Taxes on consignment gun

[Shootfirst]

Hey guys I did some research to see if this had been brought up before and found nothing. I recently bought a used revolver from a lgs on consignment. When I went to cash out the shop owner charged me tax on it. I was surprised and questioned him on it. He said I have to pay taxes on it used or new. I have never bought a gun on consignment before, however I have used an FFL to do a person to person sale I never paid taxes. I always expect to pay taxes when I buy them new at a gun shop. Why does the lgs charge taxes? Thank you in advance.

 

[drgrant]

Hey guys I did some research to see if this had been brought up before and found nothing. I recently bought a used revolver from a lgs on consignment. When I went to cash out the shop owner charged me tax on it. I was surprised and questioned him on it. He said I have to pay taxes on it used or new. I have never bought a gun on consignment before, however I have used an FFL to do a person to person sale I never paid taxes. I always expect to pay taxes when I buy them new at a gun shop. Why does the lgs charge taxes? Thank you in advance.

Because with a consignment it's on the shops books as a sale, that's why. I have not been in a single MA gun shop that didn't charge sales tax on the sale of a consignment gun, unless it was one of those deals where the shop owner said "I'll eat the tax for you if you pay cash" etc. (and that's not something that happens at most shops...).

An FTF transfer is a service and the money is never touched by the shop outside of the fee you pay them.

-Mike

 

[Rob Boudrie]

Feel fortunate you do not live in WA - their regulations on FFLs require collecting sales tax on transfers and, if the transfer is not a sale, on the actual value of the transferred gun.

 

[drgrant]

Feel fortunate you do not live in WA - their regulations on FFLs require collecting sales tax on transfers and, if the transfer is not a sale, on the actual value of the transferred gun.

Yeah, their law there is brutal, there's literally no exceptions for anything, either.

-Mike

 

[Shootfirst]

Because with a consignment it's on the shops books as a sale, that's why. I have not been in a single MA gun shop that didn't charge sales tax on the sale of a consignment gun, unless it was one of those deals where the shop owner said "I'll eat the tax for you if you pay cash" etc. (and that's not something that happens at most shops...).

An FTF transfer is a service and the money is never touched by the shop outside of the fee you pay them.

-Mike

Thanks drgrant. I just felt like I had been taken for a ride. The guys I know that have guns never bought a consignment gun. One guy I know said " you should b paying taxes on almost everything u buy in Ma. even internet sales." I said ya whatever. LoL. Thank you I didn't want to b the only one paying sales tax on consignment guns MA.

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Feel fortunate you do not live in WA - their regulations on FFLs require collecting sales tax on transfers and, if the transfer is not a sale, on the actual value of the transferred gun.

Holys**t

 

[peterthefish]

Yeah, their law there is brutal, there's literally no exceptions for anything, either.

-Mike

Sure there are. Sell / transfer a frame / receiver only.

 

[drgrant]

Thanks drgrant. I just felt like I had been taken for a ride. The guys I know that have guns never bought a consignment gun. One guy I know said " you should b paying taxes on almost everything u buy in Ma. even internet sales." I said ya whatever. LoL. Thank you I didn't want to b the only one paying sales tax on consignment guns MA.

If you want a racket to watch out for, watch out for the shops that charge sales tax on inbound transfer service. That is not required by law, although some make excuses for it, and honestly I think most of these just shove the money into their pocket. (if they don't they're stupid). If you run into these, don't even bother arguing with them, you won't win- just use a different dealer. Always check this before inbounding a gun. There aren't that many that do it, but they are out here.

-Mike

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Sure there are. Sell / transfer a frame / receiver only.

WA exempts frames from their law?

-Mike

 

[Shootfirst]

If you want a racket to watch out for, watch out for the shops that charge sales tax on inbound transfer service. That is not required by law, although some make excuses for it, and honestly I think most of these just shove the money into their pocket. (if they don't they're stupid). If you run into these, don't even bother arguing with them, you won't win- just use a different dealer. Always check this before inbounding a gun. There aren't that many that do it, but they are out here.

-Mike

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WA exempts frames from their law?

-Mike

I believe I read that on this site before. Thank you. Some shops would rather lose a customer than miss out on a couple of bucks.

 

[peterthefish]

WA exempts frames from their law?

-Mike

It significantly cuts the taxable value. Like it can turn a 3K STI into a $200 frame. So you can't avoid the whole bite, but you can avoid a chunk of it.

 

[mac1911]

basically a consignment gun is "owned" by the shop and the shop is making the sale not the person who asked the shop to sell their item.
more or less if buy other the food and clothes in MA at a legit retail location expect to pay a tax

 

[Len-2A Training]

If you want a racket to watch out for, watch out for the shops that charge sales tax on inbound transfer service. That is not required by law, although some make excuses for it, and honestly I think most of these just shove the money into their pocket. (if they don't they're stupid). If you run into these, don't even bother arguing with them, you won't win- just use a different dealer. Always check this before inbounding a gun. There aren't that many that do it, but they are out here.

-Mike

As a MA Sales Tax Vendor Certificate holder since the late 1960s I can tell you that there is no way for any vendor to pay the state sales tax on the value of a gun that they didn't sell, merely did the transfer service. The way that the sales tax form is set up there is no way that the $$ from a NON-Sale would be included in that form for the vendor to pay the 6.25% to the state.

A long and detailed explanation of the fact that the dealers who do this are THIEVES, lying and stealing your money, PERIOD!

 

[free]

basically a consignment gun is "owned" by the shop and the shop is making the sale not the person who asked the shop to sell their item.
more or less if buy other the food and clothes in MA at a legit retail location expect to pay a tax

Yes, the title is held by the consignor (gun shop) until sold. The consigner is acting as an agent of the gunman whio wishes to get rid of his gun. As you say, the gun shop is not the seller, only an agent of the seller/ guman.

 

[Dennis in MA]

At first I thought he was getting charged tax for SELLING the consignment gun. It's Friday. Reading comp is low. LOL

A sale is a sale in MA.

 

[Obie1]

basically a consignment gun is "owned" by the shop and the shop is making the sale not the person who asked the shop to sell their item.
more or less if buy other the food and clothes in MA at a legit retail location expect to pay a tax

And gun safes are sales tax free

 

[free]

And propane tank refills too. Watch out, some try to tax you on this.

 

[qqac]

The MA sales tax statute imposes a tax on the "retail sale" of tangible personal property. It does not distinguish between new or used goods. Retail sellers like the LGS are registered with the DOR and need to collect the sales tax and remit it to the DOR. The MA "use tax" (MGL ch. 64I sec. 2) is supposed to capture those transactions that are not taxed via a retail sale. It is self reported and often ignored by consumers/taxpayers. It is imposed on tangible personal property "used, stored, or consumed" in MA but on which no sales tax has been paid via a retail transaction.

Technically, in your FTF FFL transaction, you were supposed to pay a use tax to the DOR with your annual tax return.

 

[EC1]

As a MA Sales Tax Vendor Certificate holder since the late 1960s I can tell you that there is no way for any vendor to pay the state sales tax on the value of a gun that they didn't sell, merely did the transfer service. The way that the sales tax form is set up there is no way that the $$ from a NON-Sale would be included in that form for the vendor to pay the 6.25% to the state.

A long and detailed explanation of the fact that the dealers who do this are THIEVES, lying and stealing your money, PERIOD!

Aside from two that I know, all of the other transfers I have done, the MA ffls have charged sales tax albeit at a lesser value than the actual sale price but based on a lower book value, I guess like a used car transfer where the registry uses a wholesale price..

 

[Shootfirst]

If he legally had the right to collect taxes then fine. Weather or not he pays them I could care less. That's his problem. I believe we had a LGS shut down for tax evasion not long ago however I don't know the story. I just wanted to be sure I wasn't getting screwed. I feel a little better now. Thank you guys.

 

[szaino]

basically a consignment gun is "owned" by the shop and the shop is making the sale not the person who asked the shop to sell their item.
more or less if buy other the food and clothes in MA at a legit retail location expect to pay a tax

Yes, the title is held by the consignor (gun shop) until sold. The consigner is acting as an agent of the gunman whio wishes to get rid of his gun. As you say, the gun shop is not the seller, only an agent of the seller/ guman.

These are both wrong. The title of the goods remains with the original owner. The consignor only takes possession to facilitate the sale. Just because he is an FFL and has to enter this item in any federally mandated records does not change this.

I can buy a handgun from an out of state party. The invoice is from the out of state party to me I send the money to the out of state party. Handgun is shipped to a Mass FFL because the law requires I take possession from a Mass FFL. Mass FFL has to enter into his federally mandated records and it doesn't matter what they are called because he is just acting as a bailee and not taking legal title to the goods.

And, like Len said there should be no sales tax on this.

 

[free]

These are both wrong. The title of the goods remains with the original owner. The consignor only takes possession to facilitate the sale. Just because he is an FFL and has to enter this item in any federally mandated records does not change this.

I can buy a handgun from an out of state party. The invoice is from the out of state party to me I send the money to the out of state party. Handgun is shipped to a Mass FFL because the law requires I take possession from a Mass FFL. Mass FFL has to enter into his federally mandated records and it doesn't matter what they are called because he is just acting as a bailee and not taking legal title to the goods.

And, like Len said there should be no sales tax on this.

Whoops, thanks! I stand corrected and apologize. I mixed up my uses of the term consignor with the gun shop. Sorry.

 

[Len-2A Training]

Aside from two that I know, all of the other transfers I have done, the MA ffls have charged sales tax albeit at a lesser value than the actual sale price but based on a lower book value, I guess like a used car transfer where the registry uses a wholesale price..

A THIEF can afford to be "generous" and only extort part of what he could extort from the person, since he pays none of it to the state. If said dealers were reported to DOR for tax fraud, there would be a bit fewer MA FFLs and others would be scared straight!

 

[Mikeb06]

Hey guys I did some research to see if this had been brought up before and found nothing. I recently bought a used revolver from a lgs on consignment. When I went to cash out the shop owner charged me tax on it. I was surprised and questioned him on it. He said I have to pay taxes on it used or new. I have never bought a gun on consignment before, however I have used an FFL to do a person to person sale I never paid taxes. I always expect to pay taxes when I buy them new at a gun shop. Why does the lgs charge taxes? Thank you in advance.

This has bugged me for a long time. The shop does not own the gun... they did not pay for it. Aren't they doing a ffl transfer for the purchase? I have never understood why one should pay tax on a consignment gun that is owned by someone.

 

[drgrant]

This has bugged me for a long time. The shop does not own the gun... they did not pay for it. Aren't they doing a ffl transfer for the purchase? I have never understood why one should pay tax on a consignment gun that is owned by someone.

The FFL is handling the money, and then paying out minus a % fee for selling it. Technically speaking, BTW, it is the stores property unless its released from consignment- it's on their inventory books and must cross on a 4473 if you rescind the consignment agreement and want the gun back.

Sales tax has to be collected because as far as most states are concerned, a sale via a consignment is no different than any other sale. EG, that specific, economic activity, is one in which the state expects to collect revenue. You would have a better argument if the gun shop wasn't handling or touching the money- but indeed, it is, it is intimately involved in handling the money.

-Mike

 

[enbloc]

I Hate taxes...

 

[Bt74]

The FFL is handling the money, and then paying out minus a % fee for selling it. Technically speaking, BTW, it is the stores property unless its released from consignment- it's on their inventory books and must cross on a 4473 if you rescind the consignment agreement and want the gun back.

.

-Mike

I was somewhat surprise about this. Had a pistol on consignment and it wasn't moving, so I pulled it back. Had to wait 30 minutes to get the ok from the nics check on my own gun. Dumbass law.

 

[bostonasphalt2]

The FFL is handling the money, and then paying out minus a % fee for selling it. Technically speaking, BTW, it is the stores property unless its released from consignment- it's on their inventory books and must cross on a 4473 if you rescind the consignment agreement and want the gun back.

Sales tax has to be collected because as far as most states are concerned, a sale via a consignment is no different than any other sale. EG, that specific, economic activity, is one in which the state expects to collect revenue. You would have a better argument if the gun shop wasn't handling or touching the money- but indeed, it is, it is intimately involved in handling the money.

-Mike

I like to think of it as an advance on inventory, in which they only pay for it after it sells.

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I was somewhat surprise about this. Had a pistol on consignment and it wasn't moving, so I pulled it back. Had to wait 30 minutes to get the ok from the nics check on my own gun. Dumbass law.

technically, it wasn't your gun anymore