Tag Archives: “Form 1”

ATF releases 2018 Report on Firearm Commerce in the United States (Numbers, Bar Graphs, and Pie Charts!)

ATF has released its annual Firearms Commerce in the United States Statistical Update for 2018. As my one friend put it, “Let the nerdery begin.” To be fair, you have to be pretty nerdy to enjoy this stuff, hence me writing about it.

The Annual Firearms Manufacturing and Exportation Report (AFMER) is only current through 2016. This is because AFMER data is not published until one year after the close of a calendar reporting year because the information provided by those whole filed a report is protected from immediate disclosure by the Trade Secrets Act. Which is why you see a two year lag (2016 data reporting in the beginning of 2017 and a year delay between its reporting and publication).

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In 2016, there were a total of 11,497,441 firearms manufactured. This was up from 2015’s number of 9,358,661 by about 20%. The number of exports was up from the previous year by about 9%, from 343,456 in 2015 to 376,818 in 2016.

The total number of imports fell from 5,137,771 in 2016 to 4,492,256 in 2017 (imports are not included not the AFMER report which is why the numbers are more current). Once again, the number of handguns imported accounts for over half the total number of firearms imported.

For those of you NFA junkies, in 2017, there was $6,371,000 in occupational taxes paid (SOTs). This is up again from the year prior and slightly under double that of 2012. Taxes paid were $22,972,00 for 2017, about a third of what was paid in 2016 ($62,596,000). Interestingly, there were 6,749 record checks, which means that ATF searched the National Firearms Registration and Transfer Record (NFRTR) that many times to determine if a firearm was possessed lawfully or if the transfer was performed lawfully. That number is up 202 times from 2016.

In 2017, there were 40,444 Form 1s and 184,312 Form 4s filed. These numbers were different from the year prior, but not by a significant margin for the Form 1s (Form 1s were down by about 9,000 but Form 4s were up about 51,000). The total number of forms processed by the NFA Branch was down about a million from the year prior. 2017 number look similar to that of 2014 and 2015.

As far as NFA firearms registered by state, Texas still leads with 637,612. Florida follows with 377,2017. California (thanks Hollywood), Virginia and Pennsylvania round out the top 5. Florida leads the charge with registered machine guns, sitting at 44,484. Texas has an astonishing 265,597 registered silencers. Florida is the next closest with 98,972 registered silencers.

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There are currently 55,588 licensed collectors of curios or relics, making it the most popular license type. It is followed closely by dealer in firearms, of which there are 56,638 active licenses. ATF reports 136,081 total active licenses (across the spectrum). Texas holds 10,920 of those licenses, making it the state with the most.

In 2017, 17 license applications were denied. This number is up exactly one from the year prior. As for compliance inspections, ATF performed 11,009 last year. This equates to 8.09% of all licensees in 2017 being inspected.

As always, the annual report helps give some insight as to ongoings within the firearms industry.

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ATF releases 2017 Report on Firearm Commerce in the United States (Numbers, Bar Graphs, and Pie Charts!)

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ATF has released its annual Firearms Commerce in the United States Statistical Update for 2017. As my one friend put it, “[t]his is like fantasy football stats for silencer dorks.” It’s actually like that for a lot more than the silencer crowd, but I digress.

The Annual Firearms Manufacturing and Exportation Report (AFMER) is only current through 2015. This is because AFMER data is not published until one year after the close of a calendar reporting year because the information provided by those whole filed a report is protected from immediate disclosure by the Trade Secrets Act. Which is why you see a two year lag (2015 data reporting in the beginning of 2016 and a year delay between its reporting and publication).

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In 2015, there were a total of 9,358,661 firearms manufactured. This was up from 2014’s number of 9,050,626 by about 3.3%. Interestingly the number of exports fell by about 20%, from 420,932 in 2014 down to 343,456.

The total number of imports rose from 3,930,211 in 2015 to 5,137,771 in 2016 (imports are not included not the AFMER report which is why the numbers are more current). Interestingly, it was handguns that account for a little over 1.2 million more firearms imported in 2016. And as you may have guessed Austria leads the charge with handguns imported, accounting for over 1.3 million coming into the country. Probably a safe bet that Glock is responsible for the majority of those.

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For those of you NFA junkies, in 2016, there was $6,018,000 in occupational taxes paid (SOTs). This is up again from the year prior and slightly under double that of 2012. Taxes paid were $62,596,000 for 2016, almost double the year before (thanks ATF 41F). Interestingly, there were 6,547 record checks, which means that ATF searched the National Firearms Registration and Transfer Record (NFRTR) that many times to determine if a firearm was possessed lawfully or if the transfer was performed lawfully.

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In 2016, there were 49,985 Form 1s and 133,911 Form 4s filed. These numbers were up from the year prior, but not by a significant margin for the Form 4s (Form 1s were up by about 17,000). While the number of forms process by the NFA Branch was up about a million from the year prior, it was the Form 2s that accounted for almost half of that number. For those that are unaware, Form 2s are used by industry to give notice to ATF that they produced or imported a NFA firearm.

As far as NFA firearms registered by state, Texas leads with 588,696. California follows with 344,622. Florida, Virginia, and Pennsylvania round out the top 5. Interestingly, Connecticut leads the charge with registered machine guns, sitting at 52,965. However, when you consider law enforcement, it starts to make sense.

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There are currently 57,345 licensed collectors of curios or relics, making it the most popular license type. It is followed closely by dealer in firearms, of which there are 56,754 active licenses. ATF reports 137,464 active licenses. Texas holds 10,954 of those licenses, making it the state with the most.

In 2016, 16 license applications were denied. This number is down almost 50% from the year prior. As for compliance inspections, ATF performed 9,790 last year. This equates to 7.1% of all licensees in 2016 being inspected.

As always, the annual report helps give some insight as to ongoings within the firearms industry.

 

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ATF Releases ATF 41F FAQ

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With the implementation date of ATF 41F looming just around the corner (July 13, 2016), the folks over at ATF have released the ATF 41F FAQ. You can find that here. The link also includes the new Form 1, Form 4, Form 5 and Responsible Person Questionnaire.

The FAQ references:

  • How Does Final Rule 41F Change Current NFA Regulations?
  • Who is a Responsible Person?
  • What Do NFA Trust or Legal Entity Applicants Affected by the Change Need to Know?

Earlier this week, The Gun Collective released a new series called, The Legal Brief, where I discussed ATF 41F and its implications. One of the questions that wasn’t quite clear was whether a legal entity would be required to submit a copy of the Form 1/4/5 and responsible person questionnaires to the CLEO or if it would be one or the other.

Based on the question in the FAQ, it would seem that legal entities, such as trusts, corporations, LLCs, etc. will need to submit a copy of the Form 1/4/5 to the CLEO for notification in addition to all of the responsible persons submitting the responsible person questionnaire.

ATF has also confirmed, as if there were any doubt at this point, if the application is postmarked July 12th or earlier, it will be grandfathered in under the current regulations. July 13th and after will require you to comply with ATF 41F.

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ATF Releases Open Letter to CLEOs Regarding ATF 41F

On May 25, 2016 ATF released an Open Letter to Chief Law Enforcement Officers regarding ATF 41F. The letter can be found here.

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The letter briefly describes some of the changes that will occur after the rule is implemented.

Of note is the notification requirements for the CLEO. In short, all legal entities will be required to forward a copy of all Applications to Make (Form 1s) or Applications to Transfer (Form 4s) and the Responsible Person Questionnaire to the CLEO of the localities where the Responsible Person is located.

The letter does note that no action on the part of the CLEO is required, does not specify in what manner a CLEO should store the documentation, if they choose to do so, and asks that if the CLEO has any information that may disqualify any maker or transferee, including a responsible person of a legal entity, from making or possessing a firearm to provide that information to the NFA Branch.

Of concern is that the letter does not specify the copies of the Form 1s and Form 4s that the CLEOs are receiving contain confidential tax information and should be treated as such. If CLEOs choose to destroy the forms, rather than keep them, are they disposing them in a manner that would not allow an individual to view the information contained on the form? Further, the letter does not advise CLEOs (those who may reside in states that don’t allow some or all NFA items) that an individual may be a trustee of a trust located in another state. This may cause some issues with CLEOs reporting to ATF that those items are not allowed in that state.

Interestingly enough, it would seem that ATF is continuing to have the CLEO involved by asking for notification as to whether they have information about that individual which would disqualify the entity from obtaining the item. Perhaps ATF believes that the CLEO is still the best person to know the affairs of an individual even though they are now required to submit fingerprints and photos as a responsible person.

The letter does confirm that as long as applications are postmarked by July 13, 2016, they will be grandfathered in under the current regulations.

 

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NFA Firearms, Form 1s, Engraving and Cartoon Chickens

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Late last week an article was posted on a popular website, dedicated to firearms news, about the engraving of firearms that had approved Form 1s. The author describes how easy it is for one to submit a Form 1, with the advent of eForms, to register your firearm as a Short Barrel Rifle (“SBR”) but laments the marking requirement. He accurately describes ATF’s response to any number of questions you could ask them by stating “Ask three people whether you need to engrave your information on your newly registered NFA device and you’ll get three different answers.”

The author then prefaces the remainder of the article with “In an effort to sort out the confusion I asked the ATF directly…”. Oddly enough, the author seems to forget his previous statement, a mere sentence prior, that if you ask three people at ATF whether you need to engrave your information that you would receive three different answers.

The article states that if you do not plan on selling your SBR, there is no requirement to engrave the firearm. The author also claims that if you remove the firearm from the registry in order to sell it, at that point you’ll need to engrave your information on the firearm.

Perhaps the most concerning part of the post is that nowhere does the author state who he spoke to, cite to any statutes or regulations, or produce a letter from ATF confirming his statements.

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Confused yet? Let’s attempt to remove the dog from the hen house.

In an effort to make things simple to follow, a few terms need to be defined. We will examine both the National Firearms Act and its regulations.

26 U.S.C. 5845 is where one can find the definitions for the National Firearms Act.

(i) Make

The term “make”, and the various derivatives of such word, shall include manufacturing (other than by one qualified to engage in such business under this chapter), putting together, altering, any combination of these, or otherwise producing a firearm.

(m) Manufacturer

The term “manufacturer” means any person who is engaged in the business of manufacturing firearms.

It is important to differentiate between the preceding two terms. The term “manufacturer” applies to those who are engaged in the business of manufacturing firearms, while the other is in reference to individuals or entities not engaged in the business of manufacturing firearms.

26 U.S.C. 5842 regulates the identification of firearms.

(a) Identification of firearms other than destructive devices

Each manufacturer and importer and anyone making a firearm shall identify each firearm, other than a destructive device, manufactured, imported, or made by a serial number which may not be readily removed, obliterated, or altered, the name of the manufacturer, importer, or maker, and such other identification as the Secretary may by regulations prescribe.

27 C.F.R. 479 et seq. is where one can find regulations pertaining to the National Firearms Act.

Make. This term and the various derivatives thereof shall include manufacturing (other than by one qualified to engage in such business under this part), putting together, altering, any combination of these, or otherwise producing a firearm.

Manufacturer. Any person who is engaged in the business of manufacturing firearms.

Again, the distinction between maker and manufacturer is seen.

27 C.F.R. 479.102 regulates how firearms must be identified. In the pertinent part:

(a) You, as a manufacturer, importer, or maker of a firearm, must legibly identify the firearm as follows:
….
(2) By engraving, casting, stamping (impressing), or otherwise conspicuously placing or causing to be engraved, cast, stamped (impressed), or placed on the frame, receiver, or barrel thereof certain additional information. This information must be placed in a manner not susceptible of being readily obliterated, altered or removed. For firearms manufactured, imported, or made on and after January 30, 2002, the engraving, casting, or stamping (impressing) of this information must be to a minimum depth of .003 inch. The additional information includes:
(i) The model, if such designation has been made;
(ii) The caliber or gauge;
(iii) Your name (or recognized abbreviation) and also, when applicable, the name of the foreign manufacturer or maker;
(iv) In the case of a domestically made firearm, the city and State (or recognized abbreviation thereof) where you as the manufacturer maintain your place of business, or where you, as the maker, made the firearm; and

The regulations pertaining to identifying NFA firearms unequivocally state that the maker of the firearm must engrave, cast, stamp, or otherwise conspicuously place their name and the city and state where the maker made the firearm.

Now, I will admit, the regulation does not speak to the “remanufacture” of a firearm. But the term “remanufacture” is not defined in the National Firearms Act of 1934, the Gun Control Act of 1968, 27 C.F.R. 478.11, or 27 C.F.R. 749.11.

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But we need not explore this non sequitur any further because the statue and regulation clearly state that if you are putting together, altering, or any combination thereof, you are manufacturing a firearm. And if you are manufacturing the firearm, you are required to identify it with certain information.

With regard to the serial number, caliber/gauge and model, ATF has published ruling 2013-3 which states that licensed manufacturers and licensed importers of firearms, and makers, may adopt the serial number, caliber/gauge and model on the firearm without a marking variance provided a number of conditions are met. You can view that ruling here.

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A Round Table Discussion with ATF

Having had the opportunity to sit around a table with different members of ATF, a few different things were learned.

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And don’t worry, the cartoon doesn’t reflect the attitude of those I spoke to.

NFA Branch

In regards to the NFA Branch and processing times, it appears that they are aiming for a processing time of about 90 days for Form 1s and Form 4s. They are currently around the 120 day mark and are working diligently to improve that time. They have gone from 9 to 26 examiners, which should allow them to meet that goal after everyone has been brought up to speed.

Trusts account for the majority of Form 1s and Form 4s that the branch is receiving. I also learned that there is a substantial increase in Form 1 submissions since the introduction of the eForms system. Additionally, the processing times for eForm and paper form submissions are now currently running about the same time, so there is not necessarily any advantage time-wise to utilize the eForms system.

Form-4

Furthermore, I learned that ATF hoped to have had the eForm 4s back by SHOT but they indicated that did not look like it would happen. They are currently in discussions with a contractor regarding the system.

There was also a question asked of the NFA branch in relation to 3D printed parts. The attendee asked if he printed a part, that was technically a NFA firearm, would he need to notify the branch of its creation and/or destruction. The answer was yes, provided the part was functional, it would be controlled by the NFA.

Imports Branch

The Import section fielded a question relating to the “sporting purpose” exemption. Disappointingly, there does not seem to be any hope in the near future for it to be revisited in order to consider such sports as 3-Gun, USPSA, IDPA or other shooting sports.

Firearms and Ammunition Technology Division

I also had the opportunity to sit down with the Firearms and Ammunition Technology Division (FATD).

For Industry Members, if you’re looking to receive a determination on your product, you can expect it to take about 120 days. That means if you WANT a determination on your product prior to SHOT 2016, you need to have your submission to FATD before September.

They did state that they would not give you priority just because your attending SHOT and need a determination prior to it. So you have to get moving on the product and submission now. If you’re an industry member and require a letter with your submission please contact us, as letters for determinations are something we handle on a frequent basis.

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The new product on the block that is catching a lot of attention by the industry seems to be the APS 1 Shot Dynamic Pistol Rest. Having had the opportunity to sit down with FATD and discuss the dynamic pistol rest, I can say several issues have arisen. Contrary to the claims of the company, ATF stated that it has no record of receiving any samples of the product in order to issue a determination. Additionally, FATD stated they welcome a sample to be submitted for a determination. This is in stark contrast to the statement that the company has proffered that ATF will not issue a determination.

The company had stated in a Recoil Web article:

“We asked the ATF their opinion and they had none, as it is not a permanent part of the weapon…”

Furthermore, having shown FATD a picture of the product, I was immediately informed that it was a shoulder stock and ATF had previously ruled on “friction stocks” in other determinations. It would behoove APS to submit a sample to ATF in order to have a formal determination on the product, so that individuals can know whether possession of the product with a handgun would potentially subject them to criminal prosecution or not.

Firearms Industry Operations

Good news for licensees. Is there a topic you want ATF to cover for training? Apparently, you can either call your local field office or headquarters to request a seminar on the particular topic. Furthermore, if you receive or have received conflicting information from your local field office, you may want to contact the Firearms Industry Programs Branch to get a “final determination” on the matter. Of course, I’d recommend you get it in writing, which they stated they usually provide a copy of their decision to the field office as well as the licensee with the question.

ATF 41p

ATF 41P was mentioned several times. The news? ATF is still reviewing comments and there is no news as to when/if they will move forward with any kind of final rule. Additionally there are 4 reviewers for the comments and all of them have been assigned to ATF 41P.

ATF 51P

ATF 51P has had no action as far as the review of comments on it yet.

General Rulemaking

ATF stated that the priority for rulemaking determinations were ATF 41p, ATF 51P and Reporting of Losses of Firearms in Transit.

Federal Firearms Relief

If the appropriations bill is enacted as written, Federal Firearms Relief would become available again, for the first time since 1992. ATF stated that if the appropriations bill is implemented, they do not currently have an action plan in place to address the forecasted river of applications it will receive.

ATF Ruling 2013-5

ATF also stated that it would be entering into rulemaking to clarify the electronic record keeping for FFLS in relation to Ruling 2013-5. Issues that would be addressed include cloud storage, the maintenance of records offsite but on a server and tracking changes in the bound book.

 

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Did ATF Approve Your Making of a New Machinegun and Then Rescind It? Contact Us To Discuss

As many of our viewers are aware, on May 14, 2014, I wrote an article: Did ATF’s Determination on NICS Checks Open the Door for Manufacture of New Machineguns for Trusts? At that time, I submitted a paper Form 1 for a minigun, as eFile was not currently available. Several weeks later, eFile would come up and several individuals submitted eForm 1s, utilizing the argument I put forth in my article, to make new machineguns. As paper forms are taking 6+ months, but eFile Form 1s are only taking 30-45 days, several individuals have reported receiving approvals to make a new machinegun. Yesterday, ATF decided to rescind those approvals and started calling individuals to inform them of the rescission.

Some have reported receiving eFile notices from ATF stating the change in determination. ATF’s humorous basis is allegedly:

 THE GUN CONTROL ACT OF 1968 (GCA), AS AMENDED, PROHIBITS ANY PERSON FROM POSSESSING A MACHINEGUN NOT LAWFULLY POSSESSED AND REGISTERED PRIOR TO MAY 19, 1986. SEE 18 U.S.C. § 922(O). THE GCA DEFINES THE TERM “PERSON” TO “INCLUDE ANY INDIVIDUAL, CORPORATION, COMPANY, ASSOCIATION, FIRM, PARTNERSHIP, SOCIETY, OR JOINT STOCK COMPANY.” SEE 18 U.S.C. § 921(A)(1). PURSUANT TO THE NFA, 26 U.S.C. § 5822, AND IMPLEMENTING REGULATIONS, 27 C.F.R. § 479.105(A), ATF MAY NOT APPROVE ANY PRIVATE PERSON’S APPLICATION TO MAKE AND REGISTER A MACHINEGUN AFTER MAY 19, 1986.

THE FACT THAT AN UNINCORPORATED TRUST IS NOT INCLUDED IN THE DEFINITION OF “PERSON” UNDER THE GCA DOES NOT MEAN THAT AN INDIVIDUAL MAY AVOID LIABILITY UNDER SECTION 922(O) BY PLACING A MACHINEGUN “IN TRUST.” CONSEQUENTLY, IN TERMS OF AN UNINCORPORATED TRUST, ATF MUST DISREGARD SUCH A NON-ENTITY UNDER THE GCA AND CONSIDER THE INDIVIDUAL ACTING ON BEHALF OF THE TRUST TO BE THE PROPOSED MAKER/POSSESSOR OF THE MACHINEGUN.

We have discussed these rescission with several individuals and are looking at filing suit against ATF over them. If you received an approved Form 1 to make a new machinegun and have subsequently received notice from ATF that they are rescinding it, contact us to discuss your legal options.

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