New Regulations Could Cost $2250/yr

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doc540
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New Regulations Could Cost $2250/yr

Postby doc540 » Tue Jul 26, 2016 3:30 pm

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Re: New Regulations Could Cost $2250/yr

Postby Scott B. » Tue Jul 26, 2016 9:22 pm

Not good for a lot of gunsmiths, but it's good news for some.
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Re: New Regulations Could Cost $2250/yr

Postby jason812 » Tue Jul 26, 2016 9:38 pm

This is just another way to squeeze the little man out of the firearms business. Get rid of the little guys, then work on the big players. Do not make firearms illegal to own but make them almost impossible to make legally. Another government bureaucracy creating rules and laws without a vote from congress.

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Re: New Regulations Could Cost $2250/yr

Postby Scott B. » Wed Jul 27, 2016 8:31 am

They've loosened one screw and tightened another.

Used to be any 'manufacturing' activity was required to pay ITAR. The interpretation was 'manufacturing' as defined by BATF, which is pretty draconian. Change a hand guard, sights, grip, etc before sale? That's 'manufacturing.' Put an upper on a lower? Manufacturing. Guess what you have to do if you 'manufacture?' Break out the ol' engraving machine and of course more paperwork.
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Re: New Regulations Could Cost $2250/yr

Postby cyphur » Wed Jul 27, 2016 8:45 am

There appears to be an exception to the law, in the case where said "manufacturing" activities are solely for domestic R&D. As soon as you move to sell said item, immediate ITAR registration is required.

IANAL, so confirm with your ITAR-familiar lawyer before you embark on an enterprise on the above information.


I have been contemplating doing gun smithing for a while, first on 1911s, and eventually on Rem700s, all at a very low scale. I was hoping just to do enough work to eventually even out the cost of equipment over a few years. At such a low scale registering with ITAR would most certainly put me at a net loss for the year. Which would be good for taxes I suppose, being run as an LLC, but not great for the wallet. In the mean time, as long as I do it for myself only for R&D/educational purposes while spinning up the business, ITAR should not be required.

Good news is hydrocoating and Cerakoting are specifically exempted from ITAR registration. At least there is that.



In addition, in reading the law, if you are a dealer, and you buy a firearm, then modify it before sale, you absolutely are "manufacturing" if you are improving on the firearm. It appears this changes that requirement to only cases where drilling, cutting or machining is required to complete said modification. This should be a huge help for dealers who wish to customize things like AR-15s, rifles with optics packages, etc.

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Re: New Regulations Could Cost $2250/yr

Postby Scott B. » Wed Jul 27, 2016 10:20 am

cyphur wrote:In addition, in reading the law, if you are a dealer, and you buy a firearm, then modify it before sale, you absolutely are "manufacturing" if you are improving on the firearm. It appears this changes that requirement to only cases where drilling, cutting or machining is required to complete said modification. This should be a huge help for dealers who wish to customize things like AR-15s, rifles with optics packages, etc.


Yes, as far as ITAR goes, No, as far as ATF goes.
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Re: New Regulations Could Cost $2250/yr

Postby cyphur » Wed Jul 27, 2016 10:45 am

Scott B. wrote:
cyphur wrote:In addition, in reading the law, if you are a dealer, and you buy a firearm, then modify it before sale, you absolutely are "manufacturing" if you are improving on the firearm. It appears this changes that requirement to only cases where drilling, cutting or machining is required to complete said modification. This should be a huge help for dealers who wish to customize things like AR-15s, rifles with optics packages, etc.


Yes, as far as ITAR goes, No, as far as ATF goes.


ITAR is the subject at hand. I did not reference anything about getting an FFL.

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Re: New Regulations Could Cost $2250/yr

Postby Scott B. » Wed Jul 27, 2016 11:44 am

Certainly. Just didn't want any potential home FFL thinking they were able to do things that could get them in trouble w/ the other.
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Re: New Regulations Could Cost $2250/yr

Postby LSUTiger » Wed Jul 27, 2016 1:01 pm

Sort of a quasi related question as a result of a discussion on another forum:

Under the following conditions, it is legal to assemble a firearm (assuming it does not constitute an NFA item and specifically AR15) especially for another person? :

1. A serialized lower, upper, barrel, parts kits and all necessary parts to perform a complete build are legally purchased by the owner.

2. The owner then takes the serialized lower, upper , barrel, parts kits and all necessary parts to perform a complete build to another person who is not an FFL or gunsmith or manufacturer, and pays them to assemble the parts. (in cash or in trade, like a case of beer or more likely done while sharing a case of beer :cheers2: ). Also, what if it is just done as a free favor?

3. This does not include any 80% lowers or unfinished parts made into a lower receiver. This does not require modification or manufacture of parts. All parts are COTS and supplied by the owner. Only assembly of parts.

4. There is no transfer of ownership between the two parties.

5. You are not advertising services etc. This is not as a business, but more of a helping a buddy or family member occasionally situation.

6. Is just mounting an optic or VFG or sling or accessory considered manufacture?

7. If manufacturing a firearm is simply putting parts together then you couldn't do it for yourself with out a license, I think at issue is what constitutes "engaging in the business of " and the definition of "manufacturing"

https://www.atf.gov/file/11711/download


As defined by section 921(a)(21)(A), the term
“engaged in the business” means, as applied to a manufacturer of firearms, “a person who
devotes time, attention, and labor to manufacturing firearms as a regular course of trade or
business with the principal objective of livelihood and profit through the sale or distribution of
the firearms manufactured.” Because “manufacturing” is not defined by the GCA, courts have
relied on the ordinary meaning of the word, including actions to “make a product suitable for
use.”

manufacture

1.
the making of goods or wares by manual labor or by machinery, especially on a large scale:
the manufacture of television sets.
2.
the making or producing of anything; generation:
the manufacture of body cells.
3.
the thing or material manufactured; product:
Plastic is an important manufacture.


verb (used with object), manufactured, manufacturing.
4.
to make or produce by hand or machinery, especially on a large scale.
5.
to work up (material) into form for use:
to manufacture cotton.
6.
to invent fictitiously; fabricate; concoct:
to manufacture an account of the incident.
7.
to produce in a mechanical way without inspiration or originality:
to manufacture a daily quota of poetry.
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Re: New Regulations Could Cost $2250/yr

Postby ScottDLS » Wed Jul 27, 2016 1:29 pm

LSUTiger wrote:Sort of a quasi related question as a result of a discussion on another forum:

Under the following conditions, it is legal to assemble a firearm (assuming it does not constitute an NFA item and specifically AR15) especially for another person? :

1. A serialized lower, upper, barrel, parts kits and all necessary parts to perform a complete build are legally purchased by the owner.

2. The owner then takes the serialized lower, upper , barrel, parts kits and all necessary parts to perform a complete build to another person who is not an FFL or gunsmith or manufacturer, and pays them to assemble the parts. (in cash or in trade, like a case of beer or more likely done while sharing a case of beer :cheers2: ). Also, what if it is just done as a free favor?

3. This does not include any 80% lowers or unfinished parts made into a lower receiver. This does not require modification or manufacture of parts. All parts are COTS and supplied by the owner. Only assembly of parts.

4. There is no transfer of ownership between the two parties.

5. You are not advertising services etc. This is not as a business, but more of a helping a buddy or family member occasionally situation.

6. Is just mounting an optic or VFG or sling or accessory considered manufacture?

7. If manufacturing a firearm is simply putting parts together then you couldn't do it for yourself with out a license, I think at issue is what constitutes "engaging in the business of " and the definition of "manufacturing"

https://www.atf.gov/file/11711/download


As defined by section 921(a)(21)(A), the term
“engaged in the business” means, as applied to a manufacturer of firearms, “a person who
devotes time, attention, and labor to manufacturing firearms as a regular course of trade or
business with the principal objective of livelihood and profit through the sale or distribution of
the firearms manufactured.” Because “manufacturing” is not defined by the GCA, courts have
relied on the ordinary meaning of the word, including actions to “make a product suitable for
use.”

manufacture

1.
the making of goods or wares by manual labor or by machinery, especially on a large scale:
the manufacture of television sets.
2.
the making or producing of anything; generation:
the manufacture of body cells.
3.
the thing or material manufactured; product:
Plastic is an important manufacture.


verb (used with object), manufactured, manufacturing.
4.
to make or produce by hand or machinery, especially on a large scale.
5.
to work up (material) into form for use:
to manufacture cotton.
6.
to invent fictitiously; fabricate; concoct:
to manufacture an account of the incident.
7.
to produce in a mechanical way without inspiration or originality:
to manufacture a daily quota of poetry.


Just as legal as it would be to buy one, decide you didn't like it anymore and give as a gift or sell to another non-prohibited resident of the same state. The serialized lower IS the firearm. If you bought an 80% lower and drilled/built it yourself and sold it to your buddy...no problem. It would be a "ghost gun". No requirement to serialize a title 1 (non-NFA) gun unless you're a FFL manufacturer.
4/13/1996 Completed CHL Class, 4/16/1996 Fingerprints, Affidavits, and Application Mailed, 10/4/1996 Received CHL, renewed 1998, 2002, 2006, 2011, 2016...). "ATF... Uhhh...heh...heh....Alcohol, tobacco, and GUNS!! Cool!!!!"

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Re: New Regulations Could Cost $2250/yr

Postby Scott B. » Wed Jul 27, 2016 1:48 pm

This is really a question of who needs an FFL and who doesn't. In your example, friends doing friends favors doesn't run afoul of ATF.

This is from one of ATF's FFL FAQs (acronym overload?)

FAQ 10. At what point should I obtain a Federal firearms license (FFL)?

Federal law requires a Federal firearms license if you are engaged in the business as a firearms dealer, manufacturer or importer. A person is engaged in those businesses, as it applies to each license type, as follows:

1. Manufacturer of firearms -- a person who devotes time, attention, and labor to manufacturing firearms as a regular course of trade or business with the principal objective of livelihood and profit through the sale or distribution of the firearms manufactured (18 U.S.C. § 921(a)(21)(A));

2. Manufacturer of ammunition -- a person who devotes time, attention, and labor to manufacturing ammunition as a regular course of trade or business with the principal objective of livelihood and profit through the sale or distribution of the ammunition manufactured (18 U.S.C. § 921(a)(21)(B));

3. Dealer in firearms -- a person who devotes time, attention, and labor to dealing in firearms as a regular course of trade or business with the principal objective of livelihood and profit through the repetitive purchase and resale of firearms, but such term shall not include a person who makes occasional sales, exchanges, or purchases of firearms for the enhancement of a personal collection or for a hobby, or who sells all or part of his personal collection of firearms (18 U.S.C. § 921(a)(21)(C));

4. Dealer in firearms (gunsmith) -- a person who devotes time, attention, and labor to engaging in such activity as a regular course of trade or business with the principal objective of livelihood and profit, but such term shall not include a person who makes
occasional repairs of firearms, or who occasionally fits special barrels, stocks, or trigger mechanisms to firearms (18 U.S.C. § 21(a)(21)(D));

5. Dealer in firearms (pawnbroker) -- a person whose business or occupation includes the taking or receiving, by way of pledge or pawn, of any firearm as security for the payment or repayment of money (18 U.S.C. § 921(a)(12));

6. Importer of firearms -- a person who devotes time, attention, and labor to importing firearms as a regular course of trade or business with the principal objective of livelihood and profit through the sale or distribution of the firearms imported (18 U.S.C. § 921(a)(21)(E));

7. Importer of ammunition -- a person who devotes time, attention, and labor to importing ammunition as a regular course of trade or business with the principal objective of livelihood and profit through the sale or distribution of the ammunition imported (18 U.S.C. § 921(a)(21)(F)).

The term “principal objective of livelihood and profit ” is further defined as the intent underlying the sale or disposition of firearms as predominantly one of obtaining livelihood and pecuniary gain, as opposed to other intents such as
improving or liquidating a personal firearms collection: Provided, that proof of profit shall not be required as to a person who engages in the regular and repetitive purchase and disposition of firearms for criminal purposes or terrorism.

Note that there is no particular minimum number of firearms that must be sold, manufactured, or imported specified by law to be “engaged in the business.” Whether a person has been engaged in the business of dealing, manufacturing, or importing firearms, is made on a case -by-case basis. Considerations include, but are not limited to: the quantity of firearms sold, manufactured, or imported; the frequency of transactions over a period of time; the intent of the person in acquiring and disposing of firearms; and any representations made to the buyer regarding the person’s ability and willingness to obtain or transfer firearms.

We recommend that you contact your local ATF office (http://www.atf.gov/field/index.html) to evaluate the facts and
circumstances of your particular case. Information on how to become a Federal firearms licensee is available at:
http://www.atf.gov/firearms/how-to/become-an-ffl.html.

FAQ 11. Do I need a Federal firearms license to make a firearm for my own personal use, provided it is not being made for resale?

Firearms may be lawfully made by persons who do not hold a manufacturer’s license under the GCA provided they are not for sale or distribution and the maker is not prohibited from receiving or possessing firearms. However, a person is prohibited from
assembling a non-sporting semi automatic rifle or shotgun from 10 or more imported parts, as set forth in regulations in 27
CFR 478.39.

In addition, the making of an NFA firearm requires a tax payment and advance approval by ATF. An application to make a machinegun will not be approved unless documentation is submitted showing that the firearm is being made for the official use of a Federal, State or local government agency ( 18 U.S.C. § 922(o),(r); 26 U.S.C. § 5822; 27 CFR §§ 478.39, 479.62, and 479.105).

Additionally, although markings are not required on firearms manufactured for personal use (excluding NFA firearms), owners are recommended to conspicuously place or engrave a serial number and/ or other marks of identification to aid in investigation or recovery by State or local law enforcement officials in the event of a theft or loss of the privately owned firearm.
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Re: New Regulations Could Cost $2250/yr

Postby LSUTiger » Thu Jul 28, 2016 7:00 pm

Chance favors the prepared. Making good people helpless doesn't make bad people harmless.
There is no safety in denial. When seconds count the Police are only minutes away.
Sometimes I really wish a lawyer would chime in and clear things up. Do we have any lawyers on this forum?

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Re: New Regulations Could Cost $2250/yr

Postby KLB » Fri Jul 29, 2016 2:31 pm

And so it begins. The schmuck is in office until late January. There's no telling what additional damage he'll do between now and then. I expect his edicts to get increasingly worse. I'll bet a doozy comes about January 15. I wish i had confidence Trump would, if elected, undo these edicts, but I don't.

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Re: New Regulations Could Cost $2250/yr

Postby Scott B. » Fri Jul 29, 2016 6:43 pm

This is not a new regulation. It's a clarification of the existing regulation and for a fair number of Type 7 FFLs, it lets them off the hook for the ITAR fee. A huge swath were ignoring the fee, or ignorant of it, but at their peril.

I'm happy not to have to pay it again. Big pain in the day planner to go down to the bank, do a wire transfer to the State Department, use the right routing codes and a hope for a bank employee who knew what they were doing.

Initially this does look bad for gunsmiths. However, I imagine a number of them were already Type 7s who knew the drill. I've not seen the breakdown between Type 1 and 7 for gunsmiths, but it would be interesting to see. I suspect a large number will continue to ignore ITAR. That's a risk they'll have to decide for themselves.

I don't like ITAR. Don't think it should be applied to those who deal strictly w/ domestic firearms. It should be confined to import/export FFLs and that's a pretty tiny group compared to the overall number.
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Re: New Regulations Could Cost $2250/yr

Postby cyphur » Tue Aug 02, 2016 8:26 am

Scott B. wrote:This is not a new regulation. It's a clarification of the existing regulation and for a fair number of Type 7 FFLs, it lets them off the hook for the ITAR fee. A huge swath were ignoring the fee, or ignorant of it, but at their peril.

I'm happy not to have to pay it again. Big pain in the day planner to go down to the bank, do a wire transfer to the State Department, use the right routing codes and a hope for a bank employee who knew what they were doing.

Initially this does look bad for gunsmiths. However, I imagine a number of them were already Type 7s who knew the drill. I've not seen the breakdown between Type 1 and 7 for gunsmiths, but it would be interesting to see. I suspect a large number will continue to ignore ITAR. That's a risk they'll have to decide for themselves.

I don't like ITAR. Don't think it should be applied to those who deal strictly w/ domestic firearms. It should be confined to import/export FFLs and that's a pretty tiny group compared to the overall number.



Not sure how a Type 07 FFL avoids ITAR, would be interested in hearing.

https://www.pmddtc.state.gov/compliance ... 20(Publish).pdf

2. Registration Required – Manufacturing: In response to questions from persons engaged
in the business of gunsmithing, DDTC has found in specific cases that ITAR registration is
required because the following activities meet the ordinary, contemporary, common
meaning of “manufacturing” and, therefore, constitute “manufacturing” for ITAR purposes:
a) Use of any special tooling or equipment upgrading in order to improve the capability
of assembled or repaired firearms;

b) Modifications to a firearm that change round capacity;
c) The production of firearm parts (including, but not limited to, barrels, stocks,
cylinders, breech mechanisms, triggers, silencers, or suppressors);

d) The systemized production of ammunition, including the automated loading or
reloading of ammunition;
e) The machining or cutting of firearms, e.g., threading of muzzles or muzzle brake
installation requiring machining, that results in an enhanced capability;
f) Rechambering firearms through machining, cutting, or drilling;
g) Chambering, cutting, or threading barrel blanks; and
h) Blueprinting firearms by machining the barrel.


I ask not to argue but I've been researching doing gun smithing work on a small scale for a bit now and ITAR really throws a wrench into those plans. Was not planning on doing it to get rich but because I enjoy it, ITAR would really hurt.


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