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Old January 9, 2013, 01:37 PM   #1
JimDandy
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Washington State, Use Tax, and FFL's.

As we seem to be headed towards a required FFL transfer for all sales, if not more, I have a few broad questions on how WA handles this.

Currently WA demands a use tax on all FFL's equal to the sales tax rate that would be charged on the FFL fee, firearm value, and any shipping costs.

Having read a few other posts this has raised some questions for me:

If they cannot tax a right guaranteed/enumerated/pick-your-verbiage, How is taxing the value of the firearm legal? This would obviously lead to questions of sales tax for in-state sales as well of course- and as such may probably be a non-starter though I'm curious about the actual answer.

Second, if the FFL fee is charged by the dealer, is he not acting as an agent of the government(in regards to the transfer only- not any business related sale), and thus be taxing a fee on that right? Though as I read the WA.gov website they specifically exempt the fees-
Quote:
Tax on transfer fees
Neither sales tax nor use tax apply on any fees charged by the Washington gun dealer for processing the required state and federal paperwork.

In addition, use tax does not apply to the service charge for 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.
In the case of a gift, if the current owner can prove sales or use tax was already paid, it doesn't have to be paid again.

While I can see this being applied to personal property not guaranteed by a right i.e. no one has the right to own a car exactly, how does that interact in this case, where the right to keep and bear arms shall not be infringed?

Basically what I'm getting at is this is the current state of affairs in WA. If this FFL for all transfers goes through, I suspect this could be the next issue raised in Washington State as it's not particularly popular with the people getting squeezed for the taxes, and at least to me smacks of trying to put their hand in cookie jars they don't own between interstate commerce and so forth.
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Old January 9, 2013, 01:59 PM   #2
sigcurious
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IIRC, the foundational issue of this is not unique to WA, many states(if not all?) have use tax laws that indicate tax is to be paid on items such as internet purchases or where tax was otherwise not collected. The difference being that because it goes through source that can be authorized to collect the tax they actually enforce it. For example, when I moved, even though I had owned my vehicle already, they inquired as to the tax I had originally paid on it at the DMV, if the tax I had paid had been less than the local tax rates I would have had to pay the difference to the state. (Fortunately, or unfortunately, the sales tax in Chicago is something like 9.25%, so I didn't have to pay)

I think the reason there is no issue with taxing firearms is because it's not a special tax for firearms, it's the general sales/use tax applied to all goods in the state of WA or wherever, albiet with unequal enforcement, when compared to stuff you buy on amazon or some other internet retailer.
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Old January 9, 2013, 02:07 PM   #3
JimDandy
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But there's still precedent for not collecting sales tax on items. We don't pay sales tax on food, so disallowing use tax on firearms is within the realm of possibility.
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Old January 9, 2013, 02:13 PM   #4
sigcurious
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Is there no general sales tax in WA? or I'm guessing that food is the exception rather than the rule?

For example if you were to run down to the newsstand and buy a book or newspaper, would their be sales tax on it?
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Old January 9, 2013, 02:15 PM   #5
JimDandy
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There is a general sales tax. Newspapers are specifically exempted, as is Food.

http://dor.wa.gov/Content/FindTaxesA...spx#interstate

And here http://apps.leg.wa.gov/rcw/default.aspx?cite=82.08.0254 says The tax levied by RCW 82.08.020 shall not apply to sales which the state is prohibited from taxing under the Constitution of this state or the Constitution or laws of the United States.
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Old January 9, 2013, 02:23 PM   #6
sigcurious
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So to clarify, are you ok with paying sales tax on a firearm you purchased in state at your LGS?
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Old January 9, 2013, 02:47 PM   #7
JimDandy
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Am I ok with it? Yeah probably. Am I sure it's strictly and technically legal? No. But I'm generally ok with paying taxes, and don't mind rendering unto Caesar. Just curious where this could head.
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Old January 9, 2013, 05:54 PM   #8
Niner4Tango
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The use tax applies to every transaction where items are brought into the state. If I buy anything in Oregon and bring it back, I am supposed to report the purchase and pay the use tax.

An intra-state private sale gun transfer does not require paying use tax as long as the seller could show he paid tax on the gun at some point in the past.

FFLs are licensed by the state as well as the federal gov't and the DOR is just using them to collect the use tax on transfers from out of state. Same way they use retail stores to collect sales tax. Neither is an agent of the state.

It's a good question, but WA just wants your money. If they want our guns, they'll let us know.

Last edited by Niner4Tango; January 9, 2013 at 06:15 PM.
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Old January 9, 2013, 07:02 PM   #9
JimDandy
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What about a seller in a state that has an income but no Sales tax?

If that theory holds true, anyone who lived all their life in Oregon, then moved to WA would theoretically be responsible for paying use tax on every possession they own?
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Old January 9, 2013, 09:39 PM   #10
hermannr
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The easy way to understand the "use" tax that WA has. Think of an automobile you purchase in Oregon, but license in WA. Exactly the same thing.

If you purchased the iten in WA, you would pay a sales tax, if you purchase an item for your business (not personal use) you pay use tax. If you purchase a taxable item outside WA, that slea tax has not already been collected on, you pay use tax.

As for you "gift" firearm. If the gift was from a relative, there is no use or sales tax. (again, think an automobile that was purchased by your mother in Oregon, and tehn given to you to register in WA...no use tax)

However, if the "gift" was purchased out of state, no sales tax was paid to the other state, and the giver was not a relative..you will have to pay use tax.

This actually applies to anything that is taxable purchased out of state, but currently there is no way to inforce it. (except items purchased for business use)
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Old January 10, 2013, 09:38 AM   #11
JimDandy
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That doesn't answer my question.. if John Smith moves from Portland, Ore, to Seattle, WA.. an income tax state, to a sales/use tax state, is he supposed to pay use tax on every possession he brings with him?
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Old January 10, 2013, 11:03 AM   #12
Doyle
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Quote:
That doesn't answer my question.. if John Smith moves from Portland, Ore, to Seattle, WA.. an income tax state, to a sales/use tax state, is he supposed to pay use tax on every possession he brings with him?
No. Use taxes are only assesed when an item is purchased if the purchaser is subject to that jurisdiction's use tax laws at the time of purchase.
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Old January 10, 2013, 12:06 PM   #13
tulsamal
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Oklahoma has the normal sales tax on groceries. One of my absolute biggest pet peeves. Talk about a regressive tax... do we think Toby Keith eats 500x more potatoes than the middle class working people?

But back on topic... this is the biggie for me:

Quote:
FFLs are licensed by the state as well as the federal gov't and the DOR is just using them to collect the use tax on transfers from out of state.
That would put a serious crimp in my gun buying. Right now I buy a $2000 gun on gunbroker. Have it shipped to my dealer for $20. And pay the $20 transfer fee. But the sales tax here is 9.5%. If I had to pay that... that single rifle would run me $190 in sales tax. Wow. Over the course of a year, that really adds up.

Gregg
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Old January 10, 2013, 02:05 PM   #14
Doyle
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Tulsamal, you might want to look at this: http://stateimpact.npr.org/oklahoma/...eable-use-tax/

You ALREADY are subject to Oklahoma use tax on your out-of-state purchases. You are supposed to voluntarily remit that tax to the state.
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Old January 10, 2013, 02:21 PM   #15
JimDandy
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That's our situation here too, only the State now requires the FFL to collect the use tax rather than trusting us to voluntarily remit it as most of us don't even know there IS such a thing.
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Old January 10, 2013, 07:43 PM   #16
hermannr
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JimDandy. If you move from OR to WA you owe nothing on anything you legally own, including your automobile (if you have owned it over 6 months). Just because you move from OR to WA does not mean you have any specific duty to "transfer" your firearms.

They do have a little "got ya" in that if you have owned something expensive that is registerd (like an automobile) for less than 6 months, they assume you purchased it to avoid the sales tax and will try hit you will it anyway. Ya, been there, gone through that,

There is no firearms registration in either OR or WA....so no transfer needed.
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Old January 11, 2013, 09:52 AM   #17
tulsamal
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Quote:
You are supposed to voluntarily remit that tax to the state.
I'm aware that such a law exists. But saying it is "widely ignored" has to be the understatement of the year. People buy stuff from Amazon in vast numbers and very, very few people then "voluntarily" pay sales tax on it at the end of the year. Which is why the states have been trying to change the law so that places like Amazon will collect the tax right at the time of purchase.

Gregg
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Old February 20, 2013, 01:48 PM   #18
filmingNRoading
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I heard something about voiding the tax if you could receive an invoice stating that there was no cash value per say/ invoice stating $0.

"Firearms as gifts
A firearm received as a gift is subject to use tax unless it can be shown 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. "

I was curious about a sweepstakes/giveaway. I contacted the people holding the contest in which in their terms and conditions in their contest stated:
"The rifle was manufactured by and will be transferred by __________ and will be treated in a fashion of purchasing a gun from that manufacturer without any transfer of funds. No cash value can be substituted for any awarded prize..."

I asked the holders how they would handle the transfer process and this was their response.
"We can send a receipt from our FFL for $0 as a promotional item which would void any tax on the item and you would have to pay the transfer fee.
Promotional items under $2000 in value are not taxable in any state unless total accrued value over the course of a year totals or exceeds $7500 as far as my understanding goes."

My question is. Are they correct. Would a sales receipt stating $0 and stating it as a promotional item void the tax?

Last edited by filmingNRoading; February 20, 2013 at 02:08 PM.
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Old February 20, 2013, 03:15 PM   #19
BigD_in_FL
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In most cases, the "use" tax is the same as any sales tax and is applied on items bought from out of state sources. I worked for a utility and we remitted use taxes to the state coffers in the millions of dollars every year on purchases from out of state manufacturers - basic S.O.P.

Many states are enacting sales/use taxes on areas previously not taxed - like attorney services, etc. - all part of the game to increase decreased tax revenues in lieu of cutting spending
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