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Interstate transfers of firearms
Washington residents sometimes purchase firearms from out-of-state persons. Because of state and federal laws, a firearm purchased by a Washington resident must be sent from the out-of state person to a federally licensed gun store located in Washington State.
Once the Washington gun dealer has conducted the required background checks the dealer will transfer the firearm to the Washington resident.
The following information provides instructions for the taxability of such transfers.
Is the transfer of a firearm subject to sales tax?
In an interstate transfer of firearms the Washington gun dealer is required to collect retail sales tax from the Washington resident on the purchase price of the firearm. The retail sales tax is collected from the Washington customer at the time the customer takes possession of the firearm. Sales tax is collected on the total selling price, including freight and/or delivery charges and other amounts added, such a an amount for insurance coverage.
However, sales tax does not apply on the service charge for processing the required Federal and State forms and contacting the National Instant Criminal Background Check System (NICS) when the fee is stated separately from the selling price of the firearm and freight and/or delivery charges, insurance, etc.
How are these transactions reported on the Excise Tax Return?
When completing the Excise Tax Return the gross selling price of the firearm is reported under the retailing business and occupation (B&O) tax classification and the retail sales tax lines. The dealer is allowed a deduction under the retailing B&O tax classification for “consignment sales.”
The fee received (when separately stated on the purchase invoice) for the transfer service is reported under the service and other activities B&O tax classification. Sales tax is not collected on this transaction.
Applicable law
RCW 82.12.040(1) states:
Every person who maintains in this state a place of business or a stock of goods, or engages in business activities within this state, shall obtain from the department a certificate of registration, and shall, at the time of making sales of tangible personal property, extended warranties, or sales of any service defined as a retail sale in RCW 82.04.050 (2)(a) or (3)(a), or making transfers of either possession or title, or both, of tangible personal property for use in this state, collect from the purchasers or transferees the tax imposed under this chapter. The tax to be collected under this section shall be in an amount equal to the purchase price multiplied by the rate in effect for the retail sales tax under RCW 82.08.020. (Emphasis added).
