Here's the latest "revenue enhancement" technique used in Kentucky, particularly in cities near state borders:

A Revenue Cabinet (state IRS) person visits a gun dealer, and asks to see their transfer book.  Their sole purpose is to obtain names and contact information of KY residents taking delivery of a handgun sold out-of-state, then using this information to notify those people (just happened to me) that they owe KY use tax if the out-of-state dealer did not pay any collected sales tax to the state of Kentucky.

1. Has anyone had this happen to them, and how was it resolved?

2. More importantly, is this a legal action by the KY Revenue Cabinet?  Is there any privacy pertaining to FFL records (I know ATF has access) or can anyone visit a dealer and browse the books?

This is the first time I have heard of this happening anywhere. Ask the NRA or your state Rifle Association.

My understanding of this is that the bound book is NOT public information, but can be reviewed by the ATF as part of their aduits and for tracking a gun that has been used in a crime, or by local LE in the investigation of a crime.
The IRS, or state tax collectors have NO need to review the bound book for any purpose, as they have no jurisdiction in the firearms area, except to collect sales tax at the store, as indicated by the store's income.
If the store didn't sell you the gun, how can they collect the tax on it?

That is the point; the store doesn't collect tax or isn't legally required to collect tax. But you are supposed to send a check to the state for the tax owed on goods you bought out of state if the seller doesn't collect the tax either.

Damn, I need to talk to my FFL; I could be facing a rather large tax liability if they start doing this in Illinois.

But the bound book is not for tax collection.
That is what the register reciepts are for.
Do you pay a tax on the transfer fee? Or is it a base charge fee?
The problem that this presents is huge.
What's next? Software to track your online purchases?
The bound book serves to ONLY to document the transfers of a gunstore, not as a tax record.
As a matter of fact, the ONLY way that the tax department can ensure that they "get their's" is to make the dealer submit copies of invoices.
I've never seen a bound book that tracks the sale price.
Hell, we don't do an invoice on transfers.
We have an in house form that is used to document the inbound FFL, and the payment of the transfer fee, state call fee and shipping if sending out a firearm.
There is no way for the state to glean any tax information from it.
On an inbound firearm, when we recieve it, we log it in, and then do the state and federal form, and transfer the gun.
No invoice on the sale, no tax records.
IMHO, what they are doing is illegal, and might be a violation of federal law, since they have no buisness reviewing firearm records.

I'm not so sure I paid more than $2 for that preban AR....I swear.

4.5% of $2 = .09 cents.

Yep, sounds about right. [rolleyes]

You need to contact the NRA, this is a huge invasion of privacy. This could open the door to other actions by that government. Whats next?