Washington: Sales Tax Requirements on Firearms Transfers
- Dec 9, 2014 | Gail Cole
On November 4, 2014, voters in Washington State approved Initiative 594. As a result, background checks are now required on the transfer of “virtually all firearms.” Prior to the passage of I-594, background checks were only required on direct purchases from licensed firearms dealers.
Whether they voted for or against I-594, firearms dealers must now comply with all aspects of the new regulations. To facilitate compliance, the Washington Department of Revenue has issued a special notice on the tax implications of firearms transfers. It focuses on sales and use tax.
Effective December 4, 2014:
- Firearms dealers in Washington are no longer required to collect sales or use tax from the transferee on firearms transfers between unlicensed persons (applies to both in-state and interstate transfers).
- Firearms dealers in Washington must still collect sales or use tax from the transferee on interstate firearms transfers by a licensed dealer.
In-state firearms dealers involved “in the transfer of a firearm from an out-of-state licensed firearms dealer to an unlicensed person” in Washington must collect use tax from the transferee. The use tax is generally based on the purchase price paid by the transferee to the seller, which typically includes freight, delivery and insurance charges. If the purchase price is unknown, the in-state firearms dealer must base the use tax amount on the current fair market value, which is subject to audit verification.
In the event the firearms dealer does not collect use tax in the scenario described above, the buyer is responsible for remitting use tax to the Department of Revenue, along with either a Consumer Use Tax Return or an Excise Tax Return.
Charges for background checks are not subject to sales or use tax.
Additional information, including B&O tax requirements and documentation needed to substantiate the transfer of firearms, is available on the special notice.
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