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I-594 Department of Revenue memo

Discussion in 'Off Topic' started by IronMonster, Dec 6, 2014.

  1. IronMonster

    IronMonster Washington Opinionated Member Diamond Supporter

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    http://dor.wa.gov/Docs/Pubs/SpecialNotices/2014/sn_14_Firearms.pdf

    Bam, Tax you suckers!

    Tax Implications of Firearms transfers
    Introduction
    This Special Notice explains how the passage of Initiative 594 (“I-594”) affects the tax
    collection responsibilities of licensed Washington firearms dealers.
    For tax purposes, I-594:

    Effective December 4, 2014, I-594 removes the requirement for firearms dealers
    to collect sales or use tax from the transferee on firearms transfers between
    unlicensed persons whether such transfers are in-state or interstate transfers.

    Keeps the requirement for firearms dealers to collect sales or use tax from the
    transferee on interstate firearms transfers by a licensed dealer.
    Effective December 4, 2014, I-594 requires background checks on virtually all firearms
    transfers. See I-594 for the limited exceptions to the background check requirement.
    Contact your local law enforcement officials for questions unrelated to state taxes.
    Previously, background checks were only required on direct purchases from licensed
    firearms dealers.
    The following terms apply for purposes of this Special Notice:
    “Licensed dealer” means a dealer who has a Federal Firearms License (FFL) pursuant to
    18 U.S.C. Sec. 923(c).
    “Unlicensed person” means any person who is not an FFL gun dealer under Chapter
    9.41 RCW.
    “Transfer” means the intended delivery of a firearm to another person regardless of
    whether there is consideration or promise of payment, including, but not limited to
    transfers, sales, gifts and loans of firearms.
    “Transferee” means the person that will receive the firearm in Washington.
    “In-state firearms dealer involved in transferring a firearm.” This is the firearms dealer
    that will perform the background check before delivering the firearm to the transferee
    DECEMBER 4, 2014
    in Washington.
    Must a licensed dealer facilitating the transfer of a firearm between unlicensed
    persons collect sales tax or use tax from the transferee?
    No. An in-state firearms dealer is not required to collect sales tax or use tax when a
    firearm is transferred between unlicensed parties.
    Is the interstate transfer of a firearm from a licensed dealer subject to sales tax or
    use tax?
    Yes. An in-state firearms dealer involved in the transfer of a firearm from an out-of-
    state licensed firearms dealer to an unlicensed person in this state (interstate transfers)
    remains responsible for collecting use tax from the transferee.
    The tax due is generally determined by the purchase price paid by the transferee to the
    seller, which includes freight, delivery and insurance charges. If this purchase price is not
    known, or if the transferee acquires the firearm in a manner other than an arms-length
    sales transaction, the firearms dealer must determine the taxable amount by using
    the current fair market value of the firearm as provided by RCW 82.12.010. Current fair
    market value may be determined by the insured value, a recent appraisal, or a reliable
    resource, such as a respected publisher of gun values. Values are subject to audit
    verification.
    Does the buyer/transferee owe use tax if the in-state firearms dealer does not
    collect the tax?
    Yes. I-594 does not relieve the purchaser/transferee from the obligation to pay use
    tax. The purchaser/transferee receiving the firearm must pay use tax directly to the
    Department of Revenue as follows:

    An unlicensed purchaser/transferee that does not have a tax reporting account with
    the Department must report and pay the tax by completing and filing a Consumer
    Use Tax Return. See the Department’s website at www.dor.wa.gov.

    An unlicensed purchaser/transferee that has a tax reporting account must report
    and pay the use tax on their Excise Tax Return.
    What taxes apply to the background check fee or other transfer fee?
    Retail sales and use tax
    Neither retail sales nor use tax applies to charges or fees for performing background
    checks. This includes charges for processing required federal, state, and local forms,
    contacting the National Instant Criminal Background Check System (NICS), and for
    handling the transfer.