Sales and Use Tax

[Xringshooter]

Since I noticed it in one of the threads here I thought I'd chime in and try to set things straight. I'll try to make it as simple as possible.

PA Sales Tax:
1. If I, as a FFL, sell you something that my business purchased to be resold, I MUST charge you the appropriate sales tax. The sales tax is levied on the retail selling price which would include the shipping and handling charges and my profit margin.

2. If I, as a gunsmith, repair your gun, I MUST charge you the appropriate sales tax on the labor charge and parts to fix the gun, unless you provide me with the repair parts (then the sales tax is only on the labor involved).

PA Use Tax:
1. If I, as a business person buy something for use in my business (tools, bluing solution, computer, repair books, etc.) from a place that does not collect the PA sales tax (out of state, internet, etc.) I am obligated to pay PA a tax equal to the sales tax where I live (in my case 6%). This is the PA Use Tax. It was put in place to help businesses in PA compete with out of state and internet businesses (not my statement but from the PA Dept of Revenue).

2. If YOU, as a consumer, buy something from the internet (or a catalog) and the seller does not collect PA Sales Tax, YOU, the consumer, are obligated to pay the PA Dept of Revenue a tax equal to the sales tax where you live. This is the PA Use Tax. You can get full details on the Dept of Revenue web site.

3. If YOU, as a consumer, order something from the internet or a catalog that must come to me, a FFL, to be transferred (think PaFOA AR lower, a gun from Bud's Gun Shop, a gun from AIM Surplus, etc.) and the seller does not collect PA Sales Tax on the item, YOU, the consumer are obligated to pay the PA Use Tax. As the person doing the transfer, I AM NOT REQUIRED OR OBLIGATED TO COLLECT THE PA USE TAX FROM ANYONE. I am not even required or obligated to inform you about the Use Tax (I normally do though, nice guy that I am ). It is up to you and you alone to decide if you are going to pay it or not.

4. Personal sales (person to person not business to person) are non taxable (sales or use taxes). Interstate personal sales are also non taxable.

All that said however, when I do a PICS there is another form that goes to the PSP along with the Application/Record of Sale (handguns only). On it, I have to tell the PSP how many long arms and handguns I transferred, how many were non sales taxable and how many were sales taxable. I do not know if there would be a way the Dept of Revenue could get hold of and use the A/R S to see if people paid any Use Tax due. I also do not know if they could ask for my records to see if someone bought a gun and did not pay any Use Tax due.

I hope that this explains the difference in sales and use tax and who is and isn't obligated to do what.

[Zef_66]

Thanks for the clarification Ron! Very informative!

[Gun Bowanna]

Yes, the service fee you are charging is a taxable event.

[bronzdragon]

Excellent info, thanks for taking the time to explain it.

~r~

[schmol]

Pa can shove their "use tax" where the sun doesnt shine...just my opinion but thanks for the explanation.

[Ewussor]

Pa can shove their "use tax" where the sun doesnt shine...just my opinion but thanks for the explanation.

That was my attitude too, until 2008, when I had the pleasure of having a PA Dept. of Revenue auditor in my offices for an entire week. In the end, I owed them a bit over $5000 for the previous 3-1/2 years (which is as far back as they can go on this) and I've been paying Use Tax every month since.