ATF’s New DEVASTATING Proposed Rule on Background Checks for Fictitious Entity NFA Applications

Posted on by Joshua Prince, Esq.

By Joshua Prince, Esq.

As readers of this blog are aware (thanks to the tireless effort of Attorney Tom Odom of our firm), the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) has published an intent to enter into rulemaking in relation to “(1) add a definition for the term “responsible person”; (2) require each responsible person of a corporation, trust or legal entity to complete a specified form, and to submit photographs and fingerprints; (3) require that a copy of all applications to make or transfer a firearm be forwarded to the chief law enforcement officer (CLEO) of the locality in which the maker or transferee is located; and (4) eliminate the requirement for a certification signed by the CLEO. ” Unfortunately, we just obtained a copy of the 62 page proposal and the above statement is a false depiction of the actual proposal, as everyone was made to believe that the CLEO signature requirement would be eliminated in exchange for additional regulations on fictitious entities. As is explained below and will be further explained in future blog articles, the ATF will NOT be eliminating the CLEO requirement and instead IMPOSING it on ALL entities.

You can obtain a copy of the proposal here.

As the proposal states (starting on page 9 of the proposal), on December 3, 2009, the ATF received a petition for rulemaking from the National Firearms Act Trade and Collectors Association (NFATCA). “The NFATCA expressed concern that persons who are prohibited by law from possessing or receiving firearms may acquire NFA firearms through the establishment of legal entities such as a corporation, trust, or partnership.” It goes on to state “The Petitioner [NFATCA] expressed concern that an NFA firearm could be obtained by a prohibited person and used in a violent crime.” (emphasis added). And it gets worse. “Therefore, for applications for a corporation, trust, partnership, or other legal entity to make or receive an NFA firearms, petitioner has requested amendments to §§ 479.63 and 479.85 to require photographs and fingerprint cards for persons who are responsible for directing the management and policies of the entity, so that a background check of the individual may be conducted.” (emphasis added).

The ATF responds to this concern by stating that it agrees with the NFATCA’s concern and that further regulation is necessary. The ATF then goes on to state of a single alleged instance where an individual applied for a silencer, was denied, and then, again allegedly, applied again in the name of a trust, wherein the individual was settlor of the trust, which the ATF recognized and denied. (It must be noted that the 7th Circuit Court of Appeals in US v. Miller, 588 F.3d 418, specifically held that a trust was a PROPER legal entity for holding a firearm, where the settlor was prohibited, provided proper safeguards were included in the trust to ensure that the prohibited individual did NOT possess the firearm).

The NFATCA’s petition also sought the incorporation of the Certification of Citizenship into the existing NFA Application Forms, instead of as a separate form. (See page 11-12). The ATF agrees with this and is seeking to incorporate the ATF Form 5330.20 into the existing forms.

And it gets worse. “The NFATCA requests that the instructions on applications to make or transfer a firearm be revised so that they are consistent with those on a Form 7 (5310.12), Application for Federal Firearms License.” This means that the NFATCA requested the implementation of responsible persons for purposes of applications in the name of fictitious entities. And much to everyone’s surprise (sarcasm), the ATF agrees!

In relation to the Chief Law Enforcement Officer signature requirement, “the petitioner requests that the law enforcement certification requirement be eliminated and that ATF ‘adopt a CLEO [chief law enforcement officer] process include a full NICS  [National Instant Check System] check for principal officers of a trust or corporation receiving such firearms for the trust or corporation.'” (See page 12-17)  ATF’s response? “ATF does not propose to eliminate the CLEO certificate requirement at this time.” (See page 14). It continues to get worse – “Rather, ATF proposes extending the CLEO certificate requirement to responsible persons of a legal entity.” Guess what, under this proposal, EVERYONE will require a CLEO signature!

I will be posting more as I have time to thoroughly review the proposal. This is extremely damaging to the ENTIRE NFA community. We need to take IMMEDIATE action.

Published by Joshua Prince, Esq.

With our 2nd Amendment rights being attacked at both the Federal and State level, and the ATF (Burea of Alcohol, Tobacco, Firearms, and Explosives) trying to close down FFLs (Federal Firearms Licensees) for minor infractions while making FFLs the scapegoat when the ATF's records are inaccurate, I want to take this opportunity to introduce myself. I am one of only a handful of attorneys across the US that practices in the niche area of law known as firearms law. I decided to concentrate my legal practice on firearms law not only because I am a shooter and firearms enthusiast, but also to ensure that our inalienable Right to Keep and Bear Arms is never encroached upon. I handle cases at the Federal and State level for both FFLs and individuals. At the federal and state levels for individuals, I actively defend the 2nd Amendment of the US Constitution and Section 21 of the PA Constitution, as well as, help individuals with: - License to Carry Firearms Denials; - Challenges to Erroneous PICS Denials; - Relief from Firearms Disabilities; - Estate Planning Advice; - Gun/NFA Trusts; and - 42 USC 1983 Actions for Deprivation of Civil Rights At both the state and federal levels, I represent FFLs and SOTs throughout Pennsylvania and the US regarding: - ATF Compliance Inspections; - Warning Letters and Hearings; - FFL Revocations; - Corporate Structure Advice - Indoor/Outdoor Range Implementation; and - Forfeiture Proceedings In following my love for firearms and firearms law, I have taught several Continuing Legal Education (CLE) seminars on Firearms in Estates and Trusts and Firearms Law 101 for several Bar Associations, including Berks, Cumberland, and Dauphin Counties. I also planned and taught several Firearms in Estates CLE classes for the Pennsylvania Bar Institute (PBI). While at Widener Law School, I was a member of the Widener Law Journal. I wrote an article on the Inaccuracy of the National Firearms Registration and Transfer Record (NFRTR). I also had an article published on Fee Disputes in Workers Compensation cases in the Widener Law Journal, Volume 18, No. 2. You can often find me posting on several internet forums, including Subguns, Uzitalk, AR15, and PAFOA. I also hold PA Firearms Law classes for local ranges to inform the public on the firearm laws of the Commonwealth. Following in my father's footsteps, I am also a Board member for the Pottstown Police Athletic League (PAL).

33 thoughts on “ATF’s New DEVASTATING Proposed Rule on Background Checks for Fictitious Entity NFA Applications”

  1. Pingback: New ATF Proposals extend CLEO signoffs to Trust/LLC

  2. Something has to be done. Too many criminals paying $500 to a lawyer to establish a trust, then spending $15k more to buy a machine gun, $1k more to buy a silencer, $400 more in tax stamps and waiting 8-10 months to go kill a bunch of people. Enough! We need tougher gun control! This is way too easy!

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    2. Criminals are not going to pay money to do things legal just to, as you put it, “go kill a bunch of people.” What part of criminal do you not understand. I do not know which planet you are living on, but it is definitely not this one.

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  3. Why do anything? BATF is the most halfassed, incompetent regulator in the federal government. Submit generic comments holding a place for a constitutional challenge and WAIT. The trust avenue wws the only thing saving the CLEO requirement from a direct constitutional attack, since no one really had or wanted standing. Now, BATF is proposing to give a whole kess of people standing to challenge the NFA on constitutional and equal protection grounds. Their immature overreach is a long term opportunity.

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  5. Joshua, check out the NFATCA official statement on their website confirming that they had nothing to do with the extension of the CLEO. in fact they have been working on getting it removed for a couple of years now.

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    1. Bob, you are correct; however, they are ignoring requests to post a copy of their petition, which doesn’t bode well. Also, the NFATCA hasn’t stated that any of the quotes in the Proposal were incorrect. I think we all need to see the Petition to be able to determine what they did or did not say. There is no doubt that they have been working for years to get the CLEO signature removed for the individual; the question is, what deal with the devil were they willing to strike to see that come to fruition.

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      1. Agreed! They seemed to have ‘approved’ all that the EO entails to get the CLEO portion removed. Since they didn’t get the latter they can’t claim they weren’t supporting the former. Thus why there should be no compromises. It’s ‘sold’ as having support of the pro gun group.

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  6. Pingback: OBAMA'S LATEST ATTACK ON...YOU. - Oregon Firearms Federation
  7. Pingback: NFA Collectors Group INITIATED Gun Trust Rule Change.....
  9. Pingback: SayUncle » On the NFA rule changes

  10. Josh, what is the definition of a “person” in “responsible person”. Could a trust be added to another trust. And the first trust be a responsible person to the second trust?

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      1. “By defining the term ‘responsible person’ so broadly as to include beneficiaries, one finds oneself having to contemplate the absurd possibility of fingerprinting, photographing, and securing CLEO sign-offs for unborn children.”

        http://johnpierceesq.com/?p=389

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  11. I don’t have any problem with this whatsoever. If you want to be a private individual and own or use any other specifically potent, hazardous materials or devices (high explosives, industrial chemicals or gases), then you have to take extraordinary legal and financial responsibilities. Fully automatic and silenced weapons fall into that category. If you’re willing to jump through all the hoops and pay the fees, then you should be allowed to own all you want. If you can’t, then there are plenty of other guns available to you that would meet any legal necessity you have, and are readily available.

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    1. If the CLEOs were obliged to sign the authorization for someone with a clean background, or state legal cause for refusing, you would have a point. But there are jurisdictions where the CLEOs refuse to sign off, regardless of how many hoops someone jumps through.

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    2. And the only people this proposed rule would stop are the responsible people who would never be inclined to commit a crime anyway. How does that help anyone other than the government?

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  12. No legal class 3 weapons obtained with Federal tax stamps have ever been used in a crime. This is the best behaved class of firearm that exists.

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  13. How are suppressors dangerous? They actually help to make an instructing environment safer for all involved as it cuts down on the noise and individuals can hear what is being said more easily. It also makes any range time a lot safer in that ear pro may not be necessary and you can hold a conversation with those around you without having to shout. It is a great day to go to the range when it is a suppressor only day.

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    1. God forbid people have to show ID to drive, cash checks, buy alcohol/tobacco, go inside a government building, board a plane, etc…. Then we would really be suppressing people’s rights!

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