not have a copy of the receipt he had to go by the book....ended up OK, I told him what it cost...book value was less (no, I don't think I overpaid even if I over paid according to the book, that gun is one of my favorites now.)

 

[Bam]

How about telling us who did your transfer so we know who NOT to do business with.

 

[davemata]

How about telling us who did your transfer so we know who NOT to do business with.

What he said.

 

[hermannr]

We should fire them.

Odd question though, at Wholesale Sports here I've been asked a few times if I have a Montana ID, because if I did they wouldn't charge me sales tax. What's up with that?!

Hej Dave!

The no sales tax thing for someone from OR (even BC etc) is a big agreement the states (and BC) made to solve a legal argument on who got to tax who and how much...the biggest problem was people that worked in OR (heavy income tax) but lived in WA (no income tax), (Or V/V) and purchased expensive items in OR (no sales tax) but live in WA (heavy sales tax.)

This went on for years until they came to an agreement....if you live in WA you pay sales tax, if you live in OR, you pay income tax...doesn't matter where you work or where you purchase large items, you will pay teh tax based on where you live, So, when OR resident comes to WA, they present their OR ID (sometimes the retailer will as for two, DL and CHL will work for two) they are not required to pay sales tax. Over the years, other states and BC have signed on to the agreement.

 

[PDXSparky]

PDXSparky - do you have to show a Montana or OR id to run that game? I wouldn't mind a small discount on my next ammo purchase.

Yes, you have to show an OR photo id. Driver's license is most common as it would show your state of residency.

 

[22many]

Ok guys. Being that were talking about taxes and laws then how would a trade deal go? If I was to trade my gun for another gun out of state then would I have to pay tax on it? If No money was exchanged is this how Washington screws you with their "use" tax?

 

[Thebastidge]

Ok guys. Being that were talking about taxes and laws then how would a trade deal go? If I was to trade my gun for another gun out of state then would I have to pay tax on it? If No money was exchanged is this how Washington screws you with their "use" tax?

I haven't had that situation come up, but yes, I would probably have to charge you the book value on the aquisition and the dispostion would be none of my affair. Again, sorry, but that's the biz. Talk to your representative.

But unlike all other items sold new in Washington, sales tax on transferred firearms is based on the total value paid including shipping. With close to 10% sales tax in King County, that shipping charge just got even more expensive.

Who says? Shipping is a service, and there is no sales or use tax on a service. I don't charge folks use tax on shipping.

 

[optiontrigger]

I haven't had that situation come up, but yes, I would probably have to charge you the book value on the aquisition and the dispostion would be none of my affair. Again, sorry, but that's the biz. Talk to your representative.



Who says? Shipping is a service, and there is no sales or use tax on a service. I don't charge folks use tax on shipping.

Ever since the requirement. It's right here ===> <broken link removed>

Note that it calls it a use tax and doesn't differentiate between a new vs used firearm.

 

[Thebastidge]

Yes, sales tax is on sales in Washington. Use tax is on items purchased outside of Washington. Technically different things, collected at the same rate. You show me a receipt for the purchase price and I'm not going to ask if it includes freight.

That circular references an RCW, which says NOTHING about use tax on shipping or insurance charges. The RCW references warranties (which are sold), but specifically defines the items subject to sales tax or use tax as tangible items. Services performed upon tangible items, such as cleaning, repair, modification etc can only charge sales tax as it pertains to the tangible itmes which are included as part of the service. If you repair a car by selling them a new alternator plus installation, the sales tax only applies to the part, not the labour or shipping. If you repair a firearm, the sales tax only applies to the (for example) new firing spring, not to installation. If you re-blue a gun barrel, sales tax doesn't apply, as the materials used are not a discrete unit that is applicable to sales tax- in fact, you have to pay the sales tax yourself for items which are consumables (the gun bluing material itself) in the course of your business, since they are not "for resale."

http://apps.leg.wa.gov/rcw/default.aspx?cite=82.12.010

http://apps.leg.wa.gov/rcw/default.aspx?cite=82.04.050

I would actually be willing to go to court on that one. Nowhere in the RCW does it mention sales or use tax on shipping, handling, packaging, insurance etc for retail goods- only on the purchase price. The only thing that approaches insurance is extended warranty, and it's clearly a different thing.

 

[TCOV]

Just a note on the waiver of sales tax in WA for out of state buyers from no sales tax states. The WA retailer may choose not to waive the sales tax as it requires extra recordkeeping and not worth the time. You can ask for the waiver but it is the retailers choice to grant it or not. Extra recordkeeping on a small purchase is not worth it.

 

[optiontrigger]

That link to the DOR document says "Use tax is collected on the total purchase price, including freight/delivery and insurance charges." Unless you have a different DOR dictionary, the words "freight/delivery" and "shipping" are synonymous.

I don't agree with paying tax on shipping charges but that's what happens in this state and every FFL I've used has calculated sales tax on the total amount of firearm+shipping+insurance+transfer fee.

For some reason, WA sees fit to do this on firearms but no other type of item.

 

[hermannr]

I haven't had that situation come up, but yes, I would probably have to charge you the book value on the aquisition and the dispostion would be none of my affair. Again, sorry, but that's the biz. Talk to your representative.

Actually, the rule is the tax is paid on the difference (if any), just like if you trade in a car...car cost say $10,000, your trade is worth $5,000...you pay sales tax on the $5,000 difference. Check your Dept of Revenue handbook.

Who says? Shipping is a service, and there is no sales or use tax on a service. I don't charge folks use tax on shipping.

You are correct on the shipping. Think about when you go to the PO, UPS, or FedEx...there is no sales tax on their postage/fees when you are the shipper.

 

[optiontrigger]

Is there any precedence of somebody challenging the WA DOR on this issue? Thebastidge mentioned about going to court over this but I'd think it would be better to have background rather than the FFL having to go on the defensive and waste time and money. I'd hope that the acceptability of this practice doesn't create an acceptance in Olympia that it can spill over to charging tax on shipping of non-firearms.