Gun buyer asks to call it a "gift" to avoid taxes

C

Cossack

New member
I have an out-of-state buyer of a rifle I posted for sale on a forum (not on this site), who, after agreeing to buy, asked me to enclose a note with the rifle stating that it is a gift so that he does not have to pay his state sales tax when it goes through his FFL dealer.

I'm seeing red flags - please confirm or contradict my thinking here:

First of all, couldn't that be considered tax fraud, to which I don't want to be party?

Second of all, in the case of any legal dispute over the funds, couldn't it be a problem if i have claimed it was a "gift" anywhere along the line?

I can sympathize with his desire to avoid a sizeable chunk of sales tax, but I try to be cautious and do things by the book and according to my own ethical standards.

Let me know if I'm missing anything here in my thought process.
 
I agree with your thinking and would avoid going through that slippery slope.

Not certain what states are involved. If you have enough sales in buyer's state, you may be required to collect sales tax for that state. If there was a problem, couldn't you just hear the buyer show his receipt or cancelled check and say "I understood that the price INCLUDED sales tax. Most states go after the seller.

Not sure why his FFL would collect sales tax for a sale out of state. Maybe it is a "use tax."
 
Either he pays the taxes or the FFL has to pay them.

Do not engage in tax fraud, get caught and you're toast. Do it across a state line via common carrier and add Mail or Wire Fraud.
 
Bail. You don't need the potential tax/ mail fraud / conspiracy headaches and that's not the kind of person you want to do biz with. Bail.
 
When I lived in WA state the dealers always charged for a WA sales tax on the price of the gun whenever I used them for a transfer.

Now I'm in MT, where we have no sales tax, period. Those are the only two states I've purchased guns in.

I'm assuming the buyer's state is like WA concerning this issue.
 
I would not write any note. I have bought 2 or 3 firearms online (not private sale, on line stores and dealers) I paid them and had the guns shipped to my ffl dealer. He never knew how much I paid for it cause its not his concern. All I had to pay taxes on was the NICs and transfer fee. I have dealt with an ammo sales person online and he asked me to pay with paypal as a gift due to either paypal charges more or doesn't deal with ammo and guns. I did find out from paypal if you send it as a gift you dont have the protection or security of paying regular.
 
The consensus here backs my gut feeling. I actually told him I wasn't comfortable with the idea before I started this thread, but then got to thinking about the issue more and wanted more feedback. I'm not ready to walk/bail if he's not demanding a note and everything else is by the book, but I'm not going to write that note.

Thanks.
 
tynman said:
I would not write any note. I have bought 2 or 3 firearms online (not private sale, on line stores and dealers) I paid them and had the guns shipped to my ffl dealer. He never knew how much I paid for it cause its not his concern. All I had to pay taxes on was the NICs and transfer fee. I have dealt with an ammo sales person online and he asked me to pay with paypal as a gift due to either paypal charges more or doesn't deal with ammo and guns. I did find out from paypal if you send it as a gift you dont have the protection or security of paying regular.
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The main reason people will ask to be paid via Paypal gift is so that you assume the cost for any fees that may be incurred, rather than the seller. I've done the same thing, except when using eBay, and most of the time PayPal doesn't charge for "gifts" unless they go over a certain amount.
 
asked me to enclose a note with the rifle stating that it is a gift so that he does
not have to pay his state sales tax when it goes through his FFL dealer.
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Guys, that's tax fraud pure and simple.
Bad juju, big time.
 
"Gift" is a Paypal scam to defraud the seller and bilk him. It's a gift - therefore the "buyer" is off the hook for any renumeration. This is usually discovered after his financial instrument is found with insufficient funding but the goods already shipped.

As for the local FFL - he's not going along with it anyway.

I'd clearly tell the buyer he needs to either commit the funds and honor the sale or back out, with a 24 hour window. I would also openly note that in the thread so others will be aware.

"Gift" is usually some kind of unethical workaround. If it was really a gift you'd have it wrapped under the tree waiting. Complete strangers don't qualify unless it's a missionary outreach.
 
Lots of unanswered questions here. What state are you shipping to? An FFL is a federal license so how does he end up being an agent of the state to collect their sales tax. I can see where the state says the FFL needs to charge a tax for his service (he is a business) but collecting a tax on the sales price doesn't sound right. If we can find out what state the buyer is in then hopefully an FFL from that state will chime in and educate us.
As to the Paypal "gift" I thought that was a way to get around Paypal not wanting to be involved in firearm transactions. By gifting you aren't saying it is a payment for a firearm. May be against Paypal policy but I'm not sure that is against the law. Just a guess on my part, never used Paypal.
 
An Iowa experience

Now then, just speaking to my experiences in Iowa.
At most, the FFL's on my end have only charged tax on the transfer as he has not sold me anything, only did the transfer. Most times he doesn't even charge tax on the transfer. On my last purchase, my FFL charged me $10.00 for the transfer and 7% sales tax for the transfer. Now then, if I had the FFL actually pay for a firearm, then by rights, he has to tack on sales tax. ..... ;)

who, after agreeing to buy, asked me to enclose a note with the rifle stating that it is a gift so that he does not have to pay his state sales tax when it goes through his FFL dealer.
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Your call but by my measure, it was not part of the "deal" and personally would not do it. Now, if I want to go beyond the deal, that is my call. You are seeing a Red-Flag, so don't do it. You have kept your word and that is a far as it needs to go. ..... :rolleyes:

Be Safe !!!
 
The buyer can pay for a gun via PayPal against their policy of forbidding gun transactions, by calling his payment to you a 'Gift', instead of 'Payment for Goods or Services'. There are different payment fee structures for those, also.

The seller is being asked to declare the gun as a 'Gift', in order to avoid the buyer having to pay State sales tax, which is apparently exempt from tax under the laws of his state. Most states requires taxes be paid on all transactions conducted in the state, FFL transfers included.

Sell a used car to your neighbor, he pays tax to the state when he transfers the title to his name, based on the amount stated on the form by the seller. Here in Washington, that amount is checked against the fair market value and the buyer could end up paying tax on a $3200 car instead of the $600 car his title says he paid. I think the state requires a 50% minimum valuation/stated price ratio.

Never, ever say anything you sell to someone is a 'gift', for any reason, including taxes. You have no recourse against the buyer when his check bounces two weeks later. You gave it to him, right?

For all anyone knows, this is some phantom buyer trying a sting to collect some hefty fines from FFLs or internet vendors.
 
but collecting a tax on the sales price doesn't sound right
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But is required by law in the state of Washington. Nothing like paying shipping, transfer fee and sales tax on the out of state online purchase. One of the few things I don't miss since leaving there.

Jim
 
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