Tag Archives: ATF41P “atf 41p” “gun trust” llc atf “bureau of alcohol tobacco firearms and explosives” rulemaking

Calling All Class 2 and 3 SOTs

By Tom Odom, Esq.

In connection with our on-going effort to oppose ATF’s proposed rulemaking 41P (addressed in more than twenty recent posting to this blog), the Firearms Industry Consulting Group, a division of Prince Law Offices, P.C.,  is seeking Special Occupation Tax payers (SOTs) that will share details of their experience in dealing with firearms regulated under the National Firearms Act.

If you are a licensed dealer or manufacturer of NFA firearms and are one of the many SOTs that can answer “yes” to one or more of the following questions, we would like to hear from you:

• Are you located in a jurisdiction where State law requires that you conduct some form of background check in addition to the ATF Form 4 before physically transferring the NFA firearm to a customer?

• Do you regularly perform a NICS check upon completion of a Form 4473 even for NFA firearms?

• Have you been advised by your IOI (or other ATF representative) that you should perform a NICS check upon completion of a Form 4473 even for NFA firearms?

Our website at www.FirearmsIndustryConsultingGroup.com provides information on how to reach our attorneys by phone, fax, and e-mail.



Filed under ATF, Firearms Law, Gun Trusts


By Tom Odom, Esq.

I previously shared the results of my review of the first batch of public comments that the Bureau of Alcohol, Tobacco, Firearms, and Explosives (“ATF”) posted to the electronic docket at http://www.regulations.gov  and a follow up article.  The first batch consists of the ninety-six comments posted September 12.  As of midnight September 16, a total of 435 comments (including the 96) had been received at http://www.regulations.gov/#!docketDetail;D=ATF-2013-0001

Please note that each comment is assigned a unique identification number (distinct from the “tracking number”) that begins with the prefix ATF-2013-0001-.  As with my prior summary, I will use the four digits that follow that prefix in the following discussion to invite your attention to points raised in specific comments.

As I explained in yet another prior post, the Administrative Procedure Act (“APA”) requires ATF not simply to choose between the option outlined in its Notice of Proposed Rulemaking (“NPR”), on the one hand, and no change whatsoever on the other hand.  ATF is responsible for considering all significant alternatives and explaining its choice among them.  The first batch of comments presented quite a variety of alternatives.

A.        Opposition to ATF’s Proposed Rule

Many, if not most, comments simply stated that the author preferred no additional regulations, opposed ATF’s proposed rule, or both.  E.g.,0012, 0014, 0015, 0016, 0017, 0018, 0025, 0027, 0028, 0036, 0058, 0064, 0071, 0076, 0077, 0079, 0080, 0088, 0091, 0092.

“I am opposed to any changes in the existing procedure regarding the use of ‘NFA Trusts’ for Form 4 approval.”  [0009]  ” It’s my understanding that less than 1% of all denied persons under the NICS system are prosecuted — so I certainly see no need to enact more laws when the ones on the books aren’t even enforced now.”  [0071]

Even an advocate of “sensible” gun control expressed opposition to the proposal.  “I have no problem with gun control and regulation if they are practical and make sense.  This one does not do either.”  [0015]

B.        Revise Existing Regulations to Reduce Burdens

Other authors saw the rulemaking as an opportunity to press ATF to reduce the burden under existing regulations.  E.g., 0031, 0075.

            1.         Eliminate CLEO Certification for Individual Applicants

            To the extent individuals began to form legal entities to hold NFA firearms as a consequence of ATF’s existing regulations and procedures — notably the effective veto power wielded by CLEOs and the longer processing times associated with applications by individuals — some comments specifically suggested eliminating the CLEO certification for individuals.  “I see no continued need for the CLEO signature in this day and age.  The speed and accuracy of the modern electronic background check has easily replaced this requirement from 1934.”  [0087]

Until recently, ATF had indicated that eliminating that requirement was part of the proposal it would present.  ATF repeatedly published an abstract in the Unified Regulatory Agenda stating:

The proposed regulations would (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.  (emphasis added)

           As recently as October 2012, ATF published that description and indicated that it contemplated publishing a NPR in July 2013.  As that abstract indicates, consistent with the NFATCA petition for rulemaking dated December 3, 2009, ATF contemplated that its proposed rule would “eliminate the requirement for a certification signed by the CLEO.”  While ATF is permitted to change course before publishing a proposed rule, certainly where ATF considered an alternative, internally and in discussion with NFATCA, for several years, that alternative warrants consideration and ATF should have provided some reasoned explanation for the change in course.

Addressing the other problem that prompted increased use of legal entities, one comment made a suggestion sure to prove popular:  “Hire additional examiners for the NFA branch to deal with the massive backlog of applications.”  [0075]

            2.         Reduce the Regulations on Certain Subclasses of NFA Firearms

           Some of the comments suggesting that if ATF was going to adjust its application procedures, it should consider reducing the burdens imposed with respect to certain types of NFA-regulated firearms.  Most often those comments suggested that ATF should significantly reduce the regulatory burden with respect to suppressors.  E.g., 0017, 0031, 0064, 0075, 0081, 0085.  In light of the growing number of States permitting use of suppressors while hunting (now up to 39 States) this may be an effective point.

At least one author made a similar argument with respect to short-barreled rifles.  See 0075.

Given the different treatment of the class of “Any Other Weapons” under existing law, it may not be unreasonable to suggest ATF tailor its proposal to the very different types of “firearms” regulated under the NFA.

            3.         Start Over

            Some comments suggested a much broader need for revision to existing ATF regulations.  “[M]y recommendation is to take most of the existing regulations off the books and burn them in the parking lot.”  [0073]

Modernize and convert the NFA process “to electronic forms that only need be filled out once.”  [0075]

One author observed:  “I do not see why an individual needs to submit fingerprints and a photo when making a title 1 firearm requires no such proof in the first place.”  [0004]  He advocated “removing the requirement for local law enforcement being needed to sign off on Form 1 and Form 4s.” Some, unfamiliar with ATF’s prior determinations, may be unaware that ATF has determined that an individual may make his/her own firearm, without need for even serializing the manufactured firearm, if there is no intent to manufacture the firearm for profit (AKA it must be for personal use).

C.        Alternative Methods for Background Checks

Some comments pointed out alternative means to address ATF’s concerns.  The means to do so mentioned most often was the National Instant Check System (“NICS”).  E.g., 0052, 0053, 0067, 0086.  “Why can’t a NICS check by a nearby FFL take the place of the fingerprint and photo requirements?”  [0004]  Rather than ATF’s proposal, “[a] more reasonable way to achieve background checks would be to require that a NICS check be performed on each person listed on a trust or as an officer in a corporation either when the entity is formed, or each time it requests a transfer.”  [0054]

Other comments suggested that CLEO certification should be replaced by CLEO notification.  “It would be much better to have CLEO notification, rather than sign-off.  Keep trusts and corps free of the extensive burdens.”  [0075]  “[R]emoving the CLEO sign off requirement, and replacing it with CLEO notification is one change that is needed in the proposed rule.”  [0086]  “I would propose that a notice go to the CLEO.  This would mirror the notice that goes to the CLEO when receiving/or renewal of a C&R or FFL.  If the CLEO had knowledge that this individual was an issue, he could raise that concern at that time.”  [0087]

D.        Alternative Methods of Restricting “Responsible Persons”

Other comments pointed out that appropriate language in the documents governing legal entities could serve the purpose.

My trust explicitly states that any trustee that is or becomes an ineligible person as defined by federal law or state law must be deemed as to have immediately resigned and must immediately surrender all NFA items held on behalf of the trust.  This language in my NFA trust clearly prevents the possibility of a prohibited person from owning or taking possession of NFA items.  This language puts to rest the BAFTE’s fears of prohibited persons using a trust as some kind of legal loop-hole.  I would recommend that instead of requiring finger prints, passport photos, and a CLEO signature for all responsible persons the BATFE require that either:

(1)       Language similar to that used in my trust is required for NFA trusts.  Prohibiting an ineligible person from being a responsible person.


(2)       If the trust does not have such language then acting Trustees, not successor trustees or any other member, be required to send in fingerprints, passport photos, and receive a CLEO signature.  [0019]

ATF could revise its proposed definition of a “responsible person” to take into account such limitations.

As another author observed, due to such provisions in trusts and other documents governing various legal entities those documents “can be an enormously educational tool in preventing such occurrences” as the proposed rule seeks to prevent.  [0059]

E.         Limited Support for Portions of the ATF Proposal

Some comments reflected that the authors were willing to accept certain aspects of ATF’s proposal if ATF eliminated other provisions.  For example, some comments were willing to accept the imposition of a requirement that responsible persons provide fingerprints and photographs as long as CLEO certification was eliminated.  E.g., 0046, 0065.

“If the goal is to keep restricted persons from owning NFA items then name and finger prints seem to be the only requirement.”  [0048]

“I am not opposed to fingerprints, photographs, and NICS background checks.  The CLEO signoff however, should be eliminated.”  [0052]


Filed under ATF, Firearms Law, Gun Trusts

Letter to Submit to Your CLEO regarding ATF 41P

By Joshua Prince, Esq.

As our viewers are aware, Firearms Industry Consulting Group (FICG), a division of Prince Law Offices, P.C., is spearheading the opposition to the Bureau of Alcohol, Tobacco, Firearms and Explosives’ proposal, ATF 41P. In that vein, in conjunction with Attorney Robert Merting, we have prepared a sample letter that you can send to your Chief Law Enforcement Officer (CLEO) requesting that he/she submit an official comment on ATF 41P to ATF. The sample letter even includes a sample letter for your CLEO to send to the ATF.

As we have previously stated, form letters are much less persuasive than specific letters; however, any letter, in this regard, which we can get filed with ATF will be very beneficial. Therefore, I would ask that you call your CLEO and attempt to schedule an appointment so that you can meet with him/her, in person, discuss the issue and present the letter to your CLEO during that meeting.

We express our great appreciation for Attorney Merting drafting the majority of the letter for us to be able to share with our viewers.



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Filed under ATF, Firearms Law, Gun Trusts


By Tom Odom, Esq.

I previously shared the results of my review of the first batch of public comments that the Bureau of Alcohol, Tobacco, Firearms, and Explosives (“ATF”) posted to the electronic docket at http://www.regulations.gov.  The first batch consists of the ninety-six comments posted September 12.  As of midnight September 15, a total of 435 comments (including the 96) had been received at http://www.regulations.gov/#!docketDetail;D=ATF-2013-0001

Please note that each comment is assigned a unique identification number (distinct from the “tracking number”) that begins with the prefix ATF-2013-0001-.  As with my prior summary, I will use the four digits that follow that prefix in the following discussion to invite your attention to points raised in specific comments.

My first review addressed several of the major false premises that seem to underlie ATF’s proposed rule including (1) the mistaken view that registered NFA firearms are used in crime to any significant degree, (2) the failure to acknowledge the legitimate purposes served by legal entities such as trusts, corporations, and LLCs, on the one hand, and the absence of misuse of legal entities by prohibited persons for purposes of obtaining NFA firearms to any significant degree, on the other hand, (3) the failure to consider that there are existing criminal penalties for transfer of a firearm to, and possession of a firearm by, a prohibited person, (4) excluding consideration of the legitimate uses for NFA firearms by law-abiding citizens, whether through the use of suppressors to mitigate hearing loss, or otherwise, and (5) ATF’s mistaken impression as to the reason many Chief Law Enforcement Officers (“CLEOs”) refuse to sign forms as stated in the Notice of Proposed Rulemaking (“NPR”).  The first review contained a very cursory overview of ATF’s cost/benefit analysis, a matter considered here in greater detail.

A.        ATF’s Cost/Benefit Analysis is Flawed

Many of the comments point out that the cost/benefit analysis ATF published in the NPR seems woefully inadequate.

1.         ATF Quantifies No Benefits

The NPR quantifies no benefits whatsoever from its proposed rule.  It would be rather difficult for ATF to do so as federal law already criminalizes possession of a firearm by a prohibited person whether using a legal entity or otherwise.  18 U.S.C. § 922(g).  And it is already a violation of federal criminal law for a trustee (or any other “responsible person” associated with a legal entity) to permit a prohibited person to possess a firearm if he has even “reasonable cause” to believe the person is prohibited.  18 U.S.C. § 922(d).  In that event, any benefit from the proposed rule would seem to be limited to the marginal increase in compliance with law projected from the imposition of a redundant prohibition.

2.         Omitted Costs

Some comments pointed out that by extending the CLEO certification requirement to trusts it would effectively become impossible to obtain suppressors despite Federal and State policy permitting their use by private citizens.  E.g., 0053.  Such added obstacles to obtaining suppressors for use in hunting and in shooting events would lead to increased hearing loss.  E.g., 0003, 0017, 0062.  The same would be true with respect to use of a firearm in a confined space in a self-defense situation.  E.g., 0017.

Even Great Britain with their overzealous firearms regulations openly want their firearms owners to use suppressors for noise reduction and they are legally purchased over the counter with no background check whatsoever.  Shooters shouldn’t have to jump through the hoops necessary to obtain suppressors as more and more states allow suppressors to be used during regular hunting seasons.  [0085]

Perhaps individuals familiar with measuring the cost of hearing loss could quantify this item.  What do juries award in cases of hearing loss?  What level of benefits are available under workers’ compensation and other schedules?  And how much more likely is it that a shooter would suffer hearing loss due to the unavailability of a suppressor?

Some comments noted that the lost sales of suppressors would, in turn, impose significant costs on suppressor manufacturers, distributors, and dealers.  E.g., 0021, 0030  “[T]his will kill the industry and take more money out of the pockets of business owners that are already having a hard time in this economy.”  [0042]  One FFL wrote:

As a Federal Firearms Licensee small business that profits from the sale of suppressors, this proposed rule would negatively impact my income.  The problem, if amended, is the extreme difficulty in obtaining the CLEO certification.  Many CLEO’s will not sign the Form 4’s for numerous reasons, and are not required by law to sign them.  Therefore, the transfer process would be stopped and there would be no other path for the customer to obtain their purchased item.  I notice there is quite a bit of research on additional costs involved in the proposal, but I couldn’t find the research on how much profit will be lost of all the businesses across the nation . . . [0034]

The lost revenue would also undercut innovation in suppressor technologies.  E.g., 0050.  Perhaps FFLs can provide some information on the number of jobs that would be lost as a result of the proposed rule.

Other comments observed that ATF failed to account for additional significant costs such as the lost taxes from fewer NFA transfers and on the income lost on the sale of NFA firearms.  E.g., 0002, 0030, 0034, 0058, 0061.  ATF estimated it received 40,565 ATF Forms 1 or 4 submitted in 2012 for non-FFL legal entities.  See 78 Fed. Reg. at 55,021.  If even half that number of applications would not be submitted due to the added processing burdens of the proposed regulations, that would seem to represent an annual loss of more than $8 million per year in stamp tax alone, in addition to the lost income taxes on manufacturers, distributors, and dealers.  Perhaps FFLs can provide some information on the sales tax and income tax revenues generated from the manufacture, distribution, and sale of NFA firearms that would be lost a result of the proposed rule.

Some comments wondered about the cost to ATF (and, hence, taxpayers) to store all the added information ATF would collect under the proposed rule, such as the documentation on the existence and validity of legal entities.  Others pointed out that it seemed ATF was unreasonably shifting some of that cost back to applicants to the extent ATF required repeated submission of identical information.

[T]he information of the responsible parties needs to be stored on record that way they don’t have to keep sending it in if they are already approved.  Forcing individuals to keep providing fingerprints and photo identification after the first time is asinine.  [0004]

The burden of collecting redundant information was supposed to be minimized by the Paperwork Reduction Act (“PRA”) and, perhaps, if ATF had performed a thorough PRA analysis some of these costs may have been reflected in the cost/benefit discussion.

3.         Under-Stated Costs

Comments pointed out that virtually every direct cost on persons seeking approval to make or transfer a NFA firearm were higher than ATF assumed.  “The estimates of time needed, and costs associated with getting fingerprints and photos are wildly inaccurate, and the time to process all that information is off as well.”  [0004]

Some comments expressed concern with the costs the proposed rule would place on CLEOs.  E.g., 0002, 0012, 0030, 0061.  For CLEOs to “even attempt to process the volume of applications by responsible parties, seeking to purchase a suppressor for example which is legal for hunting in the State of Texas, they would be neglecting their primary duties of law enforcement and the pursuit of criminals.”  [0006]  Perhaps some CLEOs would care to explain the problems that would result if they faced a significant increase in the number of applications they received.

One comment addressed the cost to ATF and, indirectly to the public in terms of further delays in processing times.

This proposed rule is pointless. It will only serve to further increase the workload of the already-overworked and understaffed NFA branch.  The wait time for approval of Forms 4 and 1 is already over 9 months.  Multiplying their workload with a horde of additional paperwork will increase it exponentially.  If anything, we need to find ways to simplify and streamline the NFA process, not further complicate it.  [0075]

Other comments made the point in terms of direct costs to applicants waiting for approval.  “[A]s of now the approval process is 9 months to a year and that is way too long to propose adding additional hurdles and requirements to it.  A right delayed is a right denied.  Speed up the current process before adding more rules and regulations.”  [0004]

Other comments pointed out that ATF’s estimate of two responsible persons per legal entity was rather low, e.g., 0019 (six), so that ATF counted only a fraction of the costs per legal entity.  E.g., 0062.  Perhaps some attorneys who draft the documents forming such legal entities can provide information regarding whether ATF’s estimate is low.  Or, if you use a legal entity and have more than two responsible persons, perhaps you would care to tell ATF directly.  As presently drafted, the proposed rule is worded so broadly that it may be construed to reach a large number of individuals.

B.        ATF’s Proposed Rule is Unworkable

Some comments pointed out problems with ATF’s definition of a “responsible person” and the absurd results that would follow.

“Responsible person” under proposed § 479.11 is defined very broadly, and much more broadly for trusts than for other entities.  There is quite a difference in how the proposed regs treat trusts versus other entities.  In addition to the grantors that set up the trust, successor trustees, distribution trustees, special trustees, lifetime beneficiaries, death beneficiaries, remote contingent beneficiaries, trust protectors, those who may hold a power of appointment, or frankly anyone that can fog a mirror, if possession includes constructive possession — all of these may be “responsible persons” based on having “direct or indirect” right of possession.  [

With the other entity types the scope of “responsible person” stops at the manager level, with those having authority to direct the management and policies of the entity relating to the firearm.  [0059]

To the extent such observations fairly demonstrate the scope of individuals associated with a trust who would be subject to ATF’s proposed rule, it is difficult to imagine how the average number of responsible persons per legal entity is only two.  Either the cost of the proposed rule is dramatically understated or the language defining a “responsible person” would seem to require serious reworking.

I share the role of co-trustee with my wife.  Two of my soon to be three children have been setup as successor trustees along with my Mother.  The proposed rule change would require that all soon to be six individuals be finger printed, have photos taken, and receive CLEO sign off.  My youngest child is not even born, you would ask me to fingerprint a newborn once she arrives?  You would ask me to finger print my other children who are aged two and five years?  You would have my finger print their elderly grandmother?  I dare say that I feel insulted.  My children are only on the trust as a method of inheritance.  My mother acts a successor trustee to hold the items until my children reach the age of 21 and can act as trustees.  Surely the ridiculousness of the idea of fingerprinting an infant, a two year old, and a five year old for a criminal background cannot be lost upon you.  [0019]

At most, “acting Trustees, not successor trustees or any other member, be required to send in fingerprints, passport photos, and receive a CLEO signature.”  [0019]

Other comments observed that the proposed regulations in connection with the long processing times would create a potential endless cycle of applications.

This requirement creates an undue burden on trusts and corporations in that they now have to submit photos and fingerprints of responsible persons, when those responsible persons could change during the lengthy NFA approval process causing the entire thing to have to start over again and again in that you have to submit identification for everyone involved.  [0004]

            Some comments pointed out that the delays are often even longer because of a series of transfers, each needing to be approved by ATF one at a time, may required to complete a transaction.  In such circumstances added regulatory obstacles may frustrate completion of the transaction.

Last week I purchased a machine gun from a dealer out of state and now am waiting on the approval of Form 3 to transfer to my dealer in state.  How is that going to work if my CLEO refuses to sign on my gun trust?  Am I supposed to just lose the thousands of dollars spent on that item?  It takes a few months before I can even get my Form 4’s sent in.  [0065]

Neither purchasers or sellers may be able to predict, months in advance, whether a CLEO signature may be available, not just to the settlor of the trust but to each and every responsible person associated with the trust.  The result would be to ossify the legal market for sales while doing nothing about the underground market.

C.        Transition Period

Whether considered as an understated element of the cost/benefit analysis or an issue going directly to the workability of the proposed rule, ATF has failed to explain in its NPR how it would transition to any new regulation it adopted.

Joshua Prince, in his September 2 letter on this point, noted that although ATF had orally indicated that any new rule would not apply to previously approved applications or to applications pending at the time any new rule became effective.  [0096]  He requested that ATF clarify its proposal with respect to such transition issues prior to publication of the NPR in the Federal Register.   ATF failed to provide any clarification to the public notice on how it proposes to handle these matters by leaving the NPR unchanged in that respect.  Moreover, rather than even provide written confirmation to Mr. Price, as his letter requested, ATF simply posted his letter in the docket as a public comment.

Other comments shared the concern.  “I would want to insure that applications already submitted are grandfathered.”  [0093]

*          *          *

            Look for forthcoming posts to this blog examining some of the other issues raised by the comments as I next turn my attention to the wide range of alternatives that have been suggested in lieu of ATF’s proposal.


Filed under ATF, Firearms Law, Gun Trusts


By Tom Odom, Esq.

            I just completed my review of the first batch of public comments that the Bureau of Alcohol, Tobacco, Firearms, and Explosives (“ATF”) posted to the electronic docket at http://www.regulations.gov.  The first batch consists of the ninety-six comments posted September 12.  As of midnight September 15, 373 comments (including the 96) had been received at http://www.regulations.gov/#!docketDetail;D=ATF-2013-0001


Please note that each comment is assigned a unique identification number (distinct from the “tracking number”) that begins with the prefix ATF-2013-0001-.  I will use the four digits that follow that prefix in the following discussion to invite your attention to points raised in specific comments.



Only one comment seemingly supported ATF’s proposed rule to impose additional restrictions on the making and transfer of firearms regulated under the National Firearms Act (“NFA”), and that comment was limited to the assumption that the NFA only applied to machine guns.  [0024]  Perhaps the author meant that he opposed the proposed rule because the NFA, in fact, includes other types of firearms as well but, if that was the meaning, it was inartfully stated.



A.        Preliminary Matters



            The fact that one comment was filed in the name of “Concerned Citizen” [0040] and another in the name of “Tony G” [0018] raise a question.  I do not know whether the authors asked ATF to withhold their names from publication and ATF assigned the pseudonyms or whether the authors submitted the comment in those names.  Remember, the Notice of Proposed Rulemaking (“NPR”) states that comments must be signed.  It outlines a procedure for you to follow if you do not want personal information posted.  Please use the procedure specified in the NPR rather than assume a fictitious name.



            With only a few exceptions, the comments were respectful and avoided personal attacks.  Given how strongly many of you feel about these issues, almost all of you managed to show great restraint while expressing your opposition.



            Other than the one comment referenced in the first paragraph above, one or two additional comments could be misquoted as suggesting support for the ATF proposal.  I think that when read in full it is clear that that author is in opposition and that somewhere along the line a typographical error resulted in the omission of “not” from a key phrase or sentence, like the assertion that Chief Law Enforcement Officers (“CLEOs”) would sign forms for anyone.  [0021]  As a result, I urge you to carefully proofread your comment before submitting it.  If, upon reviewing how your comment has been posted it is clear to you that a word has been dropped, you may care to advise ATF of the correction.



B.        Issues Raised in the Comments



            The first batch of comments raised a wide variety of issues.  I apologize in advance as my effort to put so much information into a fixed number of categories necessarily requires some over-simplification.  As you can see from my quotes from some of the posted comments, details and factual bases for the authors’ views add to the persuasiveness of comments.  This first pass through the comments examines the broad-based attacks on the flawed premises underlying ATF’s proposed rule.  Over the next few days, I will post similar summaries of the comments relating to other issues.



            1.         Registered NFA Firearms Are Not Used in Crimes



            Many comments assert that there is no history of NFA firearms being used in commission of a crime.  E.g., 0066, 0084.  Presumably the authors meant that registered NFA firearms had not been so used.  E.g., 0044, 0085, 0089.  Others who were more restrained in their representation of the facts asserted that there was no recent history of such misuse, e.g., 0020, 0089, asked rhetorically when such misuse last happened, e.g., 0090, 0013, or pointed out that ATF’s NPR failed to identify a single such usage,. 



In 25 years of practicing criminal law I have never had a case, or even heard of one, where the crime was committed with a properly licensed class lll firearm. [The] Press release from the administration doesn’t even cite one, only the successful intervention under the existing system.  [0009]



Other comments pointed to no more than a very small number of such incidents.  See 0017 (one), 0081 (one), 0041 (almost nonexistent), 0023 (“very few, if any”), 0046 (no “appreciable or even measurable quantity”), 0040 (two), 0049 (“very rarely”), 0062 (not used in “street crime”), 0066 (not used in assault or murder).



While NFA weapons as a whole are perceived by the American public as dangerous, their use in crime is exceedingly rare.  Legally-owned (ie, NFA-registered) machine guns have been used in only two murders since 1934, one of which was committed by a police officer.  A previous director of the ATF testified before Congress that fewer than ten registered machine guns have ever been used in any type of crime (including non-violent offenses such as failing to notify ATF of address changes, etc.).  The criminal use of other legally-owned NFA weapons is similarly rare.  [0012]



“In the 79 years the NFA has been in place, only 2 crimes have been committed by legally owned weapons subject to regulation by the NFA.”  [0051]



Other comments observed that the existing, strict regulatory regime applicable to lawfully acquired NFA firearms meant that criminals seek firearms from other, illegal sources, rather than comply with registration and tax requirements.


A criminal is not going to spend tens of thousands of dollars for a NFA firearm, pay a $200.00 stamp fee to the BATF, HAVE IT REGISTERED, then wait six month for the transfer to be approved to take possession of the firearm.  A criminal by its very definition will not obey this regulation and will obtain firearms through nefarious means.  [0041]



And:  “Simply put, criminals don’t mail in NFA creation and transfer forms.” [0046]  And:


The Title II weapons used in prominent crimes, such the AK-47s used in the North Hollywood shootout of 1997, have universally been illegally-owned or illegally-converted weapons.  [0012]



See also 0011, 0013, 0014, 0022.



2.         Legal Entities Serve Legitimate Purposes and Are


Not Used by Criminals to Facilitate Access to NFA Firearms



            Many comments pointed out the legitimate use of legal entities such as trusts, corporations, and LLCs.  Such purposes included estate planning, e.g., 0059, 0061, 0081, 0082, permitting members of the same family to each use NFA firearms, e.g., 0051, 0057, 0059, avoiding liability due to the “constructive possession” doctrine, e.g., 0031, and, most commonly, overcoming CLEO refusal to sign forms, e.g., 0051, 0058, 0087.



            Some comments pointed out the absence of any record of a crime conducted by someone using a NFA firearm to which he had gained access as a “responsible person” of a legal entity.  “While I cannot say for certainty that felons are not using trusts to illegally purchase weapons, one thing that is certain is that they are not committing crimes with them.”  [0051]



To make this change it should be required by the ATF to prove that the US public has a real risk to their safety.  This should be done by a non-biased third party that shows past harms done by NFA items purchased through a living trust or corporation, as well as projected future risks based on NFA items used in crimes to create a projected trend.  Laws should be made on pure scientific fact and not emotions or political pressures.  After a scientific study is done then a new proposal should be written and put up for review. 


This change should not go into effect because no proof is presented that there is a real need for it.  [0027]



Other comments made the same point by observing that ATF failed to identify any example of such misuse in its NPR.



The White House press release attempts to justify this proposal by asserting that in 2012 alone, BATFE “received more than 39,000 requests for transfers of these restricted firearms to trusts or corporations.”  Yet BATFE does not cite even one instance in which any of those registered firearms was used to commit a crime.  Instead, BATFE’s proposal cites a case in which it denied a transfer of a silencer to an individual who it determined was ineligible to possess a regulated firearm and then denied a subsequent transfer to a trust created by the same person.  [0037]



And:  “There is nothing in this proposal that indicates how these regulations would deter one, single criminal, nor has the ATF supplied even one single example of how or where a firearm transferred via a trust or corporation was used in violation of current US law.”  [0041]  See also 0004, 0015, 0022, 0031, 0058, 0068, 0075, 0084. 0094.



I have been unable to locate any evidence of any prohibited person being prosecuted for being in possession of an NFA-listed item while being a member of a trust; the standards involving possession of a Firearm by a prohibited person would have been followed and the fact that the prohibited person was a member of a trust would have been noted in the trial.


If there is no evidence of such a person being found to both be in possession of a restricted item — the National Firearms Act is a restrictive act — calls into question why the changes to an NFA Trust would be required.  [0081]



Others pointed out the absurdity of the assumption criminals would use such an approach.



[T]he idea that criminals will use trusts to buy machine guns is absurd.  First, they cost more than a car anymore.  Second they have to pay the transfer tax of $200.  Third, with the wait time for the form 3 approval and then the even longer wait for the approval of the form 4, the “criminal” will have to wait 8-9 months, and that is if there are no hiccups.  [0009]



See also 0035.  And:  “The money and time spent in trying to prevent a statistically minute occurrence doesn’t appear worth it.  Do you really think that someone that is planning on permitting a crime with an NFA weapon is going to use this route to obtain it?”  [0055]  “What felons are paying $200 tax to skirt gun regulations that take 9 months to a year to approve?  They’ll just create/buy the weapons and skip the paperwork and the tax entirely.”  [0004]  “No gang banger is going to go thru the excruciating process of paperwork, tax stamps and waiting just to get something — they will buy it illegally.”  [0003]  See also 0005, 0007, 0030. 0069, 0095.



[T]hese people who seem to be guilty of mass murders with weapons don’t spend much time planning and acqui[re] the weapons quickly so they can act on the short term plan.  Any long term planners for large mass murders . . . will find black market weapons to use and not waste time requesting authority to purchase machine guns with BATFE permission.  [0022]



            3.         ATF’s Proposal is Pointless



            Many of the comments pointed out that the ATF proposal would do nothing to accomplish any legitimate objective.  These observations took several forms including those referenced above.  In addition, comments noted that it is already a violation of law for a prohibited person to possess a NFA firearm, whether individually or through a trust or other legal entity.  E.g., 0010, 0011, 0014, 0035, 0036, 0039, 0049, 0060, 0064, 0071, 0094.  Other comments added that it is already a violation of federal criminal law for a trustee (or any other “responsible person” associated with a legal entity) to permit a prohibited person to possess a firearm if he has even “reasonable cause” to believe the person is prohibited, 18 U.S.C. § 922(d)   E.g., 0020, 0049.



            4.         Legitimate Uses of NFA Firearms



            Some comments addressed legitimate uses for firearms subject to NFA regulation, most notably the use of suppressors.  E.g., 0031, 0062, 0064, 0081.  Comments pointed out the benefit of suppressors to avoid hearing loss, particularly in the context of hunting and self-defense.  “The suppressor does not make the firearm silent as shown in Hollywood movies.  They will reduce the noise from about 140db to 100db, no way near “silent”. . . .  I am surprised that the EPA and OSHA do not require them to reduce noise pollution.”  [0031]  See also 0064, 0081.



            Other comments pointed out that certain NFA firearms were mostly collectables.  E.g., 0029, 0047, 0082.



            5.         ATF’s Cost/Benefit Analysis is Flawed



            Some comments addressed the cost/benefit analysis reflected in the NPR.  These comments pointed out the costs, even as estimated by ATF, could not be justified.  E.g., 0055.  Other comments observed that ATF failed to account for additional significant costs such as the lost taxes from fewer NFA transfers and on the income lost on the sale of NFA firearms.  E.g., 0002, 0030, 0034, 0058.



            I will look to more of the details of the cost/benefit analysis in one of the next posts.



            Other comments observed that ATF could better use its resources to investigate and prosecute persons who sought to obtain firearms and were denied.  E.g., 0045, 0071.  “76,000 failed background checks in 2011 and 3 people went to jail.  This alone says the ATF isn’t interested in combating crime.”  [0020] 


            6.         ATF Relies on a False Premise Regarding CLEO Refusals and the


Consequent Increased Use of Legal Entities to Hold NFA Firearms



            Although ATF acknowledges that CLEOs have refused to sign forms, ATF asserts that the reasons CLEOs do so is because of concern for civil liability.  Although many comments addressed the issue of CLEO refusals, not one supported ATF’s asserted reason.  Instead, comments pointed out that, at most, CLEOs were concerned about political liability and many CLEOs simply disagreed with the legislative judgment that NFA firearms were appropriate for private citizens.  E.g., 0040, 0042, 0048, 0052, 0061, 0064, 0074, 0075, 0083, 0085, 0086, 0087.  “CLEOs refuse to sign due to politics, not for fear of liability; enough said.”  [0002]



I live in a county in Kansas where our CLEO is opposed to the possession of Class lll items by civilians. He simply will not approve them, for anyone.I am a lawyer, a CCH licensee, a CCH instructor, among other things.  That my CLEO should be given the power to deny me the right to own a particular type of weapon because of his political persuasion is, simply, just not right.  [0009]


“This allows anti-gun sheriffs and police chiefs to block ownership of NFA weapons just because they don’t like them.”  [0020]  “I can recall more than one encounter with local LEO’s whose opinion is that no civilians should not possess firearms, period.”  [0052]  Some CLEOs ” won’t sign off on the form 4’s because ‘they don’t think you should have it.’  That is the exact quote I got my local CLEO.  He is an anti-gun police chief and doesn’t want anyone owning these items when it is perfectly legal to do so in my state.”  [0065]



The CLEOs I know who refuse to sign applications — not on the basis of an individualized determination with respect to the applicant but on a blanket or policy basis — do so primarily because they do not like the idea of any private citizens having firearms, regardless of what the U.S. Constitution, Federal statutes, and State law say on the matter.  [0074]



            Other comments suggested that the CLEO certification requirement was misused by CLEOs for improper purposes such as “the ability of CLEOs to demand campaign donations or favors in exchange for signatures on ATF Forms.”  [0054]



            Some comments pointed out that the premise that a CLEO would have information not available to ATF itself is a relic of an earlier time.  E.g., 0067.



As an example of the irrationality of the requirement, I live in a city of 2 million people.  The idea that a law enforcement officer, judge, or other CLEO would have any knowledge of my existence whatsoever, and further have knowledge of anything specific that a national database would not have, is beyond all rationality.  [0053]



And:  “The odds of someone like the Chief of the NYPD knowing every individual within their jurisdiction is infinitesimally small.”  [0067]



            Other comments observed that ATF mistakenly operates on the assumption that its definition of CLEOs supersedes arrangements under State law that may serve to greatly restrict the officers available to sign forms.  E.g., 0082.



As such comments explain, the shift toward increased use of legal entities is a consequence of ATF’s failure to eliminate the CLEO certification requirement for individuals once NICS and other sources rendered that system essentially obsolete.  E.g., 0031, 0054, 0058, 0062, 0067, 0074, 0075, 0087.  Instead of changing the text of the certification in a manner that would accomplish nothing given the actual reasons CLEOs refuse to sign and expanding that requirement to apply to all responsible persons of legal entities, many comments advocated the complete elimination of the CLEO certification requirement.  E.g., 0031, 0085, 0086. 



[N]o regulatory text denying the CLEO bears any liability for the certification is likely to change the practice of most CLEOs.  They will continue to refuse to sign simply as a matter of personal objection to congressional policy.  Expanding the applicability of the CLEO certification requirement to all responsible persons of legal entities will merely empower CLEOs who currently refuse to sign applications for individuals to more-thoroughly frustrate Federal and State law.  [0074]



            Some comments suggested, as an alternative, a CLEO notification procedure. 



A far better solution would be to follow the same procedure used when a business or individual applies for a Federal Firearms License were the applicant attests that they sent a copy of their application to the CLEO, providing the name and address where the FFL application was sent. This procedure, mirroring the FFL application process, would not place an undue administrative burden on local law enforcement or create the opportunity for a de facto ban to be created through failure to act by the CLEO within a jurisdiction without action by the legislative branch of the state government.  [0006]



See also 0086, 0087.  Other comments suggested that the CLEO should be required to sign unless he has a valid reason to refuse.  E.g., 0047, 0058, 0065, 0083.



*          *          *



            Look for forthcoming posts to this blog examining some of the other issues raised by the comments.




Filed under ATF, Firearms Law, Gun Trusts

Should I Start a Trust or Corporate Entity Given ATF’s Proposal, ATF 41P?

By Joshua Prince, Esq.

Many individuals are inquiring of whether they should start a trust or corporation, or if already having started such a fictitious entity, submit additional making or transfer applications, given the Bureau of Alcohol, Tobacco, Firearms, and Explosives’ (ATF) recent proposal, ATF 41P, to require CLEO signatures for all fictitious entities, as well as institution of a new role, “Responsible Person.” While ATF 41P is only a proposal and has not yet been enacted, and therefore the final language of any new regulation is yet unknown, I will attempt to explain my rationale that you should submit any making or transfer applications NOW.

For purposes of the discussion below, we will assume that ATF 41P is enacted in its current form; however, one must note that ATF 41P leaves much to be determined and is not clear in may respects. For information on ATF 41P, see my original article on the devastating effects of ATF 41P, Attorney Tom Odom’s articles on the draft proposal, procedural issues with the draft proposal, and a summary of the draft proposal, and our combined article National Firearms Act Day of Reckoning, Tuesday, September 3, 2013.

The first questions everyone wants to know is whether this regulation will remove trusts as legal entities to own NFA firearms. The answer is No. It cannot, because the definition of a person was implemented by the Congress and cannot be modified by an administrative agency. 26 U.S.C. § 7701 provides, “(1) Person.–The term ‘person’ shall be construed to mean and include an individual, a trust, estate, partnership, association, company or corporation.” (emphasis added). Therefore, trusts and other legal fictitious entities will remain to be valid entities for purposes of owning, possessing and holding NFA firearms.

The next question everyone is asking is whether ATF 41P will require existing fictitious entities (partnerships, trusts, corporations, limited liability companies…etc) to submit documentation regarding their previously approved transfers. While ATF 41P does not specifically address this issue, it is important to note that the proposal in written in relation to applications submitted after the proposed rule becomes a regulation. As an example, the Proposal reads, “The proposed changes include … photographs and fingerprints, as well as law enforcement certificate, when the legal entity files an application to make an NFA firearm or is listed as the transferee on an application to transfer an NFA firearm.” (emphasis added). Accordingly, it would not apply to existing entities, which have already had NFA firearms approved to that entity. This was also confirmed by Attorney Robert Merting during his call with ATF Attorney Brenda Friend (the same individual all comments are to be directed to). He states, “Ms. Friend specifically confirmed that the rule would not be retroactive and those transactions already approved will stand.” (emphasis in original)

The follow up question is then whether pending applications would be returned, if the regulation is enacted during the pendency of those applications. During the NSSF/FAIR’s 12th Annual Import Export Conference in Washington, D.C. on August 6-7, 2013, an individual inquired of if a new regulation was implemented, would the currently pending applications be grandfathered or would they be returned. The response was that any new regulation would only apply to applications submitted after the effective date of the regulation. Although not directly stated in Attorney Merting’s article, it appears that he too was left to believe that applications pending prior to the regulation effective date would be grandfathered. Specifically, he states, “The current regulations still stand, and if you have been waiting to purchase NFA firearms now is the time. Past transfers should not be affected by this rule change and those with firearms owned by a trust will be grandfathered in.” (emphasis in original).

Accordingly, based upon the information currently available to me, it is my opinion and conclusion that if you are currently contemplating purchasing an NFA firearm using a trust or other fictitious legal entity that you submit the application with haste. If you have not yet formed your fictitious entity, it will likely be in your best interest to form that entity now and submit your application(s), as it appears that any application submitted prior to the effective date of the regulation will be grandfathered.

UPDATE: Attorney Merting has responded, “Josh, During my conversation with Brenda she did acknowledge that pending applications would be processed, but she could not say what date would be pending. (i.e. deposit in the mail, receipt at ATF, or cashing of the tax check.) She suggested that “normally” final rules are announced 30 days ahead of time.”


Filed under ATF, Firearms Law, Gun Trusts