Sales tax on online firearm sales: whose state applies

Sales tax is one of the places an online gun store most often gets something quietly wrong. The rule of thumb is that sales tax follows where the buyer takes possession, and for firearms that is usually not the buyer’s home address. This is a general guide; confirm your obligations with your accountant and each state’s revenue department.

Three common cases

• A firearm shipped to another dealer for transfer: the buyer takes possession at the receiving FFL, so that dealer’s state is usually the one that applies.
• An accessory shipped to the buyer: the buyer’s state applies.
• Anything picked up at your store: your state and local rate apply.

Where you have to collect

You collect tax in a state where you have nexus: a physical presence, or enough sales into the state to cross its economic threshold. Thresholds differ by state and change. Keep a list of the states where you are registered, and make sure your checkout only collects where you should.

Checkout rules worth having

• Work out the taxable state on the server from the receiving dealer’s address, never from what the buyer typed.
• Tax the price after discounts.
• Show the tax before payment and charge exactly that amount.
• Keep a report by state for filing.

ArmoryFlow storefront checkout resolves the taxable state this way, uses the rates for the states you set up, and gives you a tax report by state.

See storefront checkout