Tax Guide for Sellers of Firearm and Ammunition Products
Industry Topics

The California Firearm, Firearm Precursor Part, and Ammunition Excise Tax

The California Firearm, Firearm Precursor Part, and Ammunition Excise Tax (CFET) is imposed on the gross receipts of retail sales (for example, sales to consumers) in California of any firearm, firearm precursor part, or ammunition (firearm products) made by licensed firearms dealers, firearms manufacturers, and ammunition vendors at the rate of 11 percent (RTC section 36011).

CFET Gross Receipts

For the purposes of the CFET, gross receipts include the sales price of the firearm, firearm precursor part, or ammunition and all charges related to the sale, such as any discretionary business expense separately added to any taxable sale listed separately on the invoice or receipt provided to the purchaser.

Examples of discretionary business expenses include, but are not limited to:

• Merchant credit card fee
• Handling fees
• Transfer fees
• Fabrication labor charges

State fees collected at the time of retail sale that are paid by the purchaser and that are listed separately on the invoice or receipt provided to the purchaser are not subject to the CFET and should be excluded when calculating the CFET.

Examples of state fees include, but are not limited to:

• Dealer Record of Sale (DROS) fee
• Firearms Safety fee
• Safety and Enforcement fee

Also, sales and use tax separately stated on the invoice or receipt should not be included in the gross receipts for CFET.

Sales Tax in General

Your retail sales of firearms, firearm precursor parts, ammunition products, and any other tangible personal property you sell in California are generally subject to sales tax, unless the law provides a specific exemption. Your sales and use tax gross receipts should not include any CFET reimbursement amount.

In addition to the sales price of the item being sold, you must also include in your gross receipts subject to sales tax any business expense separately added to any taxable sale.

Examples of business expenses include, but are not limited to:

• Merchant credit card processing fee
• Handling fees
• Transfer fees
• Fabrication labor charges

The sales tax rate is made up of different components: a state tax rate, the local tax rate, and any district tax rate in effect. The tax rate varies across the state and will generally depend on your business's location. You may look up the current sales and use tax rate by visiting our Find a Sales and Use Tax Rate webpage.

Tax Calculation Example

Example scenario: A customer goes into a sporting goods store and purchases a hunting rifle and pays with a credit card.

Tax calculation example

Notes

1. A 8.5% sales and use tax rate is used for demonstration only.

Tax Reimbursement

As a retailer, you owe the sales tax and the CFET on your taxable sales, and you must report and pay the sales tax and the CFET to us. Retailers may collect sales tax reimbursement from their customers, but doing so is not mandatory. Similarly, a retailer may optionally collect CFET reimbursement from their customers.

If sales tax is included in the sales price, you must post a sign notifying your customers that the sales tax is included in the sales price. If signage is not posted on the premises in a place that is visible to the customer, then the sales tax you charge your customer must be based on the sales price and added to the receipt.

If CFET reimbursement is collected on retail sales that are exempt from the CFET, the excess CFET reimbursement collected must be returned to the purchaser or it must be reported and paid to us.

Sales for Resale and General Exemptions

Sales for Resale

A firearm, firearm precursor part, or ammunition sale for resale is not subject to sales and use tax nor the CFET. As a firearms dealer or ammunition vendor, you are required to provide a resale certificate to your vendor or obtain a resale certificate from your customer as prescribed in Regulation 1668, Resale Certificates. To help you meet these sales for resale requirements, you may use a CDTFA-230, Resale Certificate, available on our website.

However, you should be aware that a Federal Firearms License (FFL) does not qualify as a resale or exemption certificate even though this license combined with a copy of a seller's permit may contain some of the essential elements specified of a resale certificate. You should keep resale or exemption certificates in your records for at least four years. For more information, see publication 103, Sales for Resale.

General Exemptions

Sales to the U.S. government are generally exempt from sales and use tax and are not subject to the CFET. For more information regarding sales to the U.S. government see Regulation 1614, Sales to the United States and Its Instrumentalities.

Sales made in interstate or foreign commerce are generally exempt from sales and use tax and are not subject to the CFET.

CFET Exemptions

Retail sales of firearms, firearm precursor parts, or ammunition are exempt from the CFET when either:

• The sale is to any active or retired peace officer or any law enforcement agency employing that peace officer [RTC section 36021(a)], or
• In any quarterly period, the total gross receipts from those retail sales are less than five thousand dollars ($5,000) [RTC section 36021(b)].

Even if your sales are exempt from the CFET, they may still be subject to sales and use tax. Additionally, even if all your retail sales of firearm products are exempt from the CFET, you are still required to file a CFET return each quarter.

You may use CDTFA-230-FET, California Firearm and Ammunition Excise Tax Exemption Certificate for Peace Officers and Law Enforcement Agencies to help with your CFET exempt sales recordkeeping.

For more information about exemptions and exclusions that may apply, see publication 101, Sales Delivered Outside of California and publication 102, Sales to the United States Government.

Delivering and Registering Firearms or Ammunition for Out-of-State Retailers

The California Penal Code requires that firearm product sales from out-of-state FFL retailers be made through a licensed California Firearms Dealer (CFD). The out-of-state retailer will ship the firearm product to the CFD to log it into their Federal Acquisition/Disposition books as applicable, complete the DOJ DROS process, and deliver the firearm product to the California purchaser following any required waiting periods.

For CFET purposes, the CFD is presumed to be the retailer and is responsible for the applicable CFET when the CFD:

• Completes the registration and transfer paperwork, and
• Delivers a firearm product to a California purchaser on behalf of either an out-of-state private party or any out-of-state FFL retailer.

For sales and use tax purposes, the CFD is presumed to be the retailer and generally owes the sales and use tax when the CFD:

• Completes the registration and transfer paperwork, and
• Delivers a firearm product to a California purchaser on behalf of an out-of-state private party or an out-of-state FFL retailer that is not engaged in business in this state.

Out-of-state retailers engaged in business in California remain responsible for reporting and paying the California use tax on the sale of a firearm product.

The sales tax and the CFET are calculated on the total amount of the sales price including any optional service charge, delivery, or handling fees but excluding any fees imposed by the state, such as the DROS fee, Firearms Safety fee, and Safety and Enforcement fee, paid by purchasers. As a CFD, you should obtain a copy of the sales contract or invoice from the out-of-state seller or the purchaser to determine the proper amount of taxes due on the sale.

Registering a Firearm from a California Private Party Seller

When a California private party seller brings a firearm to a CFD and asks that they find a buyer, the CFD is considered the consignee and retailer of the firearm and is liable for the sales tax and the CFET on the later sale of the firearm.

However, the CFD is not considered the firearm retailer and is not responsible for the sales and use tax or the CFET when all the following conditions are met:

• The CFD completes the registration paperwork for a California private party who is selling a firearm to a California purchaser,
• The seller and purchaser have negotiated the terms of sale in advance,
• The seller brings the firearm to the CFD to meet the statutory requirements for the documentation and registration, and
• The CFD does not take title of the firearm at any time during the transaction.

In this case, the private party seller would owe the sales tax unless the transaction qualifies for an exemption. For example, a firearm sale between California private parties may be exempt from sales tax if the sale qualifies as an exempt occasional sale per Regulation 1595, Occasional Sales–Sale of a Business–Business Reorganization.

Gun Clubs, Memberships, and Giveaways

If you operate a gun club or shooting range that provides ammunition and other materials (such as clay pigeons, blue rocks, or targets) with your trapshooting or similar activities for a single lump sum price, you are the consumer of the ammunition and other materials. As a consumer, you should not issue a resale certificate to your vendor when you purchase these items. For sales and use tax purposes, your vendor may charge you sales tax reimbursement for the retail sale of these items. If the vendor does not charge you sales tax reimbursement, you owe use tax on these items. Additionally, the vendor’s retail sale of ammunition to you is subject to the CFET.

If you operate a gun club or shooting range and sell ammunition, firearms, food, or other property to your members for a separate price, you are the retailer of those items. Those retail sales are subject to sales tax, and your retail sales of firearm products are subject to the CFET. You may purchase these items without sales tax by issuing your vendor a resale certificate. See the Sales for Resale section above.

If you operate a gun club or shooting range that rents firearms, you owe the sales and use tax and the CFET on the firearm rentals. Firearm rentals are generally considered a continuing sale (retail sale), and the rental receipts are generally subject to sales and use tax and the CFET. For more information on rentals, see our Tax Guide for Rental Companies. Firearm rental receipts of less than $20 per day for use only on the lessor's premises are not subject to sales and use tax or the CFET.

Membership fees and dues paid by members solely for the use of the facilities of a gun club or shooting range are generally not subject to sales and use tax or the CFET. However, when a gun club or shooting range provides tangible personal property with the purchase of a membership, such as a “free” shotgun or rifle to entice a customer to join, then the gun club or shooting range is the retailer of that property and owes sales tax on the fair retail selling price.

Additionally, your membership fees related to the anticipated retail sale of tangible personal property are subject to sales and use tax if you sell property only to members and the membership fee exceeds $70 per year. Such membership fees are also subject to sales and use tax if you sell property for less to paid members than to someone who has not paid the membership fee (regardless of the cost of membership).

Out-of-State Sellers

If you are an out-of-state FFL dealer and a retailer engaged in business in California, you may be required to register with us for a seller's permit. Out-of-state retailers are not required to register with us for a CFET certificate of registration. A retailer “engaged in business in this state” specifically includes, but is not limited to, any of the following:

• Any retailer maintaining, occupying, or using (permanently or temporarily, directly, indirectly, or through a subsidiary or agent, by whatever name called) an office, place of distribution, sales or sample room or place, warehouse or storage place, or other place of business in California.
• Any retailer having any representative, agent, salesperson, canvasser, independent contractor, or solicitor operating in this state under the authority of the retailer or its subsidiary for the purpose of selling, delivering, installing, assembling, or taking of orders for any tangible personal property.
• Any retailer earning rental income from a lease of tangible personal property situated in California.
• Any retailer that owns or leases real property or personal property (such as machinery and equipment, furniture, or computer servers) in California.
• Any retailer that has total combined sales of tangible personal property for delivery in California by the retailer and all people related to the retailer that exceeded five hundred thousand dollars ($500,000) in the preceding or current calendar year. For information, see Use Tax Collection Requirements Based on Sales into California Due to the Wayfair Decision.

If you are an out-of-state FFL seller and your only presence in California is for conventions or trade shows, you are not considered to be engaged in business in California if:

• Your presence in this state is for 15 days or fewer during any 12-month period, and
• You earned $100,000 or less of net income from those convention or trade shows during the prior calendar year.

However, if you intend to sell merchandise at a trade show or convention, you must register with us for a temporary seller's permit. You must also collect and pay the sales tax on taxable sales made during the event even though you are not required to hold a regular seller's permit. If you sell items at events held on state-designated fairgrounds, you must separately report these sales when filing your sales and use tax return.

For more information, see our Tax Guide for Out-of-State Retailers.