Back in 2013, the Bureau of Alcohol, Tobacco, Firearms and Explosives (referred to as the “BATFE” or “ATF”) proposed a rule that would have fundamentally changed how National Firearms Act (“NFA”) weapons, such as short-barreled rifles or shotguns, suppressors, machine guns and other NFA regulated weapons, could be bought by NFA Trusts or corporations. The original proposed rule would have brought the system to its knees with a quagmire of red tape.
The rule required every person in a corporation or trust (or anyone added to the trust/corporation down the road) to receive certification by their Chief Law Enforcement Officer (“CLEO”) that the CLEO had no information to indicate the item would be used for other than lawful purposes or that possession would violate State or local law.
When the ATF opened themselves up to comments from the public, they received over 9,500 comments back, only a dozen of which supported the rule as it was originally written (that’s about 0.1%). It took them two and a half years to try and address all of the comments and concerns (including those written by Texas Law Shield), and the ATF has just released the finalized version of the rule.
When does this new rule go into effect?
The rule states that it will go into effect 180 days after it has been published in the Federal Register (which ultimately means it will probably be June or July; it has yet to be published).
Whom does this change effect? What is a “responsible person?”
Since this rule pertains to NFA items, it means anyone who plans on buying short-barreled shotguns or rifles, suppressors, machine guns, explosive devices, or more obscure types of items called “AOWs.”
Second, among people who want to purchase these items, the new rule focuses on “responsible persons.” Who is a responsible person? The ATF defines them as “anyone with the power or authority to direct the management of the trust to receive, possess, ship, transport, deliver, transfer, or dispose of the NFA firearm.”
In other words, pretty much everybody in a trust, except for the beneficiaries (unless they also have the power listed above), or anyone who is allowed to possess the items in a corporation.
What will be the new procedure for obtaining an NFA item Tax Stamp once the new rule goes into effect?
All responsible persons attempting to purchase an NFA item (after this rule goes into effect) will have to mail to the ATF:
- ATF Form 4 (to have an item transferred to you) or the Form 1 (to create an NFA item)
- Two FD-528 Fingerprint cards
- A 2×2 inch photograph taken within the past year
- A completed ATF Form 5320.23 (which looks to be a “Responsible Person” information form, which asks for your name, birthdate, and optionally your social security number)
- A $200 Tax, per item, to the ATF
- If purchasing as a trust or corporation, the requisite paperwork pertaining to that entity, to the ATF (e.g., a copy of the trust itself)
- A copy of the completed Form 1 or Form 4 as applicable, or a copy of the 5320.23 to the CLEO
After these requirements have been met, the ATF will perform a background check on each responsible person. Once the responsible person(s) successfully pass the background check, the ATF will send back a tax stamp, which acts as proof that you have complied with the ATF’s new regulations.
With regard to notification of the local CLEO, it is unclear exactly how the ATF will enforce this, or verify compliance; however, it will be part of the registration process once this rule goes into effect. So if you receive a tax stamp but haven’t notified the CLEO, your ownership may be illegal. From a practical perspective, it may be a good idea to send the notification registered mail, and keep the receipt as proof that you complied with the law!
For individuals purchasing via trusts or corporations, if you plan on buying multiple items within the same two-year period, the ATF will allow you to submit verification that nothing else has changed in the trust, rather than having to send in all the initial forms. By way of example, if you bought a suppressor in August and complied with all of the listed requirements above, and with your Christmas bonus wished to buy a machine gun, you could simply attach a certificate that no additional responsible persons were added.
Do I have to get CLEO certification?
After the ATF received overwhelming opposition to imposing universal CLEO sign-off requirements, CLEO certification will be stripped out of Forms 1, 4, and 5. To put it simply, once this rule goes into effect there will no longer be a need for the CLEO to sign off on NFA item purchases, for individuals, trusts, or corporations. You will only be required to notify the CLEO instead.
Who is a CLEO?
A CLEO can be your local chief of police, county sheriff, head of state police, or the District Attorney. Just make sure you are notifying a CLEO in the area where you are located.
ATF will run background checks on the responsible persons to verify that they can possess these items.
Clarification on transfers out of estates
The ATF also took this opportunity to clarify how the transfer process handles an item owned individually (outside of a trust or corporation) that enters probate.
Once the owner dies, an executor, administrator, personal representative, or other person authorized under State law to dispose of property in an estate may take possession of the NFA item without it being considered a “transfer” of the item. Additionally, this person may transfer the item to the beneficiary tax-free of the estate while probate is open.
Old items and pending applications ARE going to be grandfathered!
In a surprisingly reasonable move, the ATF stated this rule is NOT retroactive. In other words, all items currently owned lawfully in accordance to the previous NFA regulations will not require any additional registration or paperwork. Any weapons currently lawfully owned will be grandfathered in.
The new rule also does not apply to applications in “pending” status when the rule goes into effect; so if you want to avoid the extra hassle of the rule, submit your applications BEFORE the rule starts! For help in preparing your NFA trust, click here.
Did the ATF keep the requirement that newly added “responsible persons” to a trust or corporation submit forms within 30 days?
No. The original form of the rule suggested that newly added “responsible persons” would have to submit the appropriate forms within 30 days. However, this was not included in the final rule; there is no requirement to update new responsible persons if they are added in after the item is approved. Keep in mind that after this new responsible person was added, they would have to fill out the appropriate forms for additional items to be purchased.
While it is unfortunate that there is now a new level of hassle that would-be NFA item owners have to suffer through, this final rule is much less severe than the original proposition. This victory is due entirely to the efforts of those who sent in comments to the ATF, outlining how ludicrous universal CLEO certification would have been. Texas Law Shield always tries to keep its members updated on any changes in gun law, and extends a special thanks to all those who raised their voices to support gun rights.