Why do I have to pay home state sales tax on S-9 purchased from CDNN?

[The Pontificator]

Looking for a reputable dealer in SC who'll accept a transfer from out-of-state FFL's, I got a tip from an acquaintance on a guy who charges $20 for transfers.

I called the dealer and asked him if his FFL was on file with CDNN investments. Affirmative. I told him I was faxing an order to CDNN for an S-9 and an extra magazine. He told me that he'd call me when the pistol arrived.

The person who gave me the tip also reminded me to make sure that CDNN knew that I was the 'buyer' so that I could avoid having to pay SC sales tax on the firearm.

I faxed CDNN an order which looked like this:

PURCHASER:

(my information incl. my credit card number)

RECEIVING FFL:

(SC dealer's name, address)

Jason called me within five minutes of sending the fax notifying me that the pistol would be shipped the next day. I didn't mention to him anything about avoiding paying home state sales tax as I assumed (yeah, I know) that the information given on the fax would suffice.

I got a call today from the receiving FFL. The pistol came in. He asked me who had referred him and I told him. "Did he tell you to tell CDNN that you were the buyer so you could avoid paying SC sales tax?" I replied that I had listed myself as the purchaser on the fax and that he, the receiver, had been listed as just that.



"Well, they listed me as the buyer. Unless you specifically tell CDNN that you want your name listed as the buyer to avoid sales tax, they will default to using the receiving FFL as the buyer. You'll have to pay SC sales tax on this transaction."

The dealer did say he'd forgo his $20 transaction fee, which is good.

Can someone clue me in? this is the first purchase I've made on a firearm from an out-of-state FFL in probably 8 years.

[Delta-9]

I had the same thing happen, I called around to another FFL and got the same story when buying from CDNN.

I paid the tax as I didn't feel like driving 50 miles out of the way to save ~$15 on the tax. The FFL i used was only 5 minutes from my house.

[CarlosC]

Yup, that was me that gave The Pontificator the tip. If it was any consolation, this very thing happened to me recently, and I have been doing these out-of-state purchases for years.

I feel very bad about the situation for all involved and I would like to apologize.

[The Pontificator]

Originally posted by CarlosC
Yup, that was me that gave The Pontificator the tip. If it was any consolation, this very thing happened to me recently, and I have been doing these out-of-state purchases for years.

I feel very bad about the situation for all involved and I would like to apologize.

No apologies needed. I had the opportunity to tell Jason how I wanted the transaction handled when he called me to confirm receipt of my fax.

Live and learn.

[MarcDW]

Well, actually it doesn't matter who CDNN is listing as buyer, the only factor counting is who paid the gun.
When your dealer received the gun (and it came into your state), it was already yours.
The FFL did not handle any money, beside his fee, so on what does he collect sales tax???
He actually violates ATF law, because if he collects a sales tax, then it is a sale and as an FFL you have to make a profit on sales.
Also it throughs off the book keeping, because he collects sales tax on money he did not received??

However, when you file your income tax, by law you would have to pay the sales tax for all your out of state purchases.

[tpiini]

[i]<snip>as an FFL you have to make a profit on sales.
<snip>[/B]

Huh?

I've sold several guns to friends at my cost. ATFE hasn't ever told me that I HAVE to make a profit on guns. Granted, the idea is to make a profit in the total business, but if I turn a few individual guns at cost, I'm not thinking that I'm headed for the lockup.

But, I am fairly new to this whole game. Can you enlighten me further if there is a specific law that requires me to make a profit on every gun sale? I'd rather not find out the hard way.

Thanks, Tom

[MarcDW]

Originally posted by tpiini
...I'm not thinking that I'm headed for the lockup...

Of cause you are not going to the lockup for something like this, but ATF may not renew your license!
I just had two inspectors here for 6 hours going over every single 4473 and anything you can think off.
They even note, that one customer did not make a "/" between month, date and year!!
While they were friendly and polite, they were as "dry" as can be.
In the whole time, they did not take my offer for even a glass of water! All 100% business!

Anyway, one thing they wrote up was sales I did not make a real profit on. They said that it can be a reason not to renew a license, because the ATF does not want someone to get am FFL so he can get all his buddies the guns cheaply.
If you have plenty of other sales, they don't care.

The ATF can come once a year and "entertain" you this way!

[NeXD]

Odd. As long as they charge a transfer fee, I would think that woul dbe considered "profit"

[MarcDW]

Transfers have nothing to do with this.

[Climb14er]

I recently brought in a Steyr M9 from CDNN to my FFL dealer in Denver and only paid twenty bucks for the transfer that was made out in my name. No taxes.

[The Pontificator]

Brian from CDNN replied:

"We have 50 states and every one has their own tax code. Some states, like CA and NY, collect sales tax no matter what the paper work says. Some states never collect the sales tax on out of state purchases. Some base it on how the paperwork reads. We can not keep up with sales tax laws in 50 different states."

A friend of mine who knows our state's tax code to the letter sent me this:

"From a legal standpoint, according to the state of SC, you are required to
pay the sales tax either way. If the seller doesn't collect it from you, you
are required to pay it when you file your income tax."

...and GT's DM-SC, a friend of mine, had this to say:

"The way that the SC (and almost all of the other 49 states, too) tax code is written, since you are a resident of SC, you're supposed to pay sales tax on all purchases where you receive the purchased item in SC. In other words, the only way you are not required to pay SC sales tax is if you actually purchase and receive an item in another state. They let you by with that exception simply because you are, in most states at least, paying sales tax in the state you are in when you bought the item.

This is why the SC income tax forms have that "Use Tax" box so you can self report and pay taxes on mail order purchases"

[MarcDW]

If I am not wrong, 47 States have a sales tax.
AK, DE and NH have no sales tax, but that is a job by itself to keep up with all of this!

[mmorgret]

Originally posted by Climb14er
I recently brought in a Steyr M9 from CDNN to my FFL dealer in Denver and only paid twenty bucks for the transfer that was made out in my name. No taxes.



Exactly the same here in Illinois, except my tansfer was only $10

[Sky042]

Yeah same for me. in PA. I ordered my S9 and just paid my transfer fee.
If I had to pay sales tax on all internet purchases I'd be an unhappy camper.