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Understanding the New California Firearms Excise Tax: What You Need to Know

Travis Tandy

September 16, 2024

Understanding the New California Firearms Excise Tax: What You Need to Know

As of July 1, 2024, California will impose a new excise tax on firearms and ammunition, significantly impacting businesses in the firearms industry. If you own a gun store or operate in the firearms industry in California, it's crucial to understand how this new law will affect your business, who must pay it, and how to stay compliant.

This post will break down the essentials of the new excise tax law and explain how Tandy Consulting Inc. can help you manage the financial complexities that come with this additional tax.

What Is the California Firearms Excise Tax?

The new California Firearms Excise Tax requires a 11% tax on the gross receipts from the retail sale of firearms and ammunition. This excise tax is in addition to the regular sales tax. The aim of this law is to generate revenue for gun violence prevention programs and increase accountability within the firearms industry.

Who Has to Pay the Excise Tax?

The California Firearms Excise Tax applies to:

  • Retailers: Any business that sells firearms or ammunition directly to consumers.

  • Distributors and wholesalers: In some cases, the tax will also apply to wholesalers or distributors selling to retailers, depending on the specific terms of sale.

Who Is Exempt from the Excise Tax?

Certain groups and entities are exempt from paying this new tax, including:

  • Law enforcement agencies: Sales to local, state, or federal law enforcement agencies are exempt.

  • Military: Purchases by the U.S. military are not subject to this excise tax.

  • Licensed private security agencies: Businesses that provide security services and are licensed to use firearms may also be exempt.

It's essential to verify whether your business qualifies for any exemptions to avoid unnecessary tax liabilities.

When Is the Excise Tax Due?

The excise tax will be due on a quarterly basis, similar to sales tax filing. You will need to track gross receipts from the sale of firearms and ammunition, calculate the applicable excise tax, and remit it to the California Department of Tax and Fee Administration (CDTFA).

Failure to pay the tax on time can result in significant penalties, so it’s important to maintain accurate records and stay on top of reporting deadlines.

Sales Tax vs. Excise Tax: What’s the Difference?

While both sales tax and excise tax apply to the sale of firearms and ammunition, they are separate obligations. Sales tax applies to the overall price of goods sold, whereas the excise tax is calculated based on the gross receipts specifically from the sale of firearms and ammunition. This means you'll need to account for both taxes in your financial planning and ensure that both are reported accurately.

How Tandy Consulting Inc. Can Help

At Tandy Consulting Inc., we understand the additional burden that this excise tax places on firearms businesses. Our team is equipped to help you track and manage your excise tax obligations in addition to regular sales tax reporting.

Here’s how we can assist:

  • Excise Tax Calculation: We’ll help you accurately calculate the excise tax on firearms and ammunition sales.

  • Quarterly Tax Reporting: We’ll ensure that your excise tax is reported and paid on time to avoid penalties.

  • Comprehensive Bookkeeping: Our services will integrate excise tax tracking with your overall financial management, giving you a clear view of all your tax obligations.

  • Compliance Support: We’ll help you determine if any exemptions apply to your business and ensure your records reflect compliance with the law.

  • Customized Solutions: We’ll tailor our services to meet the specific needs of your firearms business, ensuring you remain compliant without unnecessary financial strain.

Stay Compliant and Focus on What Matters

The new excise tax adds another layer of complexity to your business, but with the right support, you can navigate these changes smoothly. Tandy Consulting Inc. is here to help you stay on top of your tax obligations so that you can focus on serving your customers and growing your business.

If you have questions or need help with excise tax compliance, reach out to us today for a consultation.

Cheat Sheet: Key Points of the California Firearms Excise Tax Law

Firearms Excise Tax CA by tandyconsulting

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