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Tax on gun purchase?

Discussion in 'Shooting Related Threads' started by mich746, Jun 19, 2013.

  1. mich746

    mich746 Member

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    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. EdSy

    EdSy Active Member

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    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
     
  3. JLYON

    JLYON Supporting Vendor Supporting Vendor

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    you ship a gun into ct you will pay the state sales tax
     
  4. Joe Potosky

    Joe Potosky Well-Known Member

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    More and more states are starting to make the seller collect the tax upfront.

    Amazon is quickly going that route with many states.
     
  5. lwr_

    lwr_ Member

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    Not normal with the FFL I transfer through.
     
  6. spitter

    spitter Well-Known Member TS Supporters

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    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. Nebs

    Nebs Well-Known Member

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    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. 635 G

    635 G Well-Known Member

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    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. mich746

    mich746 Member

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    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. 870

    870 Well-Known Member

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    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. Lead Miner

    Lead Miner Supporting Vendor Supporting Vendor

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    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. Dickgshot

    Dickgshot Well-Known Member

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    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.
     
  13. BigM-Perazzi

    BigM-Perazzi Well-Known Member

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    No, he should not have unless you paid HIM for the gun...

    In that case, you purchased in state from the FFL and tax is appropriate.
     
  14. 870

    870 Well-Known Member

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    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.
     
  15. bigdogtx

    bigdogtx Well-Known Member

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    How did the FFL know how much you paid for the gun to collect the correct amount of tax?
     
  16. 635 G

    635 G Well-Known Member

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    Lets say the gun was a gift from a friend or it was left to you as a piece of an estate.

    Phil Berkowitz
     
  17. Cazadore

    Cazadore Member

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    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. john g.

    john g. TS Supporters TS Supporters

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    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. bigdogtx

    bigdogtx Well-Known Member

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    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. Dickgshot

    Dickgshot Well-Known Member

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    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.