Are You A Gunsmith or Manufacturer? Working in the Gray Areas

Are you a gunsmith or manufacturer? It may be easy to think you're one or the other, but gray areas can present challenges.

Are You A Gunsmith or Manufacturer? Working in the Gray Areas

In the first part of this article in the previous issue, we covered the basics of what under the Gun Control Act defines a gunsmith versus a manufacturer. Those basics are clear-cut and generally easy to understand, but as you might imagine, there are many scenarios that don’t fit readily into one category or the other, at least at first glance.

So, let’s look at the most common of these gray areas and see where they fall when it comes to the ATF and proper licensing.

You’re a Gunsmith If …

You have customers who bring firearms in for repair or modification and provide direction for the work to be completed, and the firearms are later returned to the same customers who brought them in. No ATF Form 4473 or NICS background check is required when returning firearms to the same person who brought the firearm in for servicing or repair, but all firearms left for repair overnight on an FFL’s premises must be logged into and out of an A&D bound book or electronic log. Most FFLs performing gunsmithing and repairs maintain a separate bound book used specifically for gunsmithing work.

You purchase used, antique or surplus military or police firearms and are simply cleaning, making minor repairs (such as replacing original parts) and then reselling the firearms. In this case, you will be reselling a firearm that had been previously introduced into commerce, and these firearms would be entered in your primary A&D bound book or electronic log as acquired firearms. Note that in Part I of this article, we said that purchasing used or new guns and making modifications such as bluing or Cerakoting and then reselling the firearm makes you a manufacturer because you are changing or modifying the performance of the firearm.

As an FFL, you acquire one receiver, assemble one firearm, and sell the one firearm. You are not a manufacturer in this case because you are not manufacturing firearms as a regular course of trade or business, and you would not need to be licensed as a manufacturer.

You’re a company or someone that produces barrels for firearms and sells the barrels to another company that assembles and sells complete firearms. Barrels are not firearms, so a company that manufactures only barrels is not a manufacturer of firearms. The company that assembles and sells the firearms with your barrels, on the other hand, should be licensed as a manufacturer of firearms.

You’re a Manufacturer of Firearms If ...

You are purchasing firearm receivers and parts and assembling firearms that you later resell (i.e., you are putting the firearms into commerce). These firearms are entered in and out of your primary A&D bound book or electronic log, and they are subject to manufacturing reporting requirements. Also, if you manufacture 50 or more completed firearms in a year, you are required to pay excise taxes to the U.S. Treasury Department’s Tax and Trade Bureau.

You’re simply a part of the manufacturing or assembly process (i.e., not the barrel manufacturer supplying a part, as we talked about above). Manufacturing isn’t always a one-stop deal. The first (original) manufacturer should have included markings for model and caliber or gauge and the unique serial number in the appropriate places.

Any additional manufacturer that participates in the assembly of a completed firearm is required to add their markings to the firearm, including their trade name (as shown on the FFL), city and state. For instance, if one manufacturer forges the receiver and a second assembles the firearm by adding the stock, barrel, etc., both manufacturers should be marked on the receiver unless an approved “ATF Marking Variance” has been received. ATF does not want multiple markings on a firearm, because that would create confusion in the event the firearm is traced. ATF will generally grant a marking variance in this context.

Manufacturing Reporting — It’s In The Details

Manufactures have many I’s to dot and T’s to cross as they produce a firearm.

Manufacturers are required to record the type, model, caliber or gauge and serial number of each complete firearm manufactured or otherwise acquired, and the date such manufacture or acquisition was made, into their Record of Firearms Manufactured no later than seven days after the firearm is manufactured or acquired.

Manufacturers are required to submit to the ATF the Annual Firearms Manufacturing and Exportation Report (ATF Form 5300.11) by April 1 of each year to report those firearms produced and sold or distributed and those firearms exported during the previous calendar year.

When a receiver is to be used by a manufacturer to build-out or assemble a firearm, the receiver should be logged out to the manufacturer’s own license number and then logged back in to their Record of Firearms Acquisition & Distribution from their manufacturer’s license number as a completed rifle (or other firearm, as appropriate). The recording of the subsequent disposition of that firearm is handled in a similar manner to the disposition of any other firearm sold or otherwise disposed of by the licensee.

Manufacturers (and gunsmiths) should enter the full 15-character FFL number in lieu of, or in addition to, the address of other FFLs from whom they receive or to whom they transfer firearms in the Acquisition and Disposition records.

FFLs Type 07 are required to submit to the Treasury Department Tax and Trade Bureau appropriate excise taxes if 50 or more complete firearms (long guns or hand guns) are manufactured in a calendar year. Type 07s are required by law to register with the Directorate of Defense Trade Controls and submit appropriate fees annually (refer to www.pmddtc.state.gov for more info). Ammunition manufacturers are also required to register and pay the annual fee. When the export control reform rules become final, this regulatory burden will be greatly reduced.

Where a company produces firearms or firearm receivers and sends the firearms/receivers out for colorizing (bluing, camouflaging, phosphating, plating, etc.) and/or heat treating, the company doing the colorizing and/or heat treating must be licensed at least as a Type 01-Dealer/Gunsmith, provided the receivers are returned to the licensed manufacturer (see Ruling 2010-10).

In accordance with 27 CFR, Section 478.92, all licensed manufacturers are required to place their markings on a firearm on which they perform manufacturing functions. It is important that you familiarize yourself with the recent rulings on manufacturing and marking requirements, especially so you will understand when markings are required. More information regarding manufacturing recordkeeping and marking can be found in the in ATF Rulings 2009-1, 2009-2, 2009-5, 2010-10, 2012-1 and 2015-1 on the ATF.gov website.

Although we have presented the common scenarios that may cause you to question whether the work you are performing defines you as a gunsmith or manufacturer, this information provided here is not all inclusive. Nor should this information be interpreted as law or ATF guidelines. It is recommended that you contact your local ATF Office, or the ATF Firearms Technology Division, with any questions you may have. Remember, your ATF partners are always willing to help guide you to do things right and safeguard your FFL. NSSF’s Compliance and Store Security Audit teams are also standing by to assist you with any compliance, security or operational issues you may have.

About the Authors

John Bocker is an NSSF Security and Compliance Consultant Team Member and the Managing Director at JB Group, LLC, a business security, compliance and strategy consulting organization specializing in ATF FFL compliance and protecting FFLs against unexpected losses resulting from regulatory non-compliance, burglary, robbery and internal control failures. 

John Clark is an NSSF Security and Compliance Consultant Team Member and the Principal and Founder of PCI Services, LLC, a business security consultancy firm with a mission to provide small to mid-size businesses with sustainable solutions that positively effect growth and protect interests. PCI Services provides solutions to the firearms industry that help both owners and investors ensure continued, sustainable success and the ability to achieve both operational and financial goals.  

A member of NSSF’s Compliance Consultant Team for the past 12 years, Wally Nelson retired in October 2005 from a distinguished 33-year career with the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF). Nelson started with ATF in 1972 as an inspector, eventually serving 28 years in management positions. From 1998 until his retirement, he was the Deputy Assistant Director of the Office of Enforcement Programs and Services. He was responsible for the ATF’s firearms and explosives programs and policies and oversaw firearms tracing, imports, licensing and NFA registrations and other operational activities. He was also the senior management leader in working with the FBI to develop the National Instant Criminal Background Check System (NICS), and was a member of the Senior Executive Service. In 2004, the rank of Meritorious Executive was conferred on him by President George W. Bush for sustained superior management accomplishments.

Harry McCabe retired from ATF in 2012 after more than 36 years of service. He began his career as an inspector in Raleigh, North Carolina, conducting numerous firearms and explosives inspections in both that state and South Carolina until being transferred to bureau headquarters in 1983. During his career, McCabe was the area supervisor in Detroit and a branch chief at ATF Headquarters. In 1998, he became Director, Industry Operations, of the Nashville Field Division where for 12 years he directed all the firearms inspection activities in Tennessee and Alabama. During that time, McCabe oversaw more than 5,000 firearms qualification and compliance inspections and conducted approximately 50 firearms industry educational seminars. In 2010, he became Deputy Assistant Director for Field Operations, where he was responsible for the entire firearms regulatory policy and inspection program nationwide. McCabe is a member of NSSF’s Compliance Consultant Team.

DON'T MISS: Read the first part of this story: click here now



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