Consignment Sale Of Nfa Item

[Robert Henley]

I looked in the NFA Handbook:

 

http://www.atf.gov/publications/firearms/nfa-handbook/

 

and I didn't see anything on whether a SOT can possess and handle (for a commission) the sale of a privately owned NFA item.

 

For example, can a SOT take possession of a NFA item and broker the sale of it for a commission?

 

I did see where if it's on a Form 4 you have to pay the $200 transfer tax to get it on a Form 3 (SOT), so it wouldn't make economic sense to transfer the NFA item to a SOT (unless you have an out-of-state buyer) versus keeping it on a Form 4 and selling it in-state via a Form 4 to Form 4 transfer.

 

Thanks, Robert

[The Lone Ranger]

There is no provision in the NFA for tax-free transfers for the purpose of consignment. A dealer can take pics, advertise, or whatever but if the firearm is left in someone else's possession there needs to be an approved application prior to the transfer.

[jim c 351]

I wouldn't think there would be a problem having a dealer clean, inspect, repair, test fire etc, an owners MG and while this is procedeing, advertise the MG for the owner. If a form is needed to make this legal , I beleive its numbered ATF5320.2.

Jim C

[The Lone Ranger]

Jim,

 

Your suggestion is widely practiced by the industry and is unlawful. My favorite scenario is when a "repair firearm" is toted to a gun show and placed on a display table with a price tag "to effect the repair". The tax-free non-transfer transfer was literally manufactured for the benefit of collectors and licensee with no foundation in law. I can easily see this going away in the future when the widespread abuse gets the attention of the wrong bureaucrat.

 

There is a reason this scenario is not covered in the handbook - there is no provision in law for it. Your gun, your freedom, your choice.

[jim c 351]

LR,

If a dealer is so bold as to take a firearm, registered to another, off his licenced premises to a gun show, I would certainly see a problem. I was thinking more of a partially disassembled firearm in the gun shop while the dealer advertises on the net.

Advertising your home address on the net as a place where MGs might be available for theft, might fall within the law, but might also have some disadvantages. Of course the owner could pay the $200.00 and legally transfer it to the dealer and hope he will sell it someday,not shoot it too much, and maybe even pay him something when he finally sells it.

Life is so full of problems and decisions, but we can thank god the government is always there to help us.

Jim C

Edited April 2, 2012 by jim c 351

[Robert Henley]

I saw on another board a reference to an individual (I presume non-FFL SOT) transferring a MG on a Form 4 to a dealer (FFL SOT) in another state. That prompted me to look at the above NFA Handbook, and I looked at Section 3.2.6.3 and Section 9.3. Would that be correct that a non-FFL SOT can transfer a registered MG on a Form 4 to a dealer (FFL SOT) in another state? [and then ultimate buyer (non-FFL SOT) in another state would receive it from that dealer via a Form 4 transfer]

 

Have I got that right?

 

Thanks, Robert

[The Lone Ranger]

That's correct, Robert. The National Firearms Act does not regulate interstate movement. Despite a fairly broad miscinception of "super regulation", NFA firearms are treated as all other firearms in that regard; therefore, a nonlicensee-licensee transfer interstate is fine for both.

 

Point of trivia and an example - the Gun Control Act is also the source of the 5320.20 - you do not find it in the NFA but the GCA, specifically 18 USC 922(a)(4) and 27 CFR 478.28

[Robert Henley]

That's correct, Robert. The National Firearms Act does not regulate interstate movement. Despite a fairly broad miscinception of "super regulation", NFA firearms are treated as all other firearms in that regard; therefore, a nonlicensee-licensee transfer interstate is fine for both.

 

Point of trivia and an example - the Gun Control Act is also the source of the 5320.20 - you do not find it in the NFA but the GCA, specifically 18 USC 922(a)(4) and 27 CFR 478.28

 

Can someone point me to the authority for this? I had an odd experience recently. I sold a SMG to an individual out-of-state (his state is NFA friendly). We were going to transfer the gun from me on a Form 4 to his Class 3 dealer (interstate transfer). However, the buyer stated he checked with several dealers in his area, and they all advised this was not allowable. I checked with my local Class 3 dealer, who advised it was allowable (as indicated in this post). In this case, my local dealer has stated she will handle the transfer (which means me transferring to her and then she to the buyer's dealer). However, I'd like to resolve this question for future reference and be able to cite the authority. I did look in the NFA Handbook, but did not find a specific FAQ on point. Anyone have a letter from BATF or anything?

 

Thanks, Robert

[The Lone Ranger]

http://www.atf.gov/firearms/faq/unlicensed-persons.html

 

See questions 1 & 3

 

If your buyer insists, definitely make him foot the extra $200. And you might point out if he is correct, the NFA Branch should reject the transfer because 27 CFR 479.86 requires ATF to deny the application if receipt of the firearm will place the recipient in violation of law.... er go, if sending a firearm interstate TO A DEALER is illegal, ATF is obligated to reject the application.

 

This situation seems to me to be getting more frequently encountered - more dealers coming on line that don't know what they can/cannot do.... and they all sign an ackowledgement of a regulatory review prior to getting their license.

 

edit for venting: What the blue blazes do these people think is the poiont of having a firearms license if you cannot receive a firearm interstate?? The bloomin Interstate Commerce clause was the (coughing) grounds for the federal government having the ability to regulate firearms in the first place. Rant off.

Edited January 11, 2013 by The Lone Ranger

[Robert Henley]

http://www.atf.gov/f...ed-persons.html

 

See questions 1 & 3

 

If your buyer insists, definitely make him foot the extra $200. And you might point out if he is correct, the NFA Branch should reject the transfer because 27 CFR 479.86 requires ATF to deny the application if receipt of the firearm will place the recipient in violation of law.... er go, if sending a firearm interstate TO A DEALER is illegal, ATF is obligated to reject the application.

 

This situation seems to me to be getting more frequently encountered - more dealers coming on line that don't know what they can/cannot do.... and they all sign an ackowledgement of a regulatory review prior to getting their license.

 

edit for venting: What the blue blazes do these people think is the poiont of having a firearms license if you cannot receive a firearm interstate?? The bloomin Interstate Commerce clause was the (coughing) grounds for the federal government having the ability to regulate firearms in the first place. Rant off.

 

The buyer is paying the $200 dealer transfer fee. I told the buyer BATF would not approve if the transfer was not in accordance with federal and state laws.

 

The buyer indicated he talked to three dealers in his state. It's odd that all three would advise him against the interstate transfer from me to his dealer.

 

I didn't see those questions in the FAQ, but I saw the same general information in the NFA Handbook. The key was the definition of a "firearm."

 

I'm looking for something more specific as it relates to the transfer of a SMG (NFA item) on a Form 4 to a dealer in another state.

 

Who should I write to at BATF to clarify/confirm the answer?

 

Thanks, Robert

[darrylta]

I believe Ted Clutter (at the NFA Branch) is the person to contact in Martinsburg.

-Darryl

[Robert Henley]

Thanks Darryl. I think I will try and contact him when I get a chance to resolve the question for the future.

 

Robert

[james m]

Thanks Darryl. I think I will try and contact him when I get a chance to resolve the question for the future.

 

Robert

Please post the response you get from the BATF here.

Jim

[The Lone Ranger]

From ATF web page:

 

Q: To whom may an unlicensed person transfer firearms under the GCA?

 

A person may sell a firearm to an unlicensed resident of his State, if he does not know or have reasonable cause to believe the person is prohibited from receiving or possessing firearms under Federal law. A person may loan or rent a firearm to a resident of any State for temporary use for lawful sporting purposes, if he does not know or have reasonable cause to believe the person is prohibited from receiving or possessing firearms under Federal law. A person may sell or transfer a firearm to a licensee in any State. However, a firearm other than a curio or relic may not be transferred interstate to a licensed collector.

 

18 U.S.C. 922(a)(3) and (5), 922(d), 27 CFR 478.29 and 478.30

 

Q: May an unlicensed person obtain a firearm from an out-of-State source if the person arranges to obtain the firearm through a licensed dealer in the purchaser’s own State?

A person not licensed under the GCA and not prohibited from acquiring firearms may purchase a firearm from an out-of-State source and obtain the firearm if an arrangement is made with a licensed dealer in the purchaser’s State of residence for the purchaser to obtain the firearm from the dealer.

 

18 U.S.C. 922(a)(3) and 922( b )(3)

 

If these dealers can't translate from the web lage and need a paper version of the exact same statutes, they can easily read it from their freely provided 2005 regulations book.

 

Ted Clutter does not normally respond to correspondence and has more than enough to stay busy. It will get re-assigned to a specialist or possibly sent to a more appropriate office such as Firearms Industry Programs Branch @ 99 NY Ave. Interstate movement of firearms is regulated by the GCA, not NFA. In any case, the statutes posted on the web site will dictate the paper based response as well.

 

Sounds like 3 dealers need to be recommended to attend an educational seminar as asoon as possible.

Edited January 11, 2013 by The Lone Ranger

[Robert Henley]

Thanks Darryl. I think I will try and contact him when I get a chance to resolve the question for the future.

 

Robert

Please post the response you get from the BATF here.

Jim

 

OK, will do. I sent a letter to Mr. Clutter this morning after my above post. We'll see what we get back.

[Robert Henley]

From ATF web page:

 

Q: To whom may an unlicensed person transfer firearms under the GCA?

 

A person may sell a firearm to an unlicensed resident of his State, if he does not know or have reasonable cause to believe the person is prohibited from receiving or possessing firearms under Federal law. A person may loan or rent a firearm to a resident of any State for temporary use for lawful sporting purposes, if he does not know or have reasonable cause to believe the person is prohibited from receiving or possessing firearms under Federal law. A person may sell or transfer a firearm to a licensee in any State. However, a firearm other than a curio or relic may not be transferred interstate to a licensed collector.

 

18 U.S.C. 922(a)(3) and (5), 922(d), 27 CFR 478.29 and 478.30

 

Q: May an unlicensed person obtain a firearm from an out-of-State source if the person arranges to obtain the firearm through a licensed dealer in the purchaser’s own State?

A person not licensed under the GCA and not prohibited from acquiring firearms may purchase a firearm from an out-of-State source and obtain the firearm if an arrangement is made with a licensed dealer in the purchaser’s State of residence for the purchaser to obtain the firearm from the dealer.

 

18 U.S.C. 922(a)(3) and 922( b )(3)

 

If these dealers can't translate from the web lage and need a paper version of the exact same statutes, they can easily read it from their freely provided 2005 regulations book.

 

Ted Clutter does not normally respond to correspondence and has more than enough to stay busy. It will get re-assigned to a specialist or possibly sent to a more appropriate office such as Firearms Industry Programs Branch @ 99 NY Ave. Interstate movement of firearms is regulated by the GCA, not NFA. In any case, the statutes posted on the web site will dictate the paper based response as well.

 

Sounds like 3 dealers need to be recommended to attend an educational seminar as asoon as possible.

 

I would add that not only did the buyer tell me the third FFL SOT he talked to said he couldn't do it, the buyer also told me this dealer said it would be a $15,000 fine. That's when I added I thought the worse that could happen is if the transfer didn't comply with all federal and state laws it would not be approved.

 

BTW, I sent links to the buyer to the relevant provisions in the NFA Handbook and other sources, and the buyer stated to me that the dealers said it didn't matter what he read you could not do it. So, yes, I'd like to see something specific to the question from BATF, instead of having to interpret what constitutes a "firearm" (which as I recall from looking at the BATF website the definition specifically listed a "silencer" but not a SMG). Of course, three transfers instead of two makes no sense, and may help explain the backlog at BATF because one extra transfer is 50% more work. Agree that If three dealers can't get it right something is wrong with their FFL SOT education.

[darrylta]

I'd look for a dealer that knows what he's doing, maybe dealer 4, 5 and 6.

A more pertinent question, why don't you have a C&R FFL?

Do away with the middle man!

-Darryl

[Robert Henley]

I'd look for a dealer that knows what he's doing, maybe dealer 4, 5 and 6.

A more pertinent question, why don't you have a C&R FFL?

Do away with the middle man!

-Darryl

 

Agreed.

 

BTW, I've got a FFL C&R but this particular gun (and a suppressor) was not C&R eligible.

[Robert Henley]

For informational purposes, here's the body of two e-mails to the buyer with some relevant information:

 

"Here's a link to the federal firearms regulations reference guide:

 

 

 

http://www.atf.gov/publications/download/p/atf-p-5300-4.pdf

 

 

 

I believe the answer to the question is found on page 176 (B1) and page 4 (definition of a "firearm").

 

This is consistent with all the below information.

 

I did a quick Goggle on the question about the transfer, and got a number of similar hits. A good, clear example was this one:

 

 

 

http://www.spreadfirearms.com/faq.html

 

 

 

See Question #5 and the answer. This is consistent with our original plan (which I believe is the most efficient method).

 

 

 

Here's a thread with a discussion about the issue, which is interesting because the poster's dealer apparently had a similar question:

 

 

 

http://www.ar15.com/archive/topic.html?b=6&f=17&t=369499

 

 

Of course, the answer is the same as the above dealer FAQ #5."

 

This was the information to which the dealers reportedly stated it didn't matter what you read.

[RoscoeTurner]

You have to realize that some dealers prefer internet fiction over actually reading the regulations.

[Grasshopper]

Dear Robert,

 

Your buyer seems to be working with FFL/SOTs that do not know what they are doing. Over the years I've purchased many out of state NFA items from mere mortals as "2 stamp" transfers. Normal protocall is the seller (like yourself) transfers the firearm to a FFL/SOT in the state of the buyers residence (stamp 1). At that point the FFL/SOT in-state to the buyer transfers the firearm on a form 4 to the buyer (stamp 2).

 

Good luck with your sale,

 

Grasshopper

[The Lone Ranger]

Robert,

 

Another option your buyer has is finding a regular FFL holder to accept the shipment. It's tax paid anyway, so no extra expense incurred and will save 6 months of unnecessary wait. It will be a PIA for a sole proporietor because of the CLEO signature, but a Corp/LLC can skip it.

 

Edit - I just saw your request for "something official" - I did not post internet "expert" commentary it is published by ATF both electronically and on paper. You even noted the same FAQ published in the regulations book on p 176 (the other one I posted is on p 177 "B1" & "B3")

 

The reason ATF uses "FAQs" is in the hope of spending less time answering the same basic questions over and over by letter when the answers apply to everyone (and thus gumming up the pipeline for no net gain - people with genuinely difficult situations, many of whom depend on getting answers to make a living wait longer while the people who refuse to take the law/regulations book for an answer demand a letter repeating the same text).

 

If you get any references for those $15,000 fines for interstate transfers to dealers, please pass along. I will make sure the appropriate folks at ATF become aware of them.

Edited January 12, 2013 by The Lone Ranger

[Robert Henley]

Perhaps BATF will put that specific question and answer in their FAQ's so it's crystal clear for those dealers who think otherwise.

 

I appreciate all the good feedback.

 

Robert

[The Lone Ranger]

The question IS answered clearly both electronically and on paper. If 3 dealers refuse to accept it as accurate, there isn't much to do. In reality, 6 months down the road, the transfer won't be your problem. If the buyer is willing to wait an extra 6 months and pay $200 more, that is really his choice. While impractical and expensive, nothing about it is prohibited - you can overpay as much tax as you want. Aside from that, if these guys all reject ATF publications, you may well wait 1-3 months to get a letter which will also be disregarded (because it is just another ATF document) and you will be starting transfer #1 of 3 that much later. Seriously - it is tough for one person to find 3 dealers lacking basic knowledge. Must be something in the water.

[Robert Henley]

If the buyer is willing to wait an extra 6 months and pay $200 more, that is really his choice.

 

That is what the buyer elected to do. My letter to Mr. Clutter is simply for future reference.

 

It seems clear to me, but there are three dealers in one locality in Texas who all reportedly said it can't be done notwithstanding my cites to the regulations. If I get a response from BATF, I will forward it to the buyer so he can share with his disbelieving dealers. It is my belief that three transfers instead of two takes more time and work by BATF, which slows everything down, and if three dealers in one locality don't understand it then maybe BATF needs to clarify it for dealers.