Important Update on Implementation of ATF-41F

Rather than use the rulemaking process set forth in the Administrative Procedure Act, the Bureau of Alcohol, Tobacco, Firearms, and Explosives (“ATF”) seemingly continues to release information in a haphazard manner that sows confusion among the very people striving to comply with its requirements.  After taking more than two years to review comments and draft regulation ATF-41F that was published on January 15, 2016, ATF already has had meetings with a small, hand-selected audience to announce that the regulation does not actually mean what it says.  Given that the regulation does not become effective until July 13, 2016, one might expect ATF to withdraw the rule and revise its text so as not to mislead the public.  It would be a breath of fresh air to see ATF show such concern.


ATF now asserts that when ATF-41F becomes effective, all Forms 1 and Forms 4 submitted by legal entities must be accompanied by fingerprints and photographs regardless of the two-year look back provision stated in the regulation.


ATF also now takes the position that current law will be applied to all applications postmarked prior to July 13, 2016.


ATF’s Meeting


As Silencer Shop reported on its blog, ATF and representatives of ATF’s National Firearms Act Branch met with the American Suppressor Association (“ASA”) and some of its members, including Silencer Shop itself while at SHOT Show last month.  While the National Rifle Association’s Institute for Legislative Action (“NRA ILA”), the National Shooting Sports Foundation, and the Gun Owners of America, Inc. & Gun Owners Foundation (“GOA”) all filed comments on the proposed rule that culminated in ATF-41F, ATF did not include representatives of those organizations in its meeting.  ATF also failed to include any representatives of the media.  Despite the number of major comments submitted by attorneys who advise consumers who seek to lawfully possess firearms regulated under the National Firearms Act (including Firearms Industry Consulting Group®, David M. Goldman and the Gun Trust Lawyer® nationwide network, and many others), no such individuals were included in ATF’s meeting.


Even after the meeting ATF took no steps to publish the information it shared.  The rest of us, as usual, were left in the dark.


ATF Asserts Fingerprints and Photographs Will Be Required With All Applications After July 13, 2016


As reported by Silencer Shop, ATF asserted that the certification procedure outlined in ATF-41F does not, in fact, establish a two-year window during which trusts and other legal entities submitting a subsequent Form 1 or Form 4 could certify there had been no change and thereby avoid having to resubmit fingerprints and photographs for all “responsible persons” with each new application.  Instead, ATF apparently now takes the position that despite the clear language of a regulation less than a month old, it really means something else.


The new text of 27 Code of Federal Regulations section 479.63, as revised by ATF-41F, governs the identification of the applicant (on a Form 1 or a Form 4).  The text is available at volume 81 of the Federal Register on pages 2722 and 2723.  The section has three subsections.  Subsection (a) addresses the situation where the applicant “is an individual”.  Subsection (b) addresses the situation where the applicant is a trust or other legal entity.  And subsection (c) alleviates the burden that would be imposed on a legal entity submitting all the documentation required in subsection (b) upon a “certification that the information has not been changed since the prior approval”.  The point of ATF’s new interpretation is the breadth of the relief provided by subsection (c).  To answer that question, one may look at the plain text of the regulation.  Subsection (b) sets forth the filing requirements for a trust or other legal entity.


Subsection (b) is further divided into two subsections.  Section 479.63(b)(1) simply specifies how the address of a legal entity is determined.   Section 479.63(b)(2) sets forth the additional documentation that must accompany the application when submitted by a trust or other legal entity and it contains four separately-numbered requirements:  (i) documentation of “the existence and validity of the entity”, such as a copy of the trust, (ii) an ATF Form 5320.23 for each “responsible person”, (iii) photographs, and (iv) fingerprint cards.  If the regulation was designed so that the certification available under section 479.63(c) were limited to only the documentation of the existence and validity of the entity rather than all four requirements, one would expect to find that the cross-reference to the exception for the certification procedure would be part of the text of section 479.63(b)(2)(i).  But that is not where ATF referenced the exception.  Instead, ATF placed the reference to the exception under section 479.63(c) in the general language of section 479.63(b)(2) preceding the four numbered requirements thereby indicating that the exception applied to all four forms of documentation.


ATF not only contradicts the text of its recently-drafted rule, the resulting procedure would seem to be upside-down in terms of ATF’s stated purpose in adopting any new rule at all.  Consider the situation of a trust that sought to acquire a different suppressor each month for a year.  Under ATF’s interpretation, every month each and every “responsible person” would be required to submit a new set of fingerprints (which obviously had not changed) and a new photograph (which, in the course of a month, is unlikely to change significantly), but the one item which could have changed significantly — the trust which may have added additional responsible persons — would not be required to be submitted.  In any rational system, the last item from the list of four types of required documentation that ATF should be willing to accept based on certification would be the paperwork that demonstrates who constitutes a responsible person.  The whole mistaken premise of ATF-41F was ATF’s belief that people who lawfully acquire NFA-regulated firearms might misuse a trust or other legal entity as a means to permit use of the firearm by some improperly-authorized “responsible person” of the legal entity.  If there were any such problem it is far from clear how requiring someone to submit a fresh set of fingerprints every month addresses it in any way.  Once ATF has the fingerprints to confirm the identity of a responsible person, the only thing that should matter is whether some new responsible person has been identified but evidence on that issue that is the very information ATF assigns the lowest priority.


ATF acknowledged receiving comments addressing the issue of whether fingerprints and photographs should be required each time an application was filed.  ATF’s response in the preamble to ATF-41F was that such an approach “does not meet the NFA’s requirement that each NFA transaction must be accompanied by an individual application and registration.”  81 Fed. Reg. 2684.  Notably, the only supporting citation ATF offered for that view was to ATF’s own regulations, not to the NFA itself.   Obviously, the NFA itself does not require that every NFA transaction be accompanied by fingerprints and photographs as for eighty years neither fingerprints nor photographs were required with regard to applications filed by legal entities.  As a result, while ATF’s response may have been adequate with regard to the suggestion that individual applicants not be required to submit fingerprints and photographs with each separate application, it provided no reason for imposing such a requirement on legal entities and, indeed, section 479.63(b)(2) and section 479.63(c), when read together, imposed a requirement for fingerprints and photographs to accompany applications only if either more than two years had elapsed or there had been some change with regard to the legal entity since the last application.  By announcing its new interpretation ATF essentially acknowledges that it failed to provide a reasoned explanation for the requirement that fingerprints and photographs accompany applications from legal entities more frequently than suggested in the comments.


The suggestion that fingerprints and photographs must accompany every Form 1 or Form 4 submitted by a trust or other legal entity has far-reaching consequences.  All the tax dollars spent on establishing a system to permit the electronic filing of a Form 1 and Form 4 will have been wasted as e-Forms were limited to situations where there were no accompanying fingerprints and photographs, and now zero applicants would qualify for use of the system.  Further tax dollars spent to develop the second version of e-Forms will also have been wasted.  Without reconsideration of its interpretation, e-Forms will be completely unavailable for applications involving consumers.


ATF Advises Postmark of Applications Will Determine Grandfathering


As reported by Silencer Shop, ATF will apply existing law to all applications postmarked prior to July 13, 2016.


When ATF first released the proposed rule that was to become ATF-41F selected individuals were advised about its retroactivity provisions while the public at large was left to wonder how the matter would be handled.  The issue was one raised in comments filed with ATF on its proposal, specifically requesting that ATF comply with its obligation to inform the regulated community (not just a few who received a reply) as to how the rule would be implemented with regard to applications approved during the period between publication of a final rule and the effective date of the rule.  ATF was also requested to address how applications would be handled that had been sent to ATF but which were not completed when the new rule became effective.


Apparently in a rush to publish ATF-41F, this issue is another one where ATF seems to have determined how to handle the issue only after publishing the rule.  In the preamble to ATF-41F, ATF explained only that “the final rule will not apply to applications that are in ‘pending ‘ status, or to previously approved applications”.  81 Fed. Reg. 2710.  The all-important question of when an application would be considered “pending” was completely ignored.  At various times ATF officials suggested that perhaps the key date would be when the payment for the transfer tax was processed, or maybe when the application made its way to the appropriate branch of ATF, and so forth.  The decision to abide by the postmark date is perfectly reasonable.  One must question, however, why ATF could not simply state that matter in the text of ATF-41F itself so that everyone would know the answer.  It would seem either that ATF prefers not to tie itself down by publishing such answers, which denies the public fair notice, or ATF had not decided the matter until after publishing ATF-41F which raises the question why ATF-41F was not delayed a few weeks so as to incorporate such information.


Public Confusion


Members of the public have already been posting questions regarding the confusion caused by ATF’s statements reported by Silencer Shop.  Certainly, clients seeking to understand ATF-41F have been asking questions about these matters since we first reported on January 4, 2016 that a draft of the rule had been posted to ATF’s Website.  Unfortunately, it seems now that the best answer is that ATF is still resolving these matters for itself and may change its mind as it works through the process of implementing the new rule.  Those are steps the agency is supposed to take before publishing a new rule.  Given that the rule does not become effective until July 13, 2016, one hopes ATF does the responsible thing and incorporates this important information into a corrected rule so that the text actually reflects the manner of implementation.

15 thoughts on “Important Update on Implementation of ATF-41F

  1. So I’m still confused about the grandfathered part. So can you buy one and submit your application prior to July 13 and not need fingerprints and photos? It existing law applies to postmarks BEFORE July 13. So that to me means you need to do prints and photos now or you application will be rejected and sent back and you’ll have to start over again.


    1. Based on ATF’s published regulation together with the statements reported from the private meeting at SHOT Show “grandfathering” should operate as follows —

      If you submit a Form 1 or Form 4 to ATF on behalf of your trust and the application is postmarked prior to July 13, 2016, ATF has stated that your application need not include fingerprints, photographs, or certification from the chief law enforcement officer. ATF will process that application as submitted rather than send it back to be resubmitted with fingerprints and photographs. Applications submitted by an individual (rather than a trust or other legal entity) postmarked prior to July 13, 2016 still must be accompanied by fingerprints, photographs, and CLEO certification.

      Once an application filed prior to July 13, 2016 is approved by ATF, the transaction is essentially grandfathered. That is, the mere passage of time does not trigger the obligation to file fingerprints, photographs, etc. Only when a new application is filed on or after July 13, 2016, will the filing requirements of ATF-41F apply and they apply only to that new application.


  2. I’m personally waiting to see the new Form 1& 4’s WITHOUT the CLEO signature block. Which following BATFE efficiency should be available about August 2018.
    Then I’m waiting for them to put it BACK ON later and start telling CLEO’s they could be civilly liable for anything that happens with the NFA items and some offices implying that CLEO’s might be criminally charged too.
    But I assume they SHOULD have the new forms ready before July 13,2016, but won’t.


    1. You are not alone in wondering how ATF will be ready to institute a new procedure on July 13, 2016. Most of the clients who have contacted me over the past month are simply opting to file everything prior to July 13, 2016, so as not to be caught thereafter waiting some unspecified period of time for ATF to sort it out and deal with the backlog that is sure to grow.


  3. Has anyone considered that the rationale (subversion) behind the requirement for redundant submissions of documentation is to (intentionally) further overwhelm the processing system, such that the sheer length of the wait time once again becomes a defacto deterrent?


    1. Yes, there are those who have speculated that the purpose is simply to deter ownership of NFA-regulated firearms both through delays in processing applications and in placing unjustifiable burdens on the applicants who seek to lawfully acquire such items. As pointed out in FICG’s comment filed in opposition to the proposed rule, it is rather far-fetched to believe someone who would use a NFA-regulated firearm in a crime would bother to comply with the requirements associated with obtaining such a firearm. Why would someone planning a robbery file a Form 1 to identify himself to ATF, pay $200 for a tax stamp, then do the required engraving on a short barrel rifle, when the robber could simply ignore the NFA requirements go to his garage and use a hacksaw? ATF would have us believe someone willing to violate the law in committing such a robbery would nonetheless scrupulously adhere to regulatory requirements applicable to the acquisition of firearms. ATF missed an opportunity to modernize and simplify its regulations, preferring instead to set traps with which to catch the people attempting to comply with the law. If that were not the case I find it hard to explain publishing a regulation that says one thing only to tell a small audience that they mean to enforce it in an entirely different manner.


  4. It is apparent to me that 41f isn’t going away and that anything prior to Jul 13, 2016 is grandfathered. So like many others out there I have new items currently being processed. My concerns are moving forward. As the settlor of a trust if I were to sell something my assumption is there would be no requirements for me or my trustees to submit any fingerprints, photo or questionnaire to ATF. I would just work with the class III FFL to broker the sale. If I were to purchase a new item then myself and trustees would be required to file a form 5320.23 questionnaire and notify local law enforcement. It’s not a problem for me but I have trustees that live out of state and are residing in states that do not allow NFA items. I have looked at the draft of 5320 and I do not see anything that specifies the person is just a trustee or where the physical item is to be located. It does however ask for the name of the person who receives and reviews the questionnaire. How would they know that without going to their local LE? It doesn’t seem that would be something you could get over the phone or off a web page. And you still need two sets of fingerprint cards from your local LE. Now what’s to say their local LE refuses to process the questionnaire because NFA items are illegal in the state they reside. What’s next?


    1. Tony, I think there are a few fine points that you missed. For example, there is no requirement that the fingerprint cards be prepared by law enforcement. Private businesses like notaries can provide the fingerprinting service just as private businesses may take the necessary photographs. Moreover, there is no processing of the questionnaire by local law enforcement that would permit, through inaction, a transfer to be delayed. The point of ATF switching from CLEO certification to CLEO notification was precisely to remove that issue. The ATF regulations themselves specify how one determines who constitutes the CLEO to whom notification must be provided. It should then be a simple matter of public record for someone completing a form to obtain the proper name. For example, to the extent the county sheriff where one resided was the one to whom notice should be provided, it would be as easy as making a phone call or checking a Web page to know the name and address of the sheriff. (There is no requirement that the individual filling out the form know which particular employee of the sheriff’s office deals with these particular forms.) As far as distinguishing that the individual completing the Form 5320.23 was merely a trustee of a trust, I would think that would be evident from completion of line 2 which would identify the specific trust as the transferee or maker or the NFA firearm. In short, while there are numerous problems with 41F, I do not believe the issues you’ve identified are among them.


  5. Thanks for the response. It helps. I still think I will be removing some people from my trust just to make things easier. Once the dust settles I will probably be calling your office to make some changes. Thanks again. Tony


  6. Has ATF made any known statements as to which status (“CREATED” or “SUBMITTED”) on e-Forms (Form 1) they consider as being the equivalent of “POSTMARKED” for a mailed Form 4 in regards to the 13JUL2016 date?


  7. Thanks for all you do and let’s not forget those responsible for all of this: Jeff “41F” Folloder and his gang of cronies at the NFATCA.

    Boycott them and every website that relates to them!


  8. Tom:
    Interesting situation….2 persons from Texas (residents and Texas drivers license) set up ABC NFA Trust. The trust goes to Colorado and purchases a suppressor. The trust files the form 4 to purchase the suppressor from the Colorado dealer and it is approved. When one of the trustees goes to Colorado tries to pick up the suppressor (the suppressor being any other weapon and follows the rules for handguns) and fills out the 4473, it is denied because the state of residence in box is not the same as the state he is picking up the suppressor in.
    My understanding has always been with trusts is that they are not individuals so they do not have to follow they rule of any other weapons?
    So..what do they do and how should they proceed?


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