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Posted: 5/15/2003 7:36:07 PM EDT
Everyone,

I have a question for legality purposes. I found a pretty good deal on buying a complete RRA upper and complete RRA lower from the same dealer. He told me that he could not sell me both parts at once for the price he gave me. He said if I did that I would be buying a firearm and would have to pay a 11% excise tax for purchasing a firearm. However, he said and agreed that I could purchase the upper now and call back in about 3 days and purchase the lower as a separate sale.

My questions are this:

Is this legal? I have a friend who talked to a rep at sableco who seemed to think this was not allowed.

If it is legal, he tells me that I will get no warranty from RRA because I am buying this as a raffle (not a complete firearm). Does this seem right? Why wouldn't RRA warranty their parts no matter what?

Lastly, is it "ok" or legal for me to even purchase a complete lower from one vendor and buy a complete upper from another and put the two pieces together? Some seem to frown on this, but I'm not sure why.

Thanks for any help.
Link Posted: 5/15/2003 8:01:35 PM EDT
The "firearm" part of an AR15 is the lower reciever. because that's where the serial number resides. It doesn't matter whether you buy a complete rifle, a stripped lowere reciever, or any combination in between. When you buy the lower, you've bought a firearm, with all the associated paperwork and records. You can buy the lower assembly from one dealer, and the upper from another. It doesn't matter. The feds only care about the part with the number on it. I just bought a DPMS lower at a gun show two weeks ago, and put a Colt barrelled upper on it that was already in my possesion. Perfectly legal; since the dealer I bought the lower from and I did all the proper paperwork, and my state regs say that if I have a valid pistol permot I'm good to go immewdiately without any further check. What I mounted on the top of that lower when I got home, or where I got what I mounted on the top of it, is totally irrelevant. The dealer you're talking with here should know this.
Link Posted: 5/15/2003 8:03:03 PM EDT
[Last Edit: 5/15/2003 8:13:18 PM EDT by sluggo]
I'm not a legal expert, but I do have to deal with this on a fairly regular basis as part of my job, so here's my take on it: Your dealer is both right and wrong. If he knowingly sells you the upper half and lower half, he has sold you a complete rifle, and if the excise tax was not paid from the factory, he becomes responsible for it on his end, at 11% of the new total sale price. If he's licensed as a manufacturer, it is no big deal because he already has to do the paperwork and pay the money. The three day seperation he proposed doesn't help him...it just puts him in a worse position by "conspiring" to avoid taxation. Conspiracy is one of ATF's best friends, because they really don't have to prove very much, and your dealer goes broke on legal fees before he cops to plea agreement, gives up his license and losses everything he has left to pay the fine and avoid jail time. As to the warranty issue, RRA does warrant their products to be usable for the intended purpose, but only offers their lifetime warranty on complete rifles and pistols, not uppers and lowers sold as seperate components. Federal rules are pretty strict on warranty issues anymore, so even offering one is a major liability for businesses now. Again, this is just how it's been explained to me by ATF and some pretty significant players in the industry. Sluggo Shamayim...your case is a little different as you aren't buying a complete rifle...just a lower half. I don't know of any AR manufacturer who pays the FET on just a lower, because even though it is the serialized part, it is not a complete rifle. They are using the same reasoning they used when they determined that your pre Sept '94 lower is only pre ban if it was previously assembled as a rifle, and if it was jsut a lower prior to the ban, it technically wasn't a rifle and isn't pre ban. I know it sounds like hair splitting and technicalities, but it is the rule and they exist to enforce it. ATF does care about excise tax..it's a major revenue source for them, or at least it was while they were still in Treasury. In the case described above, it isn't the buyer who faces the real problem with them, but the seller who, when he applies for his FFL, agrees to play by these rules. It normally isn't a problem with most firearms because they aren't modular. ARs are the dilemma that has gottten some dealers in trouble in the past on this very issue.
Link Posted: 5/15/2003 8:03:23 PM EDT
[Last Edit: 5/15/2003 8:04:14 PM EDT by Prosise]
It is absolutely legal. As long as the upper is a postban upper. Sounds like he is a shady character, or doing something he should not. RRA will warranty the rifle, just ask for a bill of sale (value of the gun) since it is a raffle item. You will need that for warranty documentation. ALso, contact RRA & ask them the same question. Always go with your gut instinct! Sounds like he does not want to repair your rifle if there is a problem. By the way, what state are you in? Prosise
Link Posted: 5/15/2003 8:06:08 PM EDT
The Dealer is full o' shit. The lower reciver is the "gun". Its perfectly legal to buy both parts and put them together (as long as the upper is post ban). Ive bought uppers and lowers many times and never had any problems.
Link Posted: 5/15/2003 8:11:12 PM EDT
I live in Ohio. The guy sells lots o' stuff on gunbroker and ebay. He seems to have the stuff in stock, which is tough to come by with RRA. Maybe it would be best to just buy upper from him and a lower from another vendor. Of course, I think I won't have any warranty on this gun then. Let me ask you guys this, in your opinion is saving $100 worth not having a lifetime warranty? I haven't heard of too much going wrong with these guns and I know most of the parts seem to be reasonably priced for repair. Just my observation.
Link Posted: 5/15/2003 8:19:07 PM EDT
Guys, 511 and most of you are looking at it from the unlicensed end-user end of it and not the licensed, audited, inspected, and liable dealer end of it. easiest way to resolve it is to call one of the manufacturers and ask them. In this case, RRA might be able to help. ATF also has an entire legal branch that loves to answer this one...just call from a pay phone and don't give them your or your dealer's name. Sluggo
Link Posted: 5/15/2003 8:22:17 PM EDT
How much is he asking for this deal?? The question here really boils down to price total for what seems like a silly way of doing business. New AR from one of the major manufacturers should go between $750 - $800
Link Posted: 5/15/2003 8:22:28 PM EDT
Link Posted: 5/16/2003 4:26:03 AM EDT
Thanks for the comments. The deal was for $620 shipped for both parts. That was with a SS barrel. I think the best way to do it would be to buy the upper from him and buy the lower from another vendor to avoid any suspicious activity. I can buy the lower from another dealer for almost the exact same price. You can get RRA complete lowers for $200 at a few places. Does a CAR A2 upper with 16" SS barrel for $420 shipped seem like a good price? Is it worth buying the SS barrel or should I opt for a Chrome Moly barrel? I know the Chrome lined barrel would be stronger, but for the amount of shooting that I do (on occasion) would it really make a difference. I think I would lik the look of the SS or a bull barrel over the regular one. Any comments?
Link Posted: 5/16/2003 4:35:13 AM EDT
Sluggo and Troy are both 100% correct. It's an attempt to avoid the 11% excise tax on (complete) rifles.
Link Posted: 5/16/2003 10:13:02 AM EDT
If you are going flattop go Chrome Moly (technical term for steel: not chromed), or stainless steel. If your going the traditional handle route go with a chromed barrell.... IMHO, accuracy will be better with the non chromed barrell. But the chromed would be really durable.... Prosise
Link Posted: 5/16/2003 10:25:13 AM EDT
Originally Posted By Troy: The excise tax only has to be paid on complete guns, so he could legally sell you the lower (stripped, complete, or anything inbetween) without paying the tax, and of course, you'd still need to do the normal gun-transfer stuff. But to then sell you an upper would require him to pay the excise tax on the TOTAL price.
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But only if he sold them both at the same time, right? If you buy a lower in the morning, and then go back and buy an upper that afternoon the dealer hasn't sold a complete rifle.
Link Posted: 5/16/2003 10:26:11 AM EDT
Link Posted: 5/16/2003 1:33:51 PM EDT
Can someone explain to me the negative effects of the Stainless Barrel? Most people seem to be staying away from them. Is it just accuracy?
Link Posted: 5/16/2003 1:51:44 PM EDT
Accuracy of a barrel depends almost entirely on the quality of the barrel maker, not on the material it's made of. Theoretically the best chrome-lined barrel won't be as accurate as the best non-lined barrel because it's hard to keep the lining uniform. In reality, very few shooters can tell the difference and I have a Bushmaster chrome-lined barrel that will shoot under 1/2" at 100yds with the right ammo. The top match barrels tend to be stainless. Depending on who you ask they either wear better than an unlined chromoly barrel, or they wear the same. I think most people shy away from stainless because they don't like the look of the shiny silver barrel. If you do, I can't think of a reason not to get one. I'd avoid the bull barrel simply because of the weight, but depending on how you're going to use it that may not matter to you.
Link Posted: 5/16/2003 2:18:32 PM EDT
As Troy and a few others have stated, it appears the dealer is attempting to circumvent the 11% tax on complete firearms. For you to buy it in this manner, it is legal. The illegal part is the dealer's failure to pay the excise tax as he is knowingly evading the tax. I don't think you can be held responsible his illegal activity, at least up until you asked the question and are now aware of his potential action. Personally, I would wonder what other 'games' this dealer may be playing.
Link Posted: 5/16/2003 10:36:58 PM EDT
Mike L, The AM/PM game might work with the dealer in question, but he's still illegal. It has nothing to do with "same transaction", it is whether he knowingly sells you the complete rifle. If he does the old wink wink, nod nod, and tells you to come back in the afternoon to get the other half, he's still conspiring (with you at this point) to avoid taxation. He's risking his license, livelihood, and potentially freedom to get the buyer's money before someone more legit can do so. I'm always very, very leery of dealers who are willing to circumvent the law for a couple bucks. Sluggo
Link Posted: 5/17/2003 2:41:22 AM EDT
Everyone, Thanks for your opninions. I feel it is in my best interest to not purchase both parts from this gun dealer if any at all. Anyone know where to find a good deal on A2 uppers with 16" barrels with muzzle break (possibly)? Would like to stay around $400+ or so. Hey, does anyone know if there is any difference between the CAR A2 upper and regular A2 upper other than the CAR Handguards? Thanks to all.
Link Posted: 5/19/2003 8:57:46 AM EDT
So I can buy the upper and lower separately to save money, unless it was the dealer's idea, then it's illegal? Gotta love the ATF... tl511, Yes that's probably the only difference, but w/o seeing the exact uppers you're comparing it's hard to say for sure.
Link Posted: 5/19/2003 11:44:00 AM EDT
Link Posted: 5/19/2003 11:55:22 AM EDT
[Last Edit: 5/19/2003 12:11:29 PM EDT by monkeyman]
If he bought the rifle complete then the tax has already been paid on it. If he assembles the pieces into a complete rifle, then he would have to pay the tax on it. If he sells you the pieces, the same way he bought them, then there is no excise tax. The dealer is just trying to save the guy some money by making sure the rifle isn't assembled at his shop. I don't see a problem with the dealer making sure the gun isn't assembled in his presence by making the guy come back another time. Some of you street corner lawyers and government informants need to lighten up. Avoiding taxes is not illegal. Not paying taxes that you owe is illegal
Link Posted: 5/19/2003 7:17:25 PM EDT
Originally Posted By monkeyman: If he bought the rifle complete then the tax has already been paid on it. If he assembles the pieces into a complete rifle, then he would have to pay the tax on it. If he sells you the pieces, the same way he bought them, then there is no excise tax. The dealer is just trying to save the guy some money by making sure the rifle isn't assembled at his shop. I don't see a problem with the dealer making sure the gun isn't assembled in his presence by making the guy come back another time. Some of you street corner lawyers and government informants need to lighten up. Avoiding taxes is not illegal. Not paying taxes that you owe is illegal
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I can't see anything in this post to disagree with. The dealer is reselling items purchased. If he resells them exactly as he purchased them he is responsible for collecting sales taxes and nothing more. If the original dealer did in fact say an 11% excise tax would have to be paid I believe he poorly explained what was going on. What he should have said was the cost would be proportionately greater due to the complete gun having the 11% factored into the wholesale price. In any case, the clearest answer would come from those who administer the regulations.
Link Posted: 5/19/2003 7:59:25 PM EDT
Monkey, The problem in selling the parts exactly as he got them is that in doing so, he has sold a complete rifle to an individual. Regardless of how he bought the components, if he knowingly sells the complete rifle to that individual, he has "conspired" to not pay the excise tax on the complete rifle. Yes, I know it was sold to the dealer as an upper and a lower, but the manufacturer didn't even send them to him together, because in doing so they would have sold him a complete rifle, and they would have been responsible for the excise tax. It's not my idea, or Troy's, or any of the legit dealers who play by the rules (to which they agree to abide when they get their license). But those are the rules nonetheless. The dealer wasn't a kind hearted soul trying to help out a fellow firearms enthusiast by giving him the lowest price possible. From 511's description of their discussion, the dealer was knowingly trying to violate the tax laws as they apply to firearms and make some cash on the side by having a lower price than the legit guys at the same show. Just my two-cents, for whatever that's worth in today's economy. Sluggo
Link Posted: 5/19/2003 8:00:33 PM EDT
Link Posted: 5/19/2003 8:10:54 PM EDT
[Last Edit: 5/19/2003 8:16:12 PM EDT by otto_esq]
The dealer in question knows that if he sells the parts in "knockdown condition" (a term with legal significance) the tax is owed. Troy was the first one with the right answer. [edited to add:] Sluggo is right as well-- he replied while I was drafting my response. I am not a street corner attorney -- I have more than one wall on which to hang my license. Saying that, here is the law: [url=http://frwebgate4.access.gpo.gov/cgi-bin/waisgate.cgi?WAISdocID=40125421512+1+0+0&WAISaction=retrieve]27 CFR 53.61(b)[/url]
(b) Parts or accessories--(1) In general. No tax is imposed by section 4181 of the Code on the sale of parts or accessories of firearms, pistols, revolvers, shells, and cartridges when sold separately or when sold with a complete firearm for use as spare parts or accessories. [b]The tax does attach[/b], however, to sales of completed firearms, pistols, revolvers, shells, and cartridges, and [b]to sale of such articles that, although in knockdown condition, are complete as to all component parts[/b].
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As for advising to spread the sale over 3 days to avoid the tax:
27 CFR Sec. 53.2 [b]Attachment of tax.[/b] (a) For purposes of this part, the manufacturers excise tax generally attaches when the title to the article sold passes from the manufacturer to a purchaser. (b) When title passes is dependent upon the intention of the parties as gathered from the contract of sale and the attendant circumstances.
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The intent of the parties is to buy/sell a complete rifle-- the 3 days doesn't change that. Tax is owed. Solution: buy from 2 different dealers My $.01 (50% discount for the board) Cheers, Otto
Link Posted: 5/19/2003 11:07:04 PM EDT
Link Posted: 5/20/2003 12:00:32 AM EDT
So what would happen if you bought a lower from a dealer and then an upper after a part is removed from the upper? Couldn't manufacturers add an unimportant and easily "lost" part to the AR's upper reciever and thus avoid paying the excise tax?
Link Posted: 5/20/2003 12:09:13 AM EDT
Link Posted: 5/20/2003 2:21:10 AM EDT
Is just the FFL resposible or is the consumer? Seems like there is no risk to the consumer just the FFL. If thats the case I could give a rats ass what limb he is on I just want cheap parts. [;)]
Link Posted: 5/20/2003 10:09:59 AM EDT
Wow, seems legal issues are always a hot topic on this forum. I really just wanted to know if this was common practice (ie legal and acceptable in practice). Apparently, it might (I stress might) be legal, but doesn't seem to be too widely practiced. This tells me that all is not on the up-and-up. I personally do not feel like being apart of a shady deal, my integrity is worth more than a few dollars. I may buy one piece from him, but not both. Thanks for all the comments.
Link Posted: 5/20/2003 11:16:41 AM EDT
Buy everythig but one part... Front sight , barrel, trigger, whatever, must be some mod you want to make. The key wording is the complete weapon.. I do not believe an 01 dealer can assemble and sell a complete weapon ,or legally pay/collect the excise tax.. Makes him a manufactuer which requires a different licence.. As a gunsmith,same licence as a dealer, you can only assemble a weapon, if the buyer provides you with some/all of the parts.. my .02
Link Posted: 5/20/2003 11:23:43 AM EDT
Buyer must provide serialized part......
Link Posted: 5/21/2003 5:09:09 AM EDT
Originally Posted By ARndog: So what would happen if you bought a lower from a dealer and then an upper after a part is removed from the upper?
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DPMS web site has AR kits completely in part form, including the lower receiver but no barrel, or another with no upper receiver, a 3rd with no bolt/carrier, etc. advertising just that. [url=https://tp-commerce.techpro.com/pantherarms/shopdisplayproducts.asp?id=18&cat=Firearms&catid=1&subcatid=18]Rifle kits (no F.E.T.*)[/url]
Link Posted: 5/21/2003 9:30:03 AM EDT
[Last Edit: 5/21/2003 10:01:42 AM EDT by monkeyman]
My point is: if the dealer bought an upper and a lower as separate parts, all he has are separate parts. If he bought a rifle and separated the parts, the excise tax would already have been paid. He has not sold a complete rifle if the parts are not put together even if he sold the separate parts to the same person. To ensure that he does not owe the tax on a complete rifle he is asking the person to pick the parts up separately. There can be no conspiracy to avoid a tax that he does not owe. To use the speeding analogy, having a car and speedometer that goes higher than 100 MPH does not consitute a conspiracy to speed. You can only get a ticket if you acutally go over the speed limit. Conversely, if he sells the two rifle componants at the same time but says with a wink and a nod, "Hey buddy, if anybody asks, you got these seperate, get it?" then that is clearly avoiding the tax. If he says, "I can't sell these together because an excise tax is owed, however the law says if I sell them separetly no tax is owed. Therefore, if you want, come back in a couple days and buy the other half." That is IMO, complying with the law as the law specifies. I'll give you another analogy. You drive to a state that has pay roads, turnpikes or whatever you call them. You stop at a gas station and ask, "what's the best way to go?" A truck driver or someone, says "you can take the turnpike but that'll cost you money. I suggest you take this road and avoid the road tax on the turnpike." Is that a conspiracy to avoid taxes? I don't think so. Taking the turnpike and throwing slugs into the basket would be violating the law. But choosing to avoid the road tax is not against the law.
Link Posted: 5/21/2003 5:07:55 PM EDT
Well argued, Monkeyman, but, based on the law, I disagree.
Monkeyman: "(C)omplying with the law as the law specifies"
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The law specifies that the tax depends on "the intention of the parties as gathered from the contract of sale and the attendant circumstances." (27CFR53.2(b)) If Tl511 went into the dealer's shop wanting a RRA AR, saw that the rifle was $800, but then noticed an add for complete lowers for $350 and complete uppers for $350, did the math and figured he could push in two pins instead of paying $100 for someone else to do it. He then asks the dealer for a complete upper and a complete lower, "here's $700." The dealer tells him, "he could not sell me both parts at once for the price he gave me. ..." If that was the case, a strong arguement could be made that it was the intent of the parties to transfer a complete rifle, regardless of how it came into the dealer's shop, or how it was leaving the shop.
My point is: if the dealer bought an upper and a lower as separate parts, all he has are separate parts.
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Yes, separate parts with legal significance if he assembles them and sells them complete (obviously, and I know you'd agree), But also if he sells them constituting a "knockdown condition." "attendant circumstances" is a vague concept and open to interpretation against the dealer in this case.
If he bought a rifle and separated the parts, the excise tax would already have been paid.
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Depending on his relationship with the manufacturer, most likely. Thus, this would be an expensive way to get spare parts. The analogies may help in understanding a situation but they are always different situations under different laws, and therefore they are irrelevent testimony in the courtroom, and not the best evidence for interpreting the law. BTW your speeding and turnpike analogies apply best to the buyer not having to pay tax when he completes the rifle having bought separate receiver assemblies, not to the dealer in this instance. I'm not sure "conspiracy" is the best term here for I haven't looked it up to see if someone can conspire to avoid the tax under the law. However, the nudge/wink situation we agree. As for the 3 days situation, in that it can be argued that it is the dealer's intent to sell a complete rifle, using 3 days to complete the sale, I refer again the the top line citing 27 CFR Sec. 53.2(b). Tax owed. Cheers, Otto
Link Posted: 5/21/2003 7:41:06 PM EDT
I'm buying that RRA! I got the upper last month, and then started looking around for the best deals on lowers. Well, it turns out, and month later, the same dealer also has the best deals on lowers. I never comitted to buying the lower from this dealer... it's just by chance. So, if I buy the parts from two separate dealers, that makes it all Ok? I buy the parts a month apart in time? I buy all the parts except the hinge pin? Ah, I dispair that our laws make no damn sense at all. Pete
Link Posted: 5/21/2003 7:57:55 PM EDT
Everyone makes a lot of sense. To let you all know what I am doing, I am buying an upper (at least I think so) from this dealer. He has the upper I want (and the lower for that matter). However, I found another vendor selling the lower for about the same amount. So, to avoid any perception of pretense I think I will go with 2 different vendors. By the way, I am getting the complete RRA lower for about $200 and the complete A4 (I think) upper for about $360 or so (hopefully-and still need carrier handle). Or possibly the A2 upper for around $380-90. Either way, it seems like a great gun for a good price, doesn't it?
Link Posted: 5/21/2003 8:26:20 PM EDT
Stinkeypete, its not up to me, but it sounds like your "attendant circumstances" are way out there. Go for it, especially if the prices are like Tl511's deal. I really think that the dealer has to be intimately involved with structuring a deal to buy a complete rifle from him, but avoiding the tax. Afterall (one thing that may not be clear in this thread) its the dealer in hot water for avoiding the tax; either with the manufacturer in violating the contract for resale of components or with the tax man. Cheers, Otto
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