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Tax on gun purchase?

6K views 41 replies 27 participants last post by  glenns 
#1 ·
I purchased a shotgun on Gunbroker from an out of state dealer. Had it sent to my FFL guy and he charged me Maryland State user tax.

Is this normal to pay tax on an out of state purchase? Anybody got any experience with this?
 
#2 ·
I believe it is expected that you pay a tax in your home state for purchases made out of state. The exception would be if the company you bought from collected tax from you on the original purchase, as they might do if they have an outlet in your state as well as elsewhere. -Ed
 
#6 ·
Maryland Imposed Use Tax on Out-of-State Purchases

For a transaction to be subject to sales and use tax in Maryland, two items must be present. First, there must be a retail sale or a use in Maryland; and secondly, the object of the sale or use must be tangible personal property or a taxable service.

In Maryland a buyer who does not pay the sales or use tax to the vendor must pay the sales and use tax that is due. This sales or use tax is paid with the return that covers the period in which the purchase was made. To the extent that you pay another state a tax on the purchase of tangible personal property or a taxable service, the tax does not apply to use of the property or service in Maryland. If the tax paid to another state is less than Maryland's sales and use tax, you as a purchaser, must pay the difference.

If the transaction was just a transfer, was the tx subject to sales tax and/or could you not have filed the tax on your state return?

Jay
 
#7 ·
I recently bought a gun from an out of state seller and had it shipped to a MD FFL. They charged me the customary transfer fee but did not collect the use tax. Retailers are only required to collect sales tax on stuff they sell. the only thing the MD FFL sold you was the service of handling the FFL paperwork, he did not sell you the gun. Also, the sale may be eligible for an exemption depending on who you bought the gun from, for instance, was it a dealer or just someone selling his gun from his personal collection. This is from the MD tax website:

"There is an exemption for casual and isolated sales of less than $1,000 which would cover sales of a seller's own household goods. This exemption does not apply to any sales by a full or part-time dealer."

You may be entitled to a refund if the sale meets the exemption criteria. If the sale was not subject to the sales tax, it should not also be subject to the use tax.
 
#8 ·
I honestly feel this could be a scam. Was a separate check made payable to the State Dept of Taxation, if the the check was made payable to the FFL you have no proof tax was paid. I never had to pay tax to any FFL when I purchased any gun from an out of state source.

Phil Berkowitz
 
#9 ·
Phil: I paid in cash, but I did get a receipt. It's not a scam, my FFL guy is an old county boy that has been around a long time. I was checking thinking it could possibly be an honest mistake on his part. He sells guns and ammo, maybe he is just use to collecting tax. The first gun I purchased was from a dealer, I got another gun coming in the mail, this time its is from a privet seller, not even sure how he would know how much I paid for it.
 
#10 ·
The real answer is it depends on the particular state. Generally the FFL is not a party to the sale and would not be required to collect any sales tax on the sale. I believe most states operate this way, NY does.

I also understand that there is at least 1 and maybe some others that require the FFL to collect the tax.

Of course, if no sales tax is paid, the buyer is usually responsible for paying use tax himself or by or including on his income tax return in states that allow that option. Of course that gets little compliance.
 
#11 ·
Many people do not know that no matter what you buy from out of state even if you have it shipped directly to you that you are obligated to send your state the applicatable sales tax. People just don't so it because the state does not have an easy way to track these purchases. It won't be long and everybody will be paying sales tax at the time of purchase no matter if it is in state or out. Terry
 
#12 ·
A business collects sales tax on what it sells, and pays use tax on what it
buys that isn't for resale. Both taxes are usually reported on the same return.

An individual that buy an item from out-of-state pays a use tax, sometimes
as an additional payment on his state income tax return.

It would be highly unusual for a business to collect use tax from an individual, and I'm inclined to agree with Phil that the dealer had no
business charging you the use tax and wouldn't even have a way to report it on his sales tax return - and worse, you're probably still on
the hook for the use tax to the state of Maryland.
 
#14 ·
CA is the state I was thinking of. I believe the CA BOE considers the in-state FFL to be an agent for the seller and therefore wants the FFL to collect the tax. This only applies when the firearm is shipped to CA from an out-of-state FFL not doing business in CA.
 
#17 ·
Get ready guys - tax on out of state Internet and "mail order" purchases is coming. Congress considering a bill that for business with over $1M in Internet sales must report sales and pay tax to the states the goods sold to.
CA and WA have been requiring FFL's to collect tax on out of state gun purchases for several years. FFL's are easy targets. In IL the ATF has asked to see our business lic and state tax certificate posted in "plain sight". Sounds like CT and MD are following.

Technically, in most states use tax codes, any goods purchased via mail order or the internet - you are expected to pay the use tax to your state when you file your income tax but who does that. DGG
 
#18 ·
Just went through the California paper work.

I was told FFL To FFL only after April 2013. You Need your FFL to regester with the Ca. Dept.of Justice and get a Firearms shippment approval # to send the gun with and send a copy of sales reciept so the Dealer in CA. can tax. All this for a 870 Trap.


John G.
 
#19 ·
I guess we will see a lot more $5 gun purchases,,,,,,,,,just how MANY times does a state need to collect tax on an item,,,,,,,,,buy a car, pay the tax, next buyer pays the tax when he buys it, next buyer and so on.........
 
#20 ·
Right now a lot of people are blowing off the use tax reporting requirement.
The logic is that (1) they won't get caught, and (2) if they do get caught, they'll pay the tax (and penalty) and it's no big deal.

Here's the catch: If you do get caught, the state isn't limited to collecting tax on that one transaction. They can - and do - go back to the earliest year open under the statute of limitations, which can be four or five years. Though they can examine every transaction, they usually give you the option of taking the tax owed for one month, multiplying by 60 and tacking on the interest. In turn, they agree to drop the penalties.

A small amount owed can turn into a large amount very quickly.
 
#22 ·
Thanks for all the input and opinions but I'm still looking for a definitive answer. Please, I'm only interested I Maryland, not other sates

If I purchase a shotgun from an privet seller out of state, sent to a FFL dealer in Maryland, do I have to pay 6% sales/user tax. And is this tax collected by the FFL dealer.

If I was buying an car the answer would be Yes, other purchases on the internet is NO. Maybe it has something to do with being registered, a way for the state to track you.
 
#23 ·
You will probably not get a definitive answer here. Call the State that you live in. You say that you paid cash. I am sure you did not send cash thru the mail. Call the Maryland Dept. Of Revenue to get your answer. Terry
 
#24 ·
Mich,

The answer to your question is specific to your state. It seems your state comptrollers office has issued memos stating that they consider the ffl for an out of state seller to be the sellers agent in md, and therefore required to collect sales tax. Note that this differs from the CA rule since CA only applies it in the situation where the out of state transaction comes from a business (ffl).

I can't blame md ffls for being nervous about this, but unless someone challenges the tax aspect they are taking a risk to ignore it.

I dont think most states would consider the ffl to be the sellers agent, especially since he is generally hired by the buyer.

Should it hold up under challenge?, Idon't think so, at least when the seller is an indivdual. Would I blame an ffl for not understanding this and being afraid to ignore the comptrollers position, no.
 
#25 ·
OK, I did the research, Yes, you have to pay TAX

27 Auctioneers, Agents, Brokers and Factors.

Every factor, auctioneer, broker, or agent acting for any principal, or entrusted with possession of any bill of lading, custom house permit, or warehouse receipt for delivery of any tangible personal property or entrusted with possession of any personal property for the purpose of sale shall be responsible for the proper collection and remittance of the tax with respect to these sales, regardless of the fact that the principal or owner of the property being sold would not have been liable for collection of the tax if they had made the sale themselves.
 
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