pistol transfer question

[sirdonas]

Hi there!

I've looked for the answer to this here and on the michigan state firearm laws page, but haven't found anything pertaining to my specific question, so if this is a duplicate question I apologize now in advance.

question: If I purchase a pistol from a seller out of state on gunbroker.com, who fills out the 'seller' portion of the paperwork? the actual seller? or does the FFL transfer site I use fill it out in this instance. I suspect the answer is the actual seller in this case, but was wondering if anyone here has had first hand experience. Oh, and if it matters, I do NOT have a CPL, so I'll have to go get a pistol purchase permit.

I'm looking at a CZ-70 in .32ACP.

Thanks gang!

[Joeywhat]

The FFL. Once the FFL accepts the gun it's officially their gun...you are buying the gun from the FFL as far as the paperwork is concerned.

[sirdonas]

Thanks Joey!

I knew y'all would know!

[Mike in Michigan]

AND....the FFL is also supposed to collect the 6% Michigan sales tax.

[JohnS624]

AND....the FFL is also supposed to collect the 6% Michigan sales tax.Not really possible. Most of the time the FFL doesn't even know how much the gun cost. The transferring FFL is providing a service, not a product. That's like saying that UPS or FX have to collect sales tax on all their interstate deliveries.

[PhotoTom]

Not really possible. Most of the time the FFL doesn't even know how much the gun cost. The transferring FFL is providing a service, not a product. That's like saying that UPS or FX have to collect sales tax on all their interstate deliveries.

According to the Michigan Department of Treasury, FFL's doing transfers are supposed to collect 6% sales tax for the transfer transaction.

There was a scan of a letter sent to one of the resident FFL's (Dongizmo (http://www.migunowners.org/forum/member.php?u=4311)) to prove it...

[492vs]

According to the Michigan Department of Treasury, FFL's doing transfers are supposed to collect 6% sales tax for the transfer transaction.

There was a scan of a letter sent to one of the resident FFL's (Dongizmo (http://www.migunowners.org/forum/member.php?u=4311)) to prove it...

IMHO BS. Show me the link to the MI.gov site that says FFL's are required to collect sales tax on out-of-state purchases. FFL's provide a service when they do a transfer and services are not taxed (yet) in MI.

[Shyster]

IMHO BS. Show me the link to the MI.gov site that says FFL's are required to collect sales tax on out-of-state purchases. FFL's provide a service when they do a transfer and services are not taxed (yet) in MI. Maybe so, maybe no but that is not the position the Michigan Department of Treasury takes. Of course you are supposed to pay 6% "use tax" on anything you purchase over the internet anyways. There is even a place on your MI-1040 for you to list it.

[492vs]

The FFL. Once the FFL accepts the gun it's officially their gun...you are buying the gun from the FFL as far as the paperwork is concerned.
No they're not! They are taking possession of the transfer gun, not ownership! They have no legal responsiblity to collect sales tax on the gun! If they have a Sales Tax License from the State Of Michigan the buyer MAY choose to pay their sales tax through that FFL but are not required to do so and never should you pay Sales Tax on the transfer fee!

[492vs]

Maybe so, maybe no but that is not the position the Michigan Department of Treasury takes. Of course you are supposed to pay 6% "use tax" on anything you purchase over the internet anyways. There is even a place on your MI-1040 for you to list it.
Again, show me the where the state says the FFL had the responsibility or the right to collect sales tax on an item that they have not sold. They have no ownership in that item!

[Shyster]

Again, show me the where the state says the FFL had the responsibility or the right to collect sales tax on an item that they have not sold. They have no ownership in that item!
AGAIN, read my response!

[492vs]

AGAIN, read my response!
I read your response and you state "maybe no but that is not the position the Michigan Department of Treasury takes" and again I say show me the official opinion of the Treasury.
If you want to pay the FFL an additional 6% that is your option, but don't tell someone else that it is required when it is not. If the FFL wants an extra 6% they should add it to their transfer fees, I have no problem with that at all. I respect all private businesses to be able to make what ever profit they feel is necessary for the operation of their business. I, unlike our President, believe in free enterprise and the ability and need to make a profit.

[that guy]

Here is what the Michigan Department Of Treasury does have posted

http://www.michigan.gov/taxes/0,1607,7-238-43529-154427--,00.html


Use Tax

The use tax is a companion tax to the sales tax. Use tax of 6% must be paid on the total price (including shipping and handling charges) of all taxable items brought into Michigan or purchases by mail from out-of-state retailers. Credit is given for tax paid to another state. Use tax is also applied to certain services such as telecommunications and hotel/motel accommodations.

it says nothing like "if you feel like paying 6%" or "if you do not feel like paying 6% that is ok."

Further down that page it does have this:


Can a customer tell a seller not to charge sales or use tax because they will pay it directly to Michigan?

Yes, if a customer provides a copy of their direct pay permit authorized by the Michigan Department of Treasury to pay tax directly to the State.

I am merely pointing out what is there...not what I think or believe in

[492vs]

Here is what the Michigan Department Of Treasury does have posted

http://www.michigan.gov/taxes/0,1607,7-238-43529-154427--,00.html



it says nothing like "if you feel like paying 6%" or "if you do not feel like paying 6% that is ok."

Further down that page it does have this:

OK, I am not debating if one owes Use Tax for online or Out of State purchases. I am stating that the FFL is not required and IMO legally able to collect such tax since they are not in ownership of the item. IMO most of the FFL's that are collecting taxes for out of state purchase are not paying the state for the use tax. That is why I said that if you do pay the FFL for your use tax make sure it is itemized on your receipt so you have proof of payment when the Michigan Treasury comes for their money.

[sse]

ranger - I think you have correctly stated the controversy.

The tax must be paid, but to who, and when? If you ask the Mich Treas they will say that the FFL has to collect it, because realistically if the FFL doesn't collect it, the State may never get it. That's no secret. But I really don't know if that is the law. Simply because they say it doesn't make it the law.

[492vs]

ranger - I think you have correctly stated the controversy.

The tax must be paid, but to who, and when? If you ask the Mich Treas they will say that the FFL has to collect it, because realistically if the FFL doesn't collect it, the State may never get it. That's no secret. But I really don't know if that is the law. Simply because they say it doesn't make it the law.
If you ask the Treasury and tell them that the FFL is only responsible for the transfer and not the sale and collection of taxes, I wonder if they would demand collection or agree and ask that you just try? I don't think they understand that the FFL, who most likely has a Sales Tax License, is not the seller of a transfer gun. Also, FFL's, do not get me wrong I do not wish to know if you do or do not pass the tax along to the state as I am sure that you do not wish to be the Tax Collection Inforcement for the MI treas.

[Dongizmo]

Again, show me the where the state says the FFL had the responsibility or the right to collect sales tax on an item that they have not sold. They have no ownership in that item!
Here you go.
The state views the ffl as a agent of the seller, and unless you have a exemption issued by the state, the dealer is supposed to collect the sales/use tax for the amount of the sale.
http://img.photobucket.com/albums/v636/dongizmo/scan0001.jpg
http://img.photobucket.com/albums/v636/dongizmo/scan0002.jpg
BTW,
The state requires you to pay the sales / use tax on all your out of state purchases, what difference does it make if the ffl collects it, or you pay it like you are obligated to with you annual income tax?
Don

[sse]

That's what I meant. That's their opinion, but it might not be the law and enforceable as such. I haven't researched it, but I'd be willing to bet if they were challenged on the concept of calling the FFL an agent of the out-of-state seller, they would lose. More likely the FFL is the agent of the buyer, i.e. the one who hired him for the job. Not my specialty, but agency law calls for the agent to have authority to act on behalf of the principal. I'm skeptical of the Department's position.

I know of no cases in which the Treas has challenged an FFL and, quite peculiar in light of the fact that there are numerous FFL's in the state and the Treas probably knows that many of them do not collect the tax. If there was such a case, I'm sure it would be well known.

[492vs]

Good, thanks for the copy of the letter, and as far as who the buyers pays the sales tax to, the state or the FFL, would make no difference to me, in fact I would rather pay the FFL and let them have the headache of filing the sales tax. But, I would still require an itemized invoice showing that the taxes were paid. Thanks for providing the letter, rumor becomes fact.

[492vs]

That's what I meant. That's their opinion, but it might not be the law and enforceable as such. I haven't researched it, but I'd be willing to bet if they were challenged on the concept of calling the FFL an agent of the out-of-state seller, they would lose. More likely the FFL is the agent of the buyer, i.e. the one who hired him for the job. Not my specialty, but agency law calls for the agent to have authority to act on behalf of the principal. I'm skeptical of the Department's position.

I know of no cases in which the Treas has challenged an FFL and, quite peculiar in light of the fact that there are numerous FFL's in the state and the Treas probably knows that many of them do not collect the tax. If there was such a case, I'm sure it would be well known.
I would agree with the statement the the FFL is an agent of the buyer not the seller since the buyer is the one that designates the FFL not the seller. In the letter to the Treas it is not stated that the FFL is hired by the seller so they would have assumed that the FFL would be an agent of the seller. Like any law it must eventually be tested in the courts. Either way if the FFL wishes to collect the tax and is sending it on to the state I would have no problem with paying the tax to the FFL.

[sse]

Like any law it must eventually be tested in the courts.
Yup.

[492vs]

This is some case law that tries to address out of state companies being liable for taxes of another state when using a third party in that state. The Supreme Court used the below criteria for a 3rd party activities to establish nexus. It is also noted that this has has mixed results in the courts and also I might add that neither of the 2 activities would apply to a Seller's FFL.

Tyler Pipe Indus. v. Dep't of Revenue, 715 P.2d 123, 125 (Wash. 1986)) for the proposition that an out-of-state seller will have nexus by attribution of a third party's in-state activities when: 1) the third party is acting "on behalf of" the out-of-state seller, and 2) the third party's activities are "significantly associated with the taxpayer's ability to establish and maintain a market in this state for the sales." Tyler Pipe, 483 U.S. at 247-48.

[Dongizmo]

That's what I meant. That's their opinion, but it might not be the law and enforceable as such. I haven't researched it, but I'd be willing to bet if they were challenged on the concept of calling the FFL an agent of the out-of-state seller, they would lose. More likely the FFL is the agent of the buyer, i.e. the one who hired him for the job. Not my specialty, but agency law calls for the agent to have authority to act on behalf of the principal. I'm skeptical of the Department's position.

I know of no cases in which the Treas has challenged an FFL and, quite peculiar in light of the fact that there are numerous FFL's in the state and the Treas probably knows that many of them do not collect the tax. If there was such a case, I'm sure it would be well known.
Yep,
And at $20.00 per transfer I should be willing to pay a shyster how much to fight them?

[sse]

Yep,
And at $20.00 per transfer I should be willing to pay a shyster how much to fight them?
You never have and neither has anyone who doesn't collect the tax.

[Dongizmo]

This is some case law that tries to address out of state companies being liable for taxes of another state when using a third party in that state. The Supreme Court used the below criteria for a 3rd party activities to establish nexus. It is also noted that this has has mixed results in the courts and also I might add that neither of the 2 activities would apply to a Seller's FFL.

Tyler Pipe Indus. v. Dep't of Revenue, 715 P.2d 123, 125 (Wash. 1986)) for the proposition that an out-of-state seller will have nexus by attribution of a third party's in-state activities when: 1) the third party is acting "on behalf of" the out-of-state seller, and 2) the third party's activities are "significantly associated with the taxpayer's ability to establish and maintain a market in this state for the sales." Tyler Pipe, 483 U.S. at 247-48.
So find a ffl who will not charge you sales tax.
Better yet, jump through the hoops to get you own ffl, then you can fight the state on it.
Good luck.

[Dongizmo]

You never have and neither has anyone who doesn't collect the tax.
You offering to pony up the cash to fight it?

[sse]

Well it shouldn't cost too much to fight a law suit that doesn't exist.

[Dongizmo]

Well it shouldn't cost too much to fight a law suit that doesn't exist.
So apply for your ffl, get your sales tax license and go for it.

[sse]

For the record, I'm not critical of what you are doing. I am just skeptical of the Department's position. Under the circumstances, I might do the same as you.

[Dongizmo]

For the record, I'm not critical of what you are doing. I am just skeptical of the Department's position. Under the circumstances, I might do the same as you.
I am not sure the suits at treasury really care, they have lawyers they pay 24-7 whether they are doing anything or not. and the argument is not that the tax is due, that is long settled, the argument is that buyers don't want to pay it via the ffl.
If they planned on paying the tax, which they are required to do anyway, what is the problem with paying it to the ffl. (Unless they are planning on cheating the state.:spank:)

[zigziggityzoo]

Example not posted:

What if Person A buys a gun from an out-of-state individual as a gift for Person B, and Person B receives it from the in-state FFL.

Person B effectively paid $0 for it. Sales tax only on the service, then?

[zigziggityzoo]

Another example:

Person A buys firearm from person B in another state.

Person B ships to Michigan FFL either via their own FFL or by themselves.

Since the sale did not originate with a business, is sales tax to be collected?

[Dongizmo]

Another example:

Person A buys firearm from person B in another state.

Person B ships to Michigan FFL either via their own FFL or by themselves.

Since the sale did not originate with a business, is sales tax to be collected?
Buy a car, private owner, from anywhere, why does the SOS collect sales tax? could you not just pay it on your annual return? Why not?

[Scoop]

Personally, I disgree with the letter (opinion) on the collection of sales tax by an FFL for simply transferring a gun. The FFL isn't a broker, seller, or agent. He's simply a cog in the logistical chain of transfer.

Our state is near bankrupt, elevendy billion dollars in debt and deficit, and we ask the Department of Treasury IF a certain tax should be paid.

Like anybody would ever expect them to say, "No, we (the state) don't want the money" ... LOFL.

[Dongizmo]

Personally, I disgree with the letter (opinion) on the collection of sales tax by an FFL for simply transferring a gun. The FFL isn't a broker, seller, or agent. He's simply a cog in the logistical chain of transfer.

Our state is near bankrupt, elevendy billion dollars in debt and deficit, and we ask the Department of Treasury IF a certain tax should be paid.

Like anybody would ever expect them to say, "No, we (the state) don't want the money" ... LOFL.

So simply apply for a FFL and tell the feds you will only be doing transfers, so you don't need a sales tax license, see how far that gets you....

Remember, the issue is not that the tax is due, it is merely the point of collection......

But hey, don't take my word for it, ask them yourself:
MIStatetreasurer@michigan.gov

[zigziggityzoo]

Buy a car, private owner, from anywhere, why does the SOS collect sales tax? could you not just pay it on your annual return? Why not?

Cars are explicitly singled out in MI tax code. Bad example because it's nowhere near the same as my scenarios.

[Dongizmo]

Cars are explicitly singled out in MI tax code. Bad example because it's nowhere near the same as my scenarios.
And again, the tax is due, why all the grief over paying it at the dealer, unless you don't intend on paying it at all.
Good example of a gun owners honesty ehh?

[zigziggityzoo]

And again, the tax is due, why all the grief over paying it at the dealer, unless you don't intend on paying it at all.
Good example of a gun owners honesty ehh?

Tax isn't always due if, for example, you purchase from a family member. There are also other situations.

One such example is when I had my brother send me an AR15 from FL to a Michigan FFL (he has his FFL in Florida).

They still tried to collect sales/use tax here in MI, even though, per my understanding of the tax code, the purchase is exempt.

[Dongizmo]

Tax isn't always due if, for example, you purchase from a family member. There are also other situations.

One such example is when I had my brother send me an AR15 from FL to a Michigan FFL (he has his FFL in Florida).

They still tried to collect sales/use tax here in MI, even though, per my understanding of the tax code, the purchase is exempt.

I know the use tax for automobiles is exempt, I believe it is because the tax was paid on the original purchase / title transfer in MI. I don't think this would apply to every purchase, otherwise we would all have our out of state brothers & sisters doing our shopping for us.
I could not find any reference for a exemption for all purchases from out of state family members, got a link to back it up?
Maybe I will order all my stuff from my brother in FL. also....

[blackwater na]

To the statement of being "GIFTED" as long as I receive a receipt accompanying the transferred item stating Zero dollars and it`s a gift, and I get a copy for my records, I have no issues with not charging sales tax. I have done that in the past. It`s one of those----"Please don`t shoot the messenger" deals.