Posted: 1/26/2009 3:07:47 PM EDT
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I had a firearm transfer I was using Harder Auto Parts for. Richard called today after the gun was shipped to tell me the fee was changing from the agreed on $20. He said there would be tax charged on sale price of the gun and transfer. The total after tax would be $54.50, he said tax will be charged on all transfers from an FFL dealer.
Again he did not inform me of the change until the gun had already shipped. After 6 years of firearms transfers and auto part purchases Dick has lost my business. On a positive note a big +1 for Mike at Paladin Firearms for going the extra mile and getting my gun back from the USPS. |
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In his defense he just found out about this and is calling his customers to let them know ,he should give those who are waiting on deliveries a break on this though.sucks I wouldn't have an issue if he would have gave a break to those with their gun already on the way. But the way he said it to me, if you can't stop the shipping then you have to pay the added costs. If I wanted to pay $50 for a transfer I would go to MichiGun, it's one block from my house. |
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Michigan has been trying to forge agreements with states to collect Michigan's sales tax on online purchases. However I'm not real sure as to what's going on here and I would like to know. Fact is I know Dick......Richard Harder that is! And I don't think he would shaft you.
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How is there tax on FFL transfers?
When an FFL signs the gun into their log, does it become their property? When they transfer the firearm to you, is it basically considered a sale, even though technically you paid for it out of state or whatever. This isn't a service? |
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He's just obeying the law. If he gets audited, he will be liable for all of the back tax he hasn't collected for many years and he'll be bankrupt. Should he really be expected to pay your tax? No but you don't change the price when a deal has been made. He should have done his homework before agreeing to a price, not attempt to change it at the point of no return. |
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He's just obeying the law. If he gets audited, he will be liable for all of the back tax he hasn't collected for many years and he'll be bankrupt. Should he really be expected to pay your tax? Ok. Maybe I am about to learn something. How is it the responsibility of an FFL transferring a firearm to collect sales tax? If the sale is from a business outside of MI isn't it the buyer who is supposed to claim the use tax? How does the local FFL know what to charge for the tax? Does the out of state FFL have to put the actual sale price on a packing slip? I guess I would understand it more if the local FFL actually placed the order for you and collected the purchase price plus fee plus sales tax but all they are doing is a transfer of something you already paid for. I never heard of local FFLs charging sales tax on transfers until recently. ETA: I don't expect a local FFL to pay any tax on the sale. That should be the responsibility of the buyer or the seller...the transferring FFL is not the buyer or the seller. |
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In his defense he just found out about this and is calling his customers to let them know ,he should give those who are waiting on deliveries a break on this though.sucks Agree,If he admittedly "Just found out about this" he should absorb the loss himself. Really this a bit strange and IMHO terrible business practice. Is he charging tax on the Transfer as a "service" or is he charging tax on the "item"? If it is on the item, he is out of line, there was no actual "Sale" between them. I had a guy try and pull this BS from a sale from gunbroker. Tried to charge "Me" out of state sales tax on a $10,000.00 gun( HK PSG-1) I was transferring for the actual buyer. 
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In his defense he just found out about this and is calling his customers to let them know ,he should give those who are waiting on deliveries a break on this though.sucks Agree,If he admittedly "Just found out about this" he should absorb the loss himself. Really this a bit strange and IMHO terrible business practice. Is he charging tax on the Transfer as a "service" or is he charging tax on the "item"? If it is on the item, he is out of line, there was no actual "Sale" between them. I had a guy try and pull this BS from a sale from gunbroker. Tried to charge "Me" out of state sales tax on a $10,000.00 gun( HK PSG-1) I was transferring for the actual buyer. Unfortunately I have heard that Michigan mandates sales tax to be collected. Thats why he just found out. Its something new. I am really not sure how this is supposed to be regulated because who is to say how much a gun may cost persay. I think if its peer to peer you dont charge tax. When its a merchant I think they collect. Idk. Im speculating. |
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I have done about 20 transfers with Richard. I have asked him about this in the past he told me " he can't charge tax because he does not know how much I paid for the gun". I am not sure what changed but I will be calling him tomorrow morning.
I can't see how he can charge tax unless he know the price I paid because of a receipt in the box if that is the case I will make sure there is no receipt sent just a packing list. I was always under the impression the state can come after you if they find out you didn't pay sales tax but they can't go after him since he didn't sell me the gun unless you bought the gun from him through a distributor. Like I said he can't charge tax if he has no proof of purchase price. |
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In his defense he just found out about this and is calling his customers to let them know ,he should give those who are waiting on deliveries a break on this though.sucks Agree,If he admittedly "Just found out about this" he should absorb the loss himself. Really this a bit strange and IMHO terrible business practice. Is he charging tax on the Transfer as a "service" or is he charging tax on the "item"? If it is on the item, he is out of line, there was no actual "Sale" between them. I had a guy try and pull this BS from a sale from gunbroker. Tried to charge "Me" out of state sales tax on a $10,000.00 gun( HK PSG-1) I was transferring for the actual buyer. Tax is being charged on the item and service. |
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In his defense he just found out about this and is calling his customers to let them know ,he should give those who are waiting on deliveries a break on this though.sucks Agree,If he admittedly "Just found out about this" he should absorb the loss himself. Really this a bit strange and IMHO terrible business practice. Is he charging tax on the Transfer as a "service" or is he charging tax on the "item"? If it is on the item, he is out of line, there was no actual "Sale" between them. I had a guy try and pull this BS from a sale from gunbroker. Tried to charge "Me" out of state sales tax on a $10,000.00 gun( HK PSG-1) I was transferring for the actual buyer. You really need to contact the Michigan Dept of Treasury to get their ruling on this before you say that Harder was wrong. He isn't. |
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In his defense he just found out about this and is calling his customers to let them know ,he should give those who are waiting on deliveries a break on this though.sucks Agree,If he admittedly "Just found out about this" he should absorb the loss himself. Really this a bit strange and IMHO terrible business practice. Is he charging tax on the Transfer as a "service" or is he charging tax on the "item"? If it is on the item, he is out of line, there was no actual "Sale" between them. I had a guy try and pull this BS from a sale from gunbroker. Tried to charge "Me" out of state sales tax on a $10,000.00 gun( HK PSG-1) I was transferring for the actual buyer. Tax is being charged on the item and service. "Use tax is required by law when a person purchases a good from out of state and the retailer hasn't charged sales tax in their jurisdiction." The above was taken from the Mich.gov site. So who is to say the original seller hasn't included the tax in their price? So now the Licensee in Michigan assumes the tax has not been paid? This is going to cause a Cluster Fk of 2 sales taxes being collected? Right? This is as F'ed up as a football bat. Calling MichMan and Dutch Pilot!!!!! Over |
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So it seems as though there are a lot of MI FFL's that have not been handling sales/use tax collection properly on out of state transfer for many, many years now.
If the state audits them and they have to pay, where does that leave them? Stuck with the tax bill? Chasing down all their transfer customers to collect "back taxes"? What about those of us that actually did remit use tax on our annual state tax returns? If this has been known about for many years now, why is it just becoming an issue now? The letter from the MI Dept. of Treasury that is posted on the migunowners thread that says FFL's must collect sales/use tax at time of transfer is almost 3 years old and references a bulletin that is 10 years old. |
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I don't think the federal government ever lifted the ban on taxation of online sales so as to build and foster an electronic economy. Any actions by the states to collect prohibited taxes are contrary to the intent of the federal ban.
On the other side of the argument the states and in fact brick and mortar businesses argue the fed law has hurt their businesses and has caused revenue losses to the states in lost taxation. This may not be decided until either one or both of these economies collapse due to the actions of the other, and I'm being facetious? Actionable? |
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So it seems as though there are a lot of MI FFL's that have not been handling sales/use tax collection properly on out of state transfer for many, many years now. If the state audits them and they have to pay, where does that leave them? Stuck with the tax bill? Chasing down all their transfer customers to collect "back taxes"? What about those of us that actually did remit use tax on our annual state tax returns? If this has been known about for many years now, why is it just becoming an issue now? The letter from the MI Dept. of Treasury that is posted on the migunowners thread that says FFL's must collect sales/use tax at time of transfer is almost 3 years old and references a bulletin that is 10 years old. It's been the law for a long time. I'm not sure how long. Many dealers just aren't aware of the States ruling or they think they can get away with it. I do know of two FFLs who did a lot of transfer who were audited a few years ago and the State assessed the tax due using a blue book for values. Both of those dealers were bankrupted as a result. Regardless of where a buyers money was sent, the actual legal purchase occurs where the form 4473 is completed. There is no way to dispute that. You can't legally buy a gun from out of State and have it shipped to you. That's why the State demands that Michigan dealers collect and pay that 6%. We do not benefit from it in any way. It's really a pain in the ass, but without a valid Michigan Sales Tax license, you can't have an FFL. |
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Its just another way for the state to collect. They look at it as another way to get out of paying. If you buy from a local dealer you pay tax so you go online to buy without tax. They are due tax and will get it. They will get it the easiest way out of the dealer. |
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Its just another way for the state to collect. They look at it as another way to get out of paying. If you buy from a local dealer you pay tax so you go online to buy without tax. They are due tax and will get it. They will get it the easiest way out of the dealer. I don't think that's totally true, paying taxes is small beans compared to some of the markup seen in most gun stores. I honestly wasn't aware of this until this post, and I have had many firearms transferred via internet sales. If I can get it used cheaper on the net I will, if I have to pay taxes and it puts it over the cost of buying it from a local dealer I'll deal with a dealer. I've since limited my purchases to in-state FTF sale for the ease of transaction. |
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Quoted: the State assessed the tax due using a blue book for values.
Is that how the dealers are now going to do it if a bill of sale is not provided with the gun when they receive it? I'm sure that's up to the individual dealer, but how is any one aside from the actual buyer and seller really know what was paid for the firearm being transferred? |
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Use tax is paid by purchaser. FFL that just transfers is not purchaser.
FFL entry of firearm into bound book does not constitute a sale. A transfer is not a sale per se. When FFL figures his sales tax he takes what he sold item for and pays tax on sale price. No sale, no tax obligation incurred by FFL. When FFL transfers for x dollars, he renders a service, not a sale of goods. No sales tax incurred. When purchaser buys out of state, purchaser is responsible for either sales or use tax payment. When Michigan purchaser fills out Michigan return, there is also a slaes/use tax return to be filed by purchaser, not FFL. If FFL collects tax, it must be remitted to state on use/sales tax return of FFL. Tax collected should be based on sales, not transfers lacking sale information. |
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Quoted: the State assessed the tax due using a blue book for values.
Is that how the dealers are now going to do it if a bill of sale is not provided with the gun when they receive it? I'm sure that's up to the individual dealer, but how is any one aside from the actual buyer and seller really know what was paid for the firearm being transferred? I require a bill of sale from the shipper. No sales slip=no transfer. |
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Use tax is paid by purchaser. FFL that just transfers is not purchaser. FFL entry of firearm into bound book does not constitute a sale. A transfer is not a sale per se. When FFL figures his sales tax he takes what he sold item for and pays tax on sale price. No sale, no tax obligation incurred by FFL. When FFL transfers for x dollars, he renders a service, not a sale of goods. No sales tax incurred. When purchaser buys out of state, purchaser is responsible for either sales or use tax payment. When Michigan purchaser fills out Michigan return, there is also a slaes/use tax return to be filed by purchaser, not FFL. If FFL collects tax, it must be remitted to state on use/sales tax return of FFL. Tax collected should be based on sales, not transfers lacking sale information. Are you a tax attorney? Are you employed by the Michigan Dept of Revenue? I've consulted with both and they do not agree with your assessment, so I'm wondering what it's based on? I would like to believe that you are correct, because all of this sales tax collecting and paying is a huge pain in the ass for me, but I must do it to stay in business. The experts I have talked to disagree with your view. |
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Use tax is paid by purchaser. FFL that just transfers is not purchaser. FFL entry of firearm into bound book does not constitute a sale. A transfer is not a sale per se. When FFL figures his sales tax he takes what he sold item for and pays tax on sale price. No sale, no tax obligation incurred by FFL. When FFL transfers for x dollars, he renders a service, not a sale of goods. No sales tax incurred. When purchaser buys out of state, purchaser is responsible for either sales or use tax payment. When Michigan purchaser fills out Michigan return, there is also a slaes/use tax return to be filed by purchaser, not FFL. If FFL collects tax, it must be remitted to state on use/sales tax return of FFL. Tax collected should be based on sales, not transfers lacking sale information. In my earlier post I believed this as well. However, I now see that this is real after anotherlefty posted the link showing the letter from the state of Michigan. The state seems to believe that the transferring FFL is an "agent of the seller" and since they have a business presence in Michigan they are obligated to collect the tax. I don't like it but that's how the state see it. |
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Use tax is paid by purchaser. FFL that just transfers is not purchaser. FFL entry of firearm into bound book does not constitute a sale. A transfer is not a sale per se. When FFL figures his sales tax he takes what he sold item for and pays tax on sale price. No sale, no tax obligation incurred by FFL. When FFL transfers for x dollars, he renders a service, not a sale of goods. No sales tax incurred. When purchaser buys out of state, purchaser is responsible for either sales or use tax payment. When Michigan purchaser fills out Michigan return, there is also a slaes/use tax return to be filed by purchaser, not FFL. If FFL collects tax, it must be remitted to state on use/sales tax return of FFL. Tax collected should be based on sales, not transfers lacking sale information. Are you a tax attorney? Are you employed by the Michigan Dept of Revenue? I've consulted with both and they do not agree with your assessment, so I'm wondering what it's based on? I would like to believe that you are correct, because all of this sales tax collecting and paying is a huge pain in the ass for me, but I must do it to stay in business. The experts I have talked to disagree with your view. Yes, He is an Attorney! |
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Hell we have had the top Michigan State Police Agency tell us numerous times on different issues what the law is and they have been proven to be wrong and myself and or MichMan1 aka Kerry have been RIGHT. Last time I did a rough check we were right 4 times to the states 0.
Just because some state official said something is law does not mean they are correct in their assertion. The only way we can really find out is to challenge that law in court and even that's not a guarantee. Perhaps there will be a time and place for that. For the time being we'll have to write some letters on the subject with a legal opinion attached and ask for a clarification. I guess you have to do what you think is right. After that you guys can request your tax payments be refunded to you! |
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When a dealer doing a transfer for me asks for sales tax I give them the 6% and don't add it to the tax due on the annual income tax.
When a dealer doing a transfer for me does not ask for sales tax, I add it to the tax due on the annual income tax. Net result in both cases is sales tax paid by me. No whining. MHO, YMMV, etc. |
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Well, looks like we have some interest here.
OK since the link on page one does not work, I fooled around and got this one http://www.google.com/search?q=Michigan%27s+Use+Tax+%28Remote+Sales+Tax%29&rls=com.microsoft:en-us:IE-SearchBox&ie=UTF-8&oe=UTF-8&sourceid=ie7&rlz=1I7ADBR_en Click on the first link from the above site called TREASURY - Michigan's Use Tax (Remote Sales Tax). This one says Use tax of 6 percent is due on the total price (including shipping and handling charges) of all taxable items brought into Michigan, purchases by mail from out-of-state retailers, and purchases made on the Internet. I fail to see how this impacts an FFL transfer. An FFL transferring is not a purchaser by mail, or a purchaser by the internet. The purchaser, not the FFL, must file a use tax return http://www.michigan.gov/documents/48f_2907_7.pdf Beginning with tax year 1999, Michigan added a line on the personal income tax form for taxpayers to include use tax due on remote sales to make it easier for Michigan income tax filers to pay use tax that they may owe. Taxpayers have the option of reporting actual use tax due or using a table provided in the income tax form that estimates use tax liability based on income. Now, turning to the argument that the FFL is an "Agent of the seller" and therefore, must collect and remit the sales or use tax to the State of Michigan, a few points may be observed. Mail order and Internet firms that do not have a nexus with a state are not required to collect sales taxes from purchasers of that state. Nexus is defined as a minimum physical presence or link to a state that would require a business to collect and be subject to a state's tax system. The case of Quill v. North Dakota, 1992 stated that it is a violation of the Commerce Clause to force businesses that do not have nexus to collect tax because of the undue burden of collection. This case caused the State to rethink its position. The Treasury now claims the FFL is an agent of the seller and since the FFL has a presence in Michigan the FFL is obligated to collect and remit the tax as if it was the seller. Is the FFL really an agent of the seller? How was this agency created? When? What is the agent paid for the agency? What duties does the principal owe to the agent? To ask these questions is to answer them. There is no agency. Even if there was an agency, when the FFL agent has acted within the scope of the actual authority given, the principal must indemnify the agent for payments made during the course of the relationship whether the expenditure was expressly authorized or merely necessary in promoting the principal’s business. So even under this agency theory, the FFL should have the right to demand the seller reimburse the FFL for at least the cost of collecting the sales tax and effecting the transfer. This would be news to the wholesaler. See how absurd the whole agency thing is? But others have noted that they have talked to experts and professionals and yes even Revenue agents with the state and have been assured the FFL is an agent of the seller. Dare we impugn the character of Michigan Treasury officals? While early decisions such as Michigan National Bank, Petitioner v Michigan Department of Treasury, Respondent, MTT Docket No. 49055; 1981 Mich. Tax LEXIS 9, December 18, 1981, might support the argument Treasury is attempting to make, more recent bulletins seem to sing a different story. See Revenue Administrative Bulletin 1999-1, STATE OF MICHIGAN –– DEPARTMENT OF TREASURY, 1999 Mich. Tax LEXIS 47; Mich. Rev. Admin. Bull. 1999-1, May 12, 1999. I can email both of these if any likes for their "tax attorney" to review. I have already provided what I consider the law, but here are some resources that others can obtain and review to form their own opinions on the subject. I would likewise be happy to review the documents and resources upon which others rely. |
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Well, now I know that you ARE an attorney and not just a key-jockey typing with no framework of reference. Good.
I do not have this documented, but the State has ruled that the actual point of purchase is where the form 4473 is completed and that is what they base our responsibility for sales tax collection. Right or wrong, I don't have the resources to fight them should I be audited and I"M not going to pay that tax out of my pocket. |
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Well, now I know that you ARE an attorney and not just a key-jockey typing with no framework of reference. Good. I do not have this documented, but the State has ruled that the actual point of purchase is where the form 4473 is completed and that is what they base our responsibility for sales tax collection. Right or wrong, I don't have the resources to fight them should I be audited and I"M not going to pay that tax out of my pocket. Link? Given a choice between right or wrong I like to side with doing what is right. |
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I don't think the federal government ever lifted the ban on taxation of online sales so as to build and foster an electronic economy. Any actions by the states to collect prohibited taxes are contrary to the intent of the federal ban. On the other side of the argument the states and in fact brick and mortar businesses argue the fed law has hurt their businesses and has caused revenue losses to the states in lost taxation. This may not be decided until either one or both of these economies collapse due to the actions of the other, and I'm being facetious? Actionable? Match the competition maybe. Instead of whining. Offer lower sales tax. |
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Well, now I know that you ARE an attorney and not just a key-jockey typing with no framework of reference. Good. You do realize that Michman1 and Bustoff are the individuals that have been working like a 4 balled monkey in a whore house, to bring justice to the PEOPLE in Great State of Michigan? |
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I don't think the federal government ever lifted the ban on taxation of online sales so as to build and foster an electronic economy. Any actions by the states to collect prohibited taxes are contrary to the intent of the federal ban. On the other side of the argument the states and in fact brick and mortar businesses argue the fed law has hurt their businesses and has caused revenue losses to the states in lost taxation. This may not be decided until either one or both of these economies collapse due to the actions of the other, and I'm being facetious? Actionable? Match the competition maybe. Instead of whining. Offer lower sales tax. He IS matching the competition by charging sales tax . |
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Well, now I know that you ARE an attorney and not just a key-jockey typing with no framework of reference. Good. You do realize that Michman1 and Bustoff are the individuals that have been working like a 4 balled monkey in a whore house, to bring justice to the PEOPLE in Great State of Michigan? Maybe it has to do with the arfcom bylaw about how post count somehow translates to intelligence. I thought anything under 1,000 posts equated to key-jockey myself. I admit, I was a little shocked myself to find out that someone with only 300 or so posts could actually be an attorney. I figured one would need at least 10,000+ posts to reach attorney status.  
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Well, now I know that you ARE an attorney and not just a key-jockey typing with no framework of reference. Good. You do realize that Michman1 and Bustoff are the individuals that have been working like a 4 balled monkey in a whore house, to bring justice to the PEOPLE in Great State of Michigan? I do know Bustoff, but no, I didn't know that MichMan1 was an attorney. That's why I asked the question. Now that I know that he IS na attorney, I will value his opinion a little more that before I knew that. I'm not going to change my policy or opinion on the tax issue, though. |
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Kerry MichMan1 is the author of the legal opinion we used to submit the question to State Rep Leon Drolet and on to the AG who authored the Machine Gun Opinion OAG 7183. Kerry is also a constitutional law scholar if I may say so. We are blessed to have such a man in our community. Most attorneys would not put in 1/10th the time and effort at his own cost to advance the pro gun movement.
I thank you for your involvement. |
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Kerry MichMan1 is the author of the legal opinion we used to submit the question to State Rep Leon Drolet and on to the AG who authored the Machine Gun Opinion OAG 7183. Kerry is also a constitutional law scholar if I may say so. We are blessed to have such a man in our community. Most attorneys would not put in 1/10th the time and effort at his own cost to advance the pro gun movement. I thank you for your involvement. BustOff, well said about MichMan1 |
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Kerry MichMan1 is the author of the legal opinion we used to submit the question to State Rep Leon Drolet and on to the AG who authored the Machine Gun Opinion OAG 7183. Kerry is also a constitutional law scholar if I may say so. We are blessed to have such a man in our community. Most attorneys would not put in 1/10th the time and effort at his own cost to advance the pro gun movement. Yeah Well,......Anotherlefty is a snappy dresser and has bionic legs. So take that, you big legal minds with your fancy law degrees and 1000+ post count. 
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After talking to Richard Harder it's clear he is trying to protect his business which he should be doing. He runs a successful auto parts store and does not need the state after him for taxes.
That being said who knows of another FFL reasonable around that area or in the eastpointe area doing transfers tax free for a reasonable amount under $30 ??? I still don't understand the letter posted on migunowners. It looks more like if you ask should I be charging tax to the tax collector he will say yes even if you shouldn't. They want their money!! |