Is the service fee a federally licensed firearms dealer charges to transfer a firearm to a New York resident subject to sales tax?

Plain-English summary

Federal and New York law generally require that a firearm bought from an out-of-state seller (or transferred between private New York residents) pass through a Federal Firearms Licensee (FFL) in New York. The FFL receives the firearm, verifies its serial number, records the acquisition and transfer in its books, fills out the required federal and state forms, and runs the buyer's NICS background check. The buyer pays the FFL a fee for these "transfer services." The FFL asked whether that fee is taxable.

The Office of Counsel concluded the transfer-service fee is not subject to sales tax. New York taxes only an enumerated list of services under Tax Law § 1105(c), and the FFL's transfer activities — receiving the firearm, creating regulatory records, running the background check, and meeting transfer requirements — aren't on that list. So the fee isn't taxable, whether the firearm originates from an out-of-state seller or from another New York resident. (This is about the service fee only; an FFL that sells a firearm from its own inventory is making a taxable sale of tangible personal property.)

What this means for you

Firearms dealers / FFLs

The fee you charge purely to process a transfer (background check, recordkeeping, required forms) is not a taxable service. Keep that separate from any sale of a firearm or accessories from your own inventory, which is a taxable retail sale.

Buyers

The FFL transfer fee on a gun you bought elsewhere (e.g., online from an out-of-state dealer) shouldn't carry New York sales tax. You generally still owe sales/use tax on the firearm itself to the appropriate party, but the transfer-processing fee is not taxed.

Accountants and tax professionals

Classic "service not enumerated in § 1105(c) = not taxable" analysis (compare TSB-A-12(8)S). Distinguish the nontaxable transfer service from a taxable sale of tangible personal property by the same dealer.

Common questions

Q: Does an FFL charge sales tax on the transfer fee?
A: No. Firearm transfer-processing services aren't enumerated taxable services under § 1105(c).

Q: Does it matter whether the gun came from out of state or another New York resident?
A: No. The transfer-service fee is not taxable either way.

Q: What about the firearm itself?
A: A firearm sold from the FFL's own inventory is a taxable sale of tangible personal property. The nontaxable item here is just the transfer-service fee.

Q: Can I rely on this opinion?
A: It binds the Department only as to the petitioner. Use it as guidance and confirm your own facts.

Citations and references

Statutes and guidance:
- Tax Law § 1105(c) (enumerated taxable services)
- 18 USC § 922(a) (federal firearm transfer rules); General Business Law § 898 (NY private-transfer-through-FFL requirement)
- TSB-A-12(8)S

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales-ao-2020.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a20-13s.pdf

Original ruling text

New York State Department of Taxation and Finance
Office of Counsel

TSB-A-20(13)S
Sales Tax
June 2, 2020

STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO. S170627A

The Department of Taxation and Finance received a Petition for Advisory Opinion from
[ REDACTED ] (hereinafter “Petitioner”). Petitioner asks whether it is required to collect New York State
sales tax when, as a federally licensed firearms dealer, it transfers a firearm from an out-of-state licensed
dealer or other out-of-state seller to a New York State resident. Petitioner also asks whether the same
service is taxable when it transfers a firearm from one New York State resident to another.
We conclude that Petitioner’s service of transferring a firearm from either an out-of-state seller or
a New York State resident to a New York State resident is not subject to New York State sales tax.
Facts
Petitioner is a New York Federal Firearms Licensee (“FFL”). Petitioner also is a New York sales
tax vendor that sells firearms from its own inventory.
A New York resident who purchases a firearm from an out-of-state FFL or other out-of-state
seller pays the seller directly. However, with certain exceptions not relevant here, any firearm purchased
out-of-state by a New York resident to be delivered into New York, such as through an online retailer,
must be shipped to an FFL located in New York. The New York FFL will receive the firearm, verify the
serial number of the firearm, record the acquisition and transfer of the firearm in the company records,
and fill out the necessary federal and state forms (“the transfer services”).
The Petitioner also will contact the National Instant Criminal Background Check System (NICS)
to perform a background check on the purchaser. The purchaser pays a fee to the Petitioner for the
transfer services when receiving the firearm. The fee for the transfer services is set by Petitioner.
Analysis
With certain exceptions that are not relevant here, it is unlawful for any person other than a
licensed importer, licensed manufacturer, licensed dealer, or licensed collector to transport into or receive
in the state where he or she resides any firearm purchased by such person outside the state where he
resides. 18 USC § 922(a). However, a person who purchases a firearm from an out-of-state seller may
take legal possession of the firearm if an arrangement is made with an FFL in the purchaser’s state of
residence to perform certain legal requirements, such as a background check, before transferring the

-2-

TSB-A-20(13)S
Sales Tax
June 2, 2020

firearm to the buyer in his or her home state. New York State has a similar statute, requiring private party
transfers of firearms to be made through an FFL. See General Business Law § 898.
Tax Law § 1105(c) imposes sales tax on the receipts from every sale, except for resale, of certain
enumerated services. Receiving firearms from other firearm sellers, creating the required records for
federal and state regulatory purposes, contacting NICS to complete a background check, and ensuring that
any State or local legal requirements for transfer are met are not among the enumerated services that are
subject to sales tax. See Tax Law § 1105(c); TSB-A-12(8)S. Therefore, Petitioner is not required to
collect sales tax on its service fee.
DATED: June 2, 2020

/S/
DEBORAH R. LIEBMAN
Deputy Counsel
NOTE: An Advisory Opinion is issued at the request of a person or entity. It is limited to the facts set
forth therein and is binding on the Department only with respect to the person or entity to whom
it is issued and only if the person or entity fully and accurately describes all relevant facts. An
Advisory Opinion is based on the law, regulations, and Department policies in effect as of the
date the Opinion is issued or for the specific time period at issue in the Opinion. The
information provided in this document does not cover every situation and is not intended to
replace the law or change its meaning.