I order rifles sometime from a mail order wholesaler in the same state (Ohio). Their web page says to add 5% for ohio orders, and so that’s what they charge me. I pay them the price of the rifle plus shipping and 5% tax - and they then send the rifle to a local firearms dealer, so that he can conduct the background check, etc.
Well, he ALSO charged me a sales tax on it. I told him it couldn’t be right - that I already paid the tax to them. So he showed me a form he had, that he got from them, showing only the price and the shipping as the total - the space after tax was blank.
Who am I actually supposed to pay the tax to? He mentioned something about his tranfers between firearms dealers were tax-free, which makes me assume that the wholesaler is incorrectly charging me tax, and I really owe it to him - especially since the tax spot on the form they gave him was blank - but I don’t know for sure.
Can anyone give me any more information on this? It’s not a huge deal, but in the future, 5% of several hundred dollars can be pretty annoying to have charged twice.
I’d go back to the wholesaler and ask for the tax back. Without evidence of bad faith on their part, I would guess that some clerk simply failed to record the transaction correctly. (I do hope you have documentation for all the money exchanges.)
The retailer is correct that there is no tax on direct resale merchandise. (I.e., distributors, O.E.M.s, and other resellers do not pay tax when buying for resale, since we do not use VAT in the U.S.) If the tax was paid to the wholesaler, the retailer should only charge you any processing fees (with any taxes they accrue). However, since the wholesaler produced a document showing that you had not paid tax that disagrees with your check or credit card transaction, they would be the people I would go to for the cash.
Various laws and court decisions have been preventing states from collecting tax on phone, mail-order, and internet sales that cross state lines. Intrastate sales have not been affected by that legislation of judicial action, so the merchants are beginning to collect taxes on intrastate sales. However, if they are going to collect the tax, they need to record it properly. Otherwise, call Betty Montgomery and lodge a complaint.
As to who should collect the tax in the future, I’d suggest getting the wholesaler and the dealer together on the phone to work out that arrangement to everyone’s satisfaction.
I’m fairly certain that the wholesaler should NOT have charged you tax, and that the retailer SHOULD have. It’s pretty simple: sales tax is only meant to be collected once, at the sale to the consumer. So anything businesses need to buy to produce their products–as well as finished products being sold by retailers–they can buy tax-free.
That’s not quite true. Remember, on paper, the consumer always pays the sales tax. The issue is under what circumstances the state can conscript merchants to act as collection agents.
When you buy in person, of course, the merchant always collects the tax and forwards it to the state. When you buy from out-of-state via phone, mail, or Internet, the merchant should do the same–provided that they have a physical retail presence in your state. I live in Illinois. If I place a catalog order with J.C. Penney, they will charge Illinois sales tax–regardless of where their catalog warehouse is located–because they have retail stores in Illinois. If I buy from Amazon, they won’t charge or collect tax–because they don’t have a store in Illinois, or anywhere else. Courts have held that merchants cannot be compelled to act as tax collectors for states where they have no physical presence.
In theory, then, if I buy from Amazon, I should remit the sales tax to Illinois on my own–because Amazon failed to do so. Needless to say nobody ever does this, and to my knowledge nobody has been prosecuted for it.
Back to your case, SenorBeef. You are responsible for paying sales tax on your gun–once. If all the “reseller” did was hold your gun for you and perform a background check, he should not have attempted to collect a tax, because he didn’t sell you anything. I would think the wholesaler would be willing to help you straighten this out, and to stop using that reseller if he proves obstinate.
That’s not quite true. Remember, on paper, the consumer always pays the sales tax. The issue is under what circumstances the state can conscript merchants to act as collection agents.
When you buy in person, of course, the merchant always collects the tax and forwards it to the state. When you buy from out-of-state via phone, mail, or Internet, the merchant should do the same–provided that they have a physical retail presence in your state. I live in Illinois. If I place a catalog order with J.C. Penney, they will charge Illinois sales tax–regardless of where their catalog warehouse is located–because they have retail stores in Illinois. If I buy from Amazon, they won’t charge or collect tax–because they don’t have a store in Illinois, or anywhere else. Courts have held that merchants cannot be compelled to act as tax collectors for states where they have no physical presence.
In theory, then, if I buy from Amazon, I should remit the sales tax to Illinois on my own–because Amazon failed to do so. Needless to say nobody ever does this, and to my knowledge nobody has been prosecuted for it.
Back to your case, SenorBeef. You are responsible for paying sales tax on your gun–once. If all the “reseller” did was hold your gun for you and perform a background check, he should not have attempted to collect a tax, because he didn’t sell you anything. I would think the wholesaler would be willing to help you straighten this out, and to stop using that reseller if he proves obstinate.
Ok. I’m thinking: The wholesaler sells other things that can ship directly to you, like ammunition. And for sales that go directly to the consumer, the tax is paid to them. Perhaps someone screwed up and didn’t realize this would be a transaction in which a firearms dealer would then be involved, and so they incorrectly charged me the tax.
I think I’ll ask another firearms dealer if that’s the standard deal with transfers.
But I’m wondering: If the point of sale/transfer is with the local dealer, then wouldn’t I pay sales tax regardless of what state I bought it in?
I’m a computer reseller and service company in Texas so I can only speak in general terms that I think apply in most states.
Think about it this way, who do you write the check to? If you write it to the wholesaler, (who isn’t really a wholesaler if he is selling individual items to the end-user and charging sales tax, he’s a mail-order retailer that’s using the word wholesale) then the “wholesaler” is responsible for the sales tax part of the transaction too. In this case, the gun dealer is acting as an agent for the delivery but is not involved in the actual sale. He has no right to charge you sales tax on an item that he did not sell.
If, however, you order the rifle and it is delivered to the gun dealer, who sets the price to you and charges you for the gun itself, then he is responsible for the sales tax part of the transaction, too.
In the OP, you said you paid the “wholesaler”. That means to me that the dealer is simply delivering, for which he could charge an additional fee and perhaps collect sales tax on that fee.
Having an agent do the delivery along with whatever is required for that delivery, in this case a background check, is not the same as a retail presence as jklann explained above.
Example: if you order something from Amazon, for instance, and have it delivered COD via UPS. UPS will deliver the item and collect the money, but are only agents for the delivery. They are in no way responsible for the goods, the price and the transaction doesn’t make a retail presence for Amazon. UPS can charge a fee for their part in the transaction, but UPS isn’t selling anything and can not charge sales tax on the goods themselves.
tomndebb is generally correct. I’ll just add that if you can’t easily get the tax from either party, you should be able to get a refund from the Ohio Department of Revenue if you can document that you paid the tax twice. You may also be able to get their auditors to contact both the wholesaler and retailer and straighten them out for future transactions.
They’re wholesalers (I believe that’s the term) for the bulk of their business. They generally sell items to gun dealers, who then mark it up for retail prices. But they also run a ‘store’ part of the business which allows individuals to buy these items as well as dealers. They buy directly from the importers, and generally sell to dealers, so they’re wholesalers in general, at least, I think so… they just do some business to individuals.
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In this case, I’m writing the check for the item to them - and I’m paying the gun dealer the $25 transfer fee (for doing the background check, paperwork, etc.).
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Yes, he’s delivering, doing some minor paperwork, etc. He doesn’t actually buy it from them and sell it to me. And the tax he charges me is based, if I recall correctly, on the price of the item (I paid to the wholesaler) plus his dealer fee. I may be wrong on that.
Makes sense. But I’m starting to think it would make sense that the sales tax would apply for their non-gun items which can ship directly to people, and that’s why it’s listed, but they incorrectly charged me for guns, which the dealer is supposed to charge for.