Ok I always ask noob questions ...mostly because I'm a noob. But I see new guys coming on all the time so hopefully the answers help them too. And sorry if this is covered elsewhere.

 

That being said: when I see a store posts 3.5% tax ...why is it not 7%? Are they kicking in half for me? Also what is taxed? The cost of the gun, plus the NICS, plus the transfer? Or is it just the cost of the gun that's taxed?

 

Thanks for looking guys!

 

 

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3.5% sales tax is charged in areas designated as Urban Enterprise Zones.

The half off tax is for stimulating business in those areas.

 

When doing a transfer at a dealer you pay the tax on the NICS and maybe on the Transfer fee as well , depends on dealer.

Beware of unscrupulous dealers who charge you tax on the price of a gun when doing transfer for something bought online.

 

If the dealer is selling you the gun from their retail location from their stock that doesn't involve a transfer then full tax on the price of the gun plus NICS,,,,etc,,,,

Hey thanks for the lesson.

 

Ok so if I were buying a gun online that cost $100 (not that I would but I'm trying to keep the math easy) and the FFL in jersey that I have it shipped to charges $10 for transfer and $10 for NICS, I could expect to pay: $120.70 - not $124.20, right??

 

 

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you pay him for services rendered $20 plus 1.40 or $21.40. You pay the tax ($7.00) on the out of state purchase ($100) on your state income tax return.

If you re buying a gun from a store in an Urban Enterprise Zone you pay 3.5% on the gun plus nics plus fee.

124 and change as you described it.

 

 

If you buy online and transfer through dealer you pay tax for the service (transfer fee) and tax on NICS ( may be 3.5% if dealer is in an Urban Enterprise Zone) and then pay the rest of the tax on your state income return which you have to on any out of state purchases which will be 7% ) as TBill described above.

 

Cheapest option for you would be to buy a gun from a store in an Urban Enterprise Zone.

Maybe one of the FFLs on here can confirm but I was under the impression that NICS was a fee, not a service and therefore not subject to sales tax.

 

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When I purchased my firearm recently from Aim Surplus I was charged no tax from Aim but 7% from NJ at the dealer then I had to pay for NICS. The dealer told me that he would be charged state tax for the transfer.

 The dealer told me that he would be charged state tax for the transfer.

The dealer either fibbed to you or cheated you, you choose!

You're responsible for reporting the Use Tax for your out-of-state purchases on your annual NJ Income Tax return, Form NJ-1040

 

You should also not be charged NJ sales tax on the NICS call (a legitimate taxable item) because the FFL already paid the sales tax to the state on it.

Tell him to check the phone bill where he gets charged for those NICS calls and he'll see that he paid the sales tax on it already.

 

Now if he wants to bump the fee up to $16.05 (or more) to cover his added expense and make it a non-taxable item, that's certainly his option.

But we should NOT be double-feeding the greedy beast that is the NJ Division of Taxation.

When I purchased my firearm recently from Aim Surplus I was charged no tax from Aim but 7% from NJ at the dealer then I had to pay for NICS. The dealer told me that he would be charged state tax for the transfer.

You pay no tax to AIM since you're an out of state customer and they do not have a retail store, offices, or warehouses in NJ AFAIK. You pay a "use tax" of 7% on your purchase when you file your NJ taxes.

 

NICS is $15. That is taxed at 7%, (I'm not sure about urban enterprise zone)

 

Transfer charge is a service and is subject to tax. Either 7%, or 3.5% if transfer is done in a UEZ.

You must pay sales tax to a NJ Dealer when paying them directly for your item. You must pay a Use Tax on your Income Tax for purchases paid to an Out-of-State Dealer. The NJ Dealer should charge you sales tax on the Transfer Fees. The NJ Dealer is charged $15.00 for each NICS check. They may pass this fee onto the customer for any amount. This could be for free, $15.00, $16.05, or I have even heard of $25.00. The usual amount is $15.00. As stated above, 7% is the norm unless the retailer is in a depressed zone, then it is 3.5%.

 

EXAMPLE 1, Purchase from a NJ Dealer:

$840.00 for a Firearm

$ 15.00 for NICS

$ 58.80 for Sales Tax (7% of $840.00)

------------------------------------

$913.80 Total Cost

 

EXAMPLE 2, Purchase from an Out-of-State Dealer:

$800.00 for a Firearm

$ 40.00 for Transfer Fee

$ 15.00 for NICS

$  2.80 for Sales Tax (7% of $40.00)

$ 56.00 for Use Tax (7% of $800.00 reported on Income Tax)

------------------------------------

$913.80 Total Cost

You must pay sales tax to a NJ Dealer when paying them directly for your item. You must pay a Use Tax on your Income Tax for purchases paid to an Out-of-State Dealer. The NJ Dealer should charge you sales tax on the Transfer Fees. The NJ Dealer is charged $15.00 for each NICS check. They may pass this fee onto the customer for any amount. This could be for free, $15.00, $16.05, or I have even heard of $25.00. The usual amount is $15.00. As stated above, 7% is the norm unless the retailer is in a depressed zone, then it is 3.5%.

 

EXAMPLE 1, Purchase from a NJ Dealer:

$840.00 for a Firearm

$ 15.00 for NICS

$ 58.80 for Sales Tax (7% of $840.00)

------------------------------------

$913.80 Total Cost

 

EXAMPLE 2, Purchase from an Out-of-State Dealer:

$800.00 for a Firearm

$ 40.00 for Transfer Fee

$ 15.00 for NICS

$  2.80 for Sales Tax (7% of $40.00)

$ 56.00 for Use Tax (7% of $800.00 reported on Income Tax)

------------------------------------

$913.80 Total Cost

 

This was my exact experience as well (example 1).     Sales tax collected only on the weapon itself (purchased "in state") - no tax on the NICS fee.

Most of the dealers I know charge sales tax on the NICS fee. Never did find out if that is correct or not.

I hate to be the first one to ask such a question and... well... I would try to formulate it in the most *delicate* way, but do you really keep track of ALL your out-of-state online purchases in order to pay use tax an all purchased items later on and if so, how do you do that?

I mean, I can possibly understand keeping track (and paying use tax down the road) of buying some expensive camera online for several thousand dollars - you don't normally make such purchases every other day, so it's easy. But I buy nearly everything online these days simply because it is convenient for most of non-urgent purchases, some of my orders are as low as $10 for some clothing item bought with some small online store and I simply don't see how to keep track of all of those for tax purposes.

It's obviously not that I encourage any of you to commit tax fraud by not reporting some major out-of-state purchases, but frankly speaking I know very few people around who try to report ALL online purchases... so my question is how you keep track of all of it?

There is an income-based chart in the NJ1040 package to estimate the Use Tax you owe.

Using that number (which is pretty low) will keep you out of trouble with the state without the need to precisely track a years worth of out-of-state purchases.

 

A tiny bit of pain to avoid the a$$-reaming you'll certainly get in the event of an audit following not paying ANY Use Tax

njJoniGuy, thanks a lot, I somehow missed that there is income-based calculation of NJ use tax. For my income bracket the number is quite low, so it definitely makes sense to use it instead of going through every single item...

Every new day on this forum brings some new knowledge, lol :-)