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tax question on 594

Discussion in 'Legal & Political Archive' started by xtratoy, Oct 16, 2014.

  1. xtratoy

    xtratoy Vancouver USA Active Member

    Likes Received:
    Are the transfer dealers going to be required to charge a sales tax besides their fees for a gun transfer in a private party sale? Just wondering because it was around 6 years back that small time FFL holders that mainly did gun tranfers were forced to collect sales tax on sales from out of state even though they were private party sales that only required the FFL transfer due to federal laws about out of state sales.
  2. GunnyG

    GunnyG The Highlands Active Member

    Likes Received:
    They won't call it a sales tax, but probably.

    Pay attention to the emboldened section below:



    Washington residents sometimes purchase firearms from out-of-state dealers. Because of state and federal laws, many firearms acquired from an out-of-state source by a Washington resident must be sent from the out-of state transferor to a federally licensed gun dealer located in Washington State.

    Once the Washington gun dealer has conducted the required background checks, the dealer will deliver the firearm to the Washington buyer.

    The following provides instructions for the taxability of such transfers.

    Is the purchase of a firearm subject to sales tax?

    For an interstate transfer of firearms, the Washington gun dealer is required to collect use tax from the Washington buyer at the time the firearm is delivered to the buyer. Use tax is collected on the total purchase price, including freight/delivery and insurance charges.

    If the purchase price is not evident, it is up to the gun dealer to determine the taxable amount by either requiring the purchaser to show the purchase price or by obtaining the selling price from the out of state seller. If for whatever reason, the Washington dealer is still unable to obtain the original purchase price, RCW 82.12.010 provides that the
    current fair market value of the firearm shall be used. Current fair market values 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).

    What if the firearm is a gift or the customer already owns it?

    A firearm obtained by gift is subject to use tax unless it can be demonstrated that the prior owner paid retail sales or use tax. (RCW 82.12.010). The Washington dealer may use the current fair market value as the taxable amount to calculate the use tax.

    In cases where the firearm owner can provide proof of retail sales or use tax paid to Washington, the Washington dealer is not required to collect use tax. The Washington dealer must retain proof of tax paid.

    In cases where the firearm owner can provide proof of retail sales or use tax paid to other states, the firearm owner is eligible for a credit against the use tax for the amount of sales or use tax paid to the other state. RCW 82.12.035.

    Transfers of Firearms Between States

    Generally, the Washington gun dealer charges the Washington resident a fee for processing paperwork related to the transfer of the weapon from out of state into Washington. Neither retail sales nor use tax apply on any fees charged by the Washington gun dealer for processing the required state and federal paperwork.

    Is the transfer fee subject to sales tax?

    The gun dealer is not required to collect retail sales tax on the service charge for processing the required federal and state forms and contacting the national Instant Criminal Background Check System (NICS) when the charge is stated separately from the selling price of the firearm and freight and/or delivery charges, insurance, etc.

    How are these transactions reported on the gun dealer’s excise tax form?

    The gross selling price of the firearm is reported under the use tax lines of the tax return.

    The separately stated service charge for processing the required federal and state forms and contacting the National Instant Criminal Background Check System is reported under the service and other activities B&O tax classification. Retail sales tax does not apply on this charge.

    Applicable law RCW 82.12.040(1) states: Every person who maintains in this state a place of business or a stock of goods, or engages in business activities within this state, shall obtain from the department a certificate of registration, and shall, at the time of making sales of tangible personal property, extended warranties, or sales of any service defined as a retail sale in RCW 82.04.050 (2)(a) or (3)(a), or making transfers of either possession or title, or both, of tangible personal property for use in this state, collect from the purchaser or transferees the tax imposed under this chapter. The tax to be collected under this section shall be in an amount equal to the purchase price multiplied by the rate in effect for the retail sales tax under RCW 82.08.020. (Emphasis added).

    Visit our website at dor.wa.gov, send an email to dorcommunications@dor.wa.gov, or call the Telephone Information Center at 1-800-647-7706. "

    In 2012, I had to pay use tax my Grandpa's old 12ga (he bought at the 1st Ave Sears in the 50's, and you expect us to still have the sales receipt?) , when my uncle sent it to me through our FFLs. That was an out-of-state transfer. I can't imagine why they wouldn't charge use tax on any similiar transfer performed through an FFL in-state.

    My gut-feeling expectation says to make sure you have any previous sales receipt showing that WA received their cut. If you can't find it, plan to pay an extra 9.6% of the firearm's current fair market value.