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I've seen it both ways. In brick and mortar stores where they take credit cards or have a cash register, they'll generally add the tax to the fee. FFLs operating outta their home or less formal situations generally include it in the fee. Both have to pay the tax to the state, it's just how they charge it. For many, the extra 5-8% is worth the effort. Similar to sales tax when eating out. Restaurants and other formal eating establishments add the tax while places like concession stands and barkers include the tax in the price to keep making change easier. Regardless of how they charge you, they still must pay the state.
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