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Not paying tax when purchasing a gun

Discussion in 'Shooting Related Threads' started by guinner16, Feb 7, 2012.

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  1. guinner16

    guinner16 TS Member

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    Just wanted to give a little background to make sure I am doing something totally legal. I live in PA and my dad lives in NJ. If he purchases the gun online from a store in PA, and its shipped to him in NJ, he will not have to pay tax. The gun will be paid by him, and be in his name at that point. Can he then just ship the gun to me via and FFL, and I will then own the gun? Is this a legal way for the gun to change hands and not have to pay taxes. The shipping is free one way, and we would have to pay FFL fees, intotal everything would be about $150-175. Taxes are about $550 and I wouldn't have to drive 3 hours to pick up the gun. This would save me over $450 when u factor in gas and tolls, but is it legal as far as the gun transfer, or do I have any other options.
     
  2. cubancigar2000

    cubancigar2000 Well-Known Member

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    as long as nhe is shipping to an ffl so it can be transfered to you because it is ilegal for him to buy it for you without a transfer
     
  3. claybrdr

    claybrdr Well-Known Member

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    what does this mean "ship the gun to me via and FFL"?

    Are you trying to say "ship the gun to me via an FFL"?

    How much is the gun and what is the tax rate? Here in Virginia the sales tax is 5% and tax of $500 would be due on a $10,000 gun. I'm guessing the liberal environment in NJ/Pa has blessed you with a higher rate. In any event, you would be free of tax at transfer time but your Dad would probably have to declare that on his NJ State tax return (if any)and pay it at filing (at least in Virginia).

    This transaction probably meets the "straw man" criteria and your Dad would be in violation of Federal laws.
     
  4. GrandpasArms

    GrandpasArms Active Member

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    The plan is probably "legal" from a firearms perspective (BATF), but I'm certain that PA would consider you guilty of violating their sales tax laws, which might be considered fraudulent. Then, if convicted, you could end up with a felony on your record. That, then, prohibits you for ever again owning a firearm. Is that worth $450?

    Is it likely to play out that way? Probably not. However, you have officially announced your thoughts on a public forum. Somebody may be watching.

    Larry Frieders *
    Grandpa's Arms, Inc. *
    http://www.grandpasarms.com *
    340 Marshall Ave #100 | Aurora, IL 60506 *
     
  5. guinner16

    guinner16 TS Member

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    I guess I didnt make myself clear enoug because I wasnt asking for tax advice, I was asking for gun transfer advice. the tax rate is 7% here, and my dad is going to buy the gun for me. He could either purchase it and do it the shipping way, or he would give me the money to get the gun myself. Either way he is paying for the gun. I was just looking for a way to help him save an extra 400-$500. Also why would the tax be an issue when he is gifting it to me. Does a son pay tax if his dad turns a car over to him. I believe on the title they can put down $1 or gift if no money actually changes hands.
     
  6. joe90t

    joe90t Active Member

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    Not sure about your Local Or state Laws,But your Father Can Buy A Gun And Pay Taxes At that time. Your Father can then "Give" you a Present And Ship it to a FFL And You Will Not Have To Pay taxes. It is a gift, and Unless Your State has a Law saying ALL Firearms Inported into the State Have To Pay Taxes(Califorina) when shipped to a FFL You Should Be Ok. NOT Sure About Your Area But We do NOT Pay The Tax Twice. JMO joe90t
     
  7. guinner16

    guinner16 TS Member

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    thanks Joe, that was more along the lines of what I was asking. He has bought a gun from PA before and had it shipped to him with no sales tax, which is legal for online purchases that do not have a store in the purchasers state. That issue is always being fought but it is legal. I just wanted to make sure that if he turned the gun directly over to me, via an FFL transfer, if everything would be ok.
     
  8. guinner16

    guinner16 TS Member

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    thanks Joe, that was more along the lines of what I was asking. He has bought a gun from PA before and had it shipped to him with no sales tax, which is legal for online purchases that do not have a store in the purchasers state. That issue is always being fought but it is legal. I just wanted to make sure that if he turned the gun directly over to me, via an FFL transfer, if everything would be ok.
     
  9. guinner16

    guinner16 TS Member

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    thanks Joe, that was more along the lines of what I was asking. He has bought a gun from PA before and had it shipped to him with no sales tax, which is legal for online purchases that do not have a store in the purchasers state. That issue is always being fought but it is legal. I just wanted to make sure that if he turned the gun directly over to me, via an FFL transfer, if everything would be ok.
     
  10. guinner16

    guinner16 TS Member

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    thanks Joe, that was more along the lines of what I was asking. He has bought a gun from PA before and had it shipped to him with no sales tax, which is legal for online purchases that do not have a store in the purchasers state. That issue is always being fought but it is legal. I just wanted to make sure that if he turned the gun directly over to me, via an FFL transfer, if everything would be ok.
     
  11. Stl Flyn

    Stl Flyn Well-Known Member

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    If he ships the gun to you, it has to go to an FFL if it is crossing state lines. They do not collect tax, nor do they give two SH$%^. All they want is to make sure you are not a felon. After that is done legally why worry about the gifting and BS. What is the difference if he drove the gun to you, and handed it to you. Basically giving you the gun. As long as you are not a known felon, its all good. I would suggest the FFL transfer. It would be better for both of you. Jon
     
  12. BigM-Perazzi

    BigM-Perazzi Well-Known Member

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    I'm thinking your a candidate for a BATF knock on the door...

    At the very least your probably violating some state or interstate law by using the transaction to circumvent state sales taxes...
     
  13. guinner16

    guinner16 TS Member

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    Big M and Eddie - Well that is what I am trying to figure out. I am not laying out a single penny for the gun. If it is legal then I will save the money, whether it is a loophole or not, as long as it is a legal loophole. If its illegal then I will get the gun myself and it will cost a bit of extra money. I was trying to find out if its a legal way to save my dad some money. Where did I say I was trying to break any laws. Like everybody else I am trying to have the least amount of money spent while staying within the law. I figured I would come here for the transfer advice, and talk to an accountant about the tax part.
     
  14. guinner16

    guinner16 TS Member

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    I just did some reseach on the tax end. An internet, or out of state purchase (Delaware) can be made without paying taxes, however when the good is brought back to the home state, the tax must be paid. I believe this included purchases made in delaware, and over the internet. It even deals with buying a good in a lower tax area. For instace my county has a 7% sales tax, but a tenth of the mile down the road is a 6% sales tax in a different county. I go to the sporting good store there because the tax rate is cheaper, and the store is much closer. Per the article I read, I am supposed to pay the 1% difference in tax rates when I return home (via my tax return of course). If this is correct then we may all be getting knocks on our door. I am sure at one point we have all paid a lower tax rate in an area, to return to our higher tax rate homes. It would be nice if it worked the other way around and people were due money back when they got back to their lower home with a lower tax rate.

    It still pretty crappy to have so many negative members on this site. Every thread turns out like this. Somebody asks a questions and they assume the person is intentionally doing something illegal. sorry to burst those bubbles, but there is nothing illegal finding legal ways to save money. Thanks to Joe for a helpful reply that didnt try to tar and feather somebody. I will just pick up the gun myself and pay the taxes.
     
  15. 870

    870 Well-Known Member

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    As long as you are not prohibited from purchasing the gun yourself, I don't believe there is any "straw man" issue here. Your dad is simply buying the gun and gifting it to you. Some states require the FFL to collect sales tax, but I guess you don't have that problem. You have not really found a way around the sales tax issue, since he actually still owes use tax on the purchase, if you are interested in what the rules really are, as opposed to what you might get away with.

    When he gifts it to you, gifts are not subject to sales or use tax.
     
  16. bubbasdad92

    bubbasdad92 Member

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    I don't know how vigorously they enforce it in NJ, but your dad would be liable for "use tax" equal to the amount of NJ sales tax for the gun when it comes into NJ. Here you go:


    "A compensating use tax is also imposed when taxable goods and services are purchased and New Jersey sales tax is either not collected or is collected at a rate less than New Jersey’s sales tax rate. The use tax is due when such goods, or the goods on which taxable services are performed, come into New Jersey. If sales tax was paid to another state, the use tax is only due if the tax was paid at a rate less than New Jersey’s rate.
     
  17. NMULTRARUNNER55

    NMULTRARUNNER55 Member

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    I respectfully disagree with 870 above. This may not a sales tax issue but it could be a straw purchase issue. I don't recommend you take that chance. In my opinion as an FFL of over 20 years, it would be better (from an ATFE perspective) for your Dad to give you the money and then you have the gun shipped to an FFL where you live so that you do the ATFE paperwork.

    If you can do it that way and avoid state sales tax by buying the gun online then you have the best of both worlds!

    The potential consequences of an ATFE problem are not worth it in my opinion!

    Steve Nunley
    Albuquerque, New Mexico
     
  18. halfmile

    halfmile Well-Known Member

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    What a load of crap. ATF is not in the sales tax business.

    A transfer is not a sale, it is a transfer.

    Theoretically a citizen of a state is supposed to pay sales tax on goods bought elswhere tax free (upon re entering the state), but the only law violated more than that one is the one prohibiting adultery. I sent a lot of equipment out of my state and chrged no tax, and the form had a line for that.

    We had the Native Americans selling tax free cigarettes, and you were supposed to pay the state tax when you left the property. (yah, right)

    You could always "borrow" your Dad's gun for a few years if you want to go that way.

    Sheesh.

    HM
     
  19. Stl Flyn

    Stl Flyn Well-Known Member

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    I am with HM. Should have never even brought up the tax deal. Just ship the damn gun through an FFL and be done with it. ATF does not collect tax or even care what price. They only make sure you are not a felon, that is it.
     
  20. 870

    870 Well-Known Member

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    Steve:

    Thanks for disagreeing w/ me nicely. I thought the problem with a straw purchase was only when you were buying it for an ineligible person, I see that is not the case. It should be ok for someone to purchase even if they intend to give it as a gift, but I agree it gets a bit more clouded.
     
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