96-144
Response October 15, 1996
Request
September 12, 1996
Dear XXXXX
As a Federal Firearms Licenced Dealer, I have some
questions regarding state sales tax.
Federal Law requires firearms shipped interstate to be sold through
FFLD's. One situation I have
encountered is a customer who locates an out of state firearm and sends the
seller his own money, needing me to
handle the transfer. My questions are:
1. Is
Utah state sales tax collected on the full purchase price of a transaction made
between two individuals in different states?
2. Is
Utah state sales tax collected on the transfer fee I would charge?
3. The
National Firearms Act firearms I sell (machine-guns) transfer with a federal
$200 tax stamp. Would a state sales tax on these constitute double taxation?
4. These
NFA firearms may be transferred to an individual. May the individual use his Utah state sales tax free regardless
whether the firearm is intended for business use (Law enforcement training) or
personal collection.
I need easily understood answers so that my
customers and I will be able to best comply with the state law. Thanks for your help.
Sincerely,
XXXXX
XXXXX
RE:
Advisory Opinion - Utah Sales and Use Tax
Dear XXXXX
We
received your letter regarding Utah sales tax as applied to interstate sales
and transfers of firearms.
Specifically, you inquired as to the state sales tax consequences in a
transaction involving you as a Federal Firearms Licensed Dealer making the
firearms transfer between a customer and an out-of-state firearms seller. We address the questions you gave us in
their respective order.
Question
1: Is Utah sales tax collected on the full purchase price of a transaction
made between two individuals in different states?
Answer
1: If Utah sales and use tax is due on a transaction, the tax is calculated
on the full purchase price. Items
purchased in Utah or delivered to customers in Utah are subject to Utah sales
and use tax.
Normally,
the vendor (or seller) is responsible for collecting sales tax from the buyer
in a sales transaction. If the vendor
is from out-of-state, but they have sufficient contact or “nexus” with Utah,
they still must collect the sales tax and remit it to the Tax Commission. If the vendor, however, is from out-of-state
and has little or no contact with Utah (“no nexus”), then the vendor is not
responsible for collecting Utah sales tax from the buyer. In these types of transactions, the buyer is
responsible for paying the sales tax directly to the Tax Commission. (See enclosed publication for a list of
activities that create sufficient contact or “nexus” with Utah for sales tax
purposes.) If both the vendor and the
buyer are from out-of-state, Utah sales and use tax do not apply.
As
a dealer, if you are acting as an agent to arrange delivery of firearms to
customers in Utah and to collect the sales price on behalf of the firearms
vendor, you must obtain a sales tax license and collect and report the sales
tax to the Tax Commission. If you
purchase firearms for resale, you may purchase them tax free under the resale
exemption. Those items purchased for
resale are subject to sales and use tax when they are subsequently resold in
Utah.
Question
2: Is Utah state sales tax collected on the transfer fee I would charge?
Answer
2: The transfer charge is a non-taxable service charge. However, the charge must be separately
stated on the bill or invoice.
Otherwise, the entire amount for the charge is taxable.
Question
3: The National Firearms Act firearms I sell (machine-guns) transfer with a
federal $200 tax stamp. Would a state
sales tax on these constitute double taxation?
Answer
3: Utah law imposes sales and use tax on the purchase price of all tangible
personal property sold in the state.
However, “[f]ederal excise tax involved in a transaction which is
subject to sales or use tax is exempt from sales and use tax provided the
federal tax is separately stated on the invoice or sales ticket and collected
from the purchaser.” Utah Admin.
Code R865-19S-52 (1996)(emphasis added); and Utah Code Ann. §
59-12-103(15)(Supp. 1996). Therefore,
the federal tax required in the transfer of firearms you sell must be stated
separately on the bill or invoice to qualify for the Utah sales and use tax
exemption.
Question
4: These NFA firearms may be transferred to an individual. May the individual use his Utah sales tax
free regardless whether the firearm is intended for business use (Law
enforcement training) or personal collection?
Answer
4: The sale is not tax free unless the purchaser qualifies for some
exemption. For instance, if a city
police department purchases firearms, the transaction is non-taxable because a
government entity is exempt from sales or use tax (see Utah Code Ann. §
59-12-104(3)(1996)). However, if a
police officer buys a gun for his own use at work or elsewhere, the purchase is
taxable because the officer, as an individual, does not qualify for the
exemption.
From
your letter, it is difficult to ascertain whether or not you encounter other
types of firearms transactions. If you
do, you may have other tax liabilities which we have not addressed in this
letter. Please contact us again if have
further questions.
For
the Commission,
Alice
Shearer,
Commissioner