Gunsmithing FFL 07 quandary

[Rthur]

I have applied to get my 07 ffl and when the ATF agent came to go over the rules. He informed me that I would need to register with the State Dept. and pay their 2250 to have a 07 FFL. I have been in contact with several 07 ffl's and have never heard anything about this before. I was wondering if anyone could shed some light on this because I think he is wrong. This is just for sporting and hunting rifles and less than 50 a year.

any help would be greatly appreciated
R

 

[deadeye]

Re: FFL 07 quandary


I don't believe this will shed any light upon why he told you that but as an 07 FFL holder in one of the worst states for gun laws (NY) - I have never heard of such a thing and I just had the Federal inspector here last month - passed with flying colors.

 

[Rthur]

Re: FFL 07 quandary

I can appreciate the problem with gun laws, being in Illinios. I have talked to several people in the business and they said this is related to class 3 sot registration which I'm not looking to do. I think they all have a different interpretation depending on which 3 letters and dept. you talk to.

 

[jasonk]

Re: FFL 07 quandary

Hmmm.... http://en.wikipedia.org/wiki/Federal_Firearms_License

Seems that I found the same info when I looked into it, thought I'd reload for profit then realized I didn't want to reload that much to cover the fees involved.

 

[Rthur]

Re: FFL 07 quandary

I agree Jason, but after talking to several 07's they have never heard anything like this.

 

[STR]

Re: FFL 07 quandary

Not all ATF inspectors/agents know their jobs well. Just like I would not trust any other professions opinion if it didn't sound correct to me. You can just call your local ATF office, and and ask for an appointment with the lead person in the office. Best of luck.

 

[Aeon1]

Re: FFL 07 quandary

Have you read this from the US State Dept? http://www.pmddtc.state.gov/registration/wmr.html If you are an 07 FFL you are declaring yourself a manufacturer. As I understand it if you are a manufacturer of any items on the United States Munitions list http://www.pmddtc.state.gov/regulations_laws/documents/official_itar/ITAR_Part_121.pdf you will probably have to register with the US State Dept and most likely pay the ITAR.

You say this is for sporting rifles and for less than 50 a year so why do you need an 07? Are these spec builds for sale or are they contract work where a customer tells you what they want and you build it? If it's contract work you are not a manufacturer. Here is an ATF ruling clarifying manufacturing vs gunsmithing http://www.atf.gov/regulations-rulings/rulings/atf-rulings/atf-ruling-2010-10.htm

 

[Rthur]

Re: FFL 07 quandary

This would be an individual basis. I was informed today that if they brought me the parts(action,barrel,ect.) to put together I required a 07 to be in compliance.

 

[m1k3]

Re: FFL 07 quandary

Its true. I actually came across this info on my own while waiting on my 07 paperwork. When I spoke to my ATF rep's, they hadn't heard of it before. They came back with it's true.

This is what they told me when I asked what should I do. They said you could go for the 07, and not pay the fees. The ATF doesn't care since they aren't the ones collecting, the State Dept is. He then added this when I figured I would just go for the 07. If the State Dept was to come to the ATF and ask for a list of 07's so they could start collecting or do an audit, the ATF would very quickly provide said list. Then you might be on the hook for years worth of fines, penalties, etc. The rules were made for larger companies making products that could be used in war times. My ATF agent agreed that it was not meant to be collected from small hobby/smiths that might make a $1k a year in profit. He changed the request to a 01 and continued with the paperwork. I'll add that the agent I was working with did all of this while I was on vacation and kept me in touch every step of the way. I was very impressed and very thankful he wasn't the typical guy you hear horror stories about.

He then provided a small work around. I supposedly can't buy an action, a barrel, stock, assemble it and sell it as a firearm. That's manufacturing. When it gets log'd in your book initially as an action, then later checked out as a rifle, you've manufactured a firearm. Supposedly. I can however buy and action. Sell said action to a client, then have that client check the action back into me to be assembled along with a barrel, stock, blah, blah blah. That's gunsmithing and covered under 01 as well as others. I log the checked in action into a separate "gunsmith" book. I've had the ATF check this a couple times and my reps say its good to go.

 

[gme]

Re: FFL 07 quandary

It's true, in order to manufacture firearms or compnent parts of a firearm what they call "articles of defence" you must register with State Dept,

 

[Rthur]

Re: FFL 07 quandary

I have heard that they are looking to change this current law for "hobbyists" the first part of 2013. Maybe I'll go with the 01 and change to an 07 when the timing is right. I need some time to get my tooling ect together.

 

[rbdub474]

Re: FFL 07 quandary

Yep as of know an 07 is required to pay ITAR, though there is talk of removing the requirement unless exporting items.

The reason a lot of ATF IOIs aren't aware of the requirement is that it is totally separate of ATF or Justice Department regulations instead it is a State Department requirement.

The punishment for not registering can be pretty severe including fines and prison if I recall correctly.

 

[nso123]

Re: FFL 07 quandary

Exactly why I am going with an 01.

 

[Rhys]

Re: FFL 07 quandary

The work around works fine, but is a real pain in the butt if you're doing work for someone who isn't local. Most of the rifles I built were for guys 1000+ miles away, and most of them had no interest in collecting all the parts themselves.

 

[STR]

Re: FFL 07 quandary

This would be an individual basis. I was informed today that if they brought me the parts(action,barrel,ect.) to put together I required a 07 to be in compliance. [/quote

Sorry, this is incorrect. If you buy parts/guns with the intentions of modifying for resale, then the 07 is required. If your customer brings all the parts for modifying or complete building, then the 07 is not required. If you have an 07 and build 50 or more rifles per year, then you owe tax on all 50. If you build less than 50, then you don't pay the tax on any. You still have to fill out a report yearly of everything considered manufacturing, and file it with ATF.

 

[STR]

Re: FFL 07 quandary

07 can do anything an 01 can, plus a lot more, but there is additional paper work and record keeping involved. That's why so many builders/smith become an 01, and ask that the customer provide all the serialized parts. This way he has no limits as to how many he can build, and not worry about the unfair excise tax the government shoved down the throats of our bigger manufacturers.

I always get the amounts wrong, but I think it's 11% per handgun, and 10% per long gun. On a $3500.00 custom rifle, that's $350.00 that goes to Uncle Sam it said rifle came to be by a "manufacturer". This sometimes why the same rifle cost more from smith to smith. Not because one guys magic dust is better than the others. That comparison is of course when your comparing apples to apples.

Company's don't just absorb unfair taxes. They pass them on to consumers. So when government says, "lets tax the big rich company's ", think twice before voting that in. I know that last part is a little off subject, but some people need to understand why there's a difference in price sometimes.

 

[m1k3]

Re: FFL 07 quandary

STR

<div class="ubbcode-block"><div class="ubbcode-header">Quote:</div><div class="ubbcode-body">If you have an 07 and build 50 or more rifles per year, then you owe tax on all 50. If you build less than 50, then you don't pay the tax on any. You still have to fill out a report yearly of everything considered manufacturing, and file it with ATF.</div></div>

Do you have any links or references to that info? I remember finding some info along those lines but then found other links that seemed to contradict that. I only build rifles on the side and only for a few locals so the taxes would kill any profits I manage to make (although "friend and family" deals seem to do most of that too).

 

[STR]

Re: FFL 07 quandary

It's all in the reg book, and since getting rid of my 07, I haven't revisited it. I would spend hours reading it sometimes to find the facts. I would go by what's written in the regs book, and not by what he or she said. This will keep you out of any kind of trouble. I wish I would have post marked the pages so that I could be of better help, but it never occurred to me that I might need again, sorry.

Now, after being out of it for over a year, I am building again. Only this time I don't hold an FFL. I work as an employee part time for a local FFL 07. No BS for me to deal with, only the fun of building, and making a little extra dough. I'm on their payroll as a per item instead of per hour employee.

The FFL is not really hard to deal with, but the only way I could afford to keep one would be to run the business out of home. In my area that's not allowed. Not allowed to legally make money and pay taxes without bothering anyone, which helps the economy. Imagine that!!

 

[m1k3]

Re: FFL 07 quandary

I really enjoy having my FFL and have a small business on the side of my day-job to use it (out of the home but I live out of town so no problems there).

I wanted to do things correctly when I started so I read as much as I could and that's where I found the tax issue after I submitted all of my paperwork and had met with the ATF agents.

My whole thing started just from using GunKote! Can't even spray a little paint with out getting Uncle Sam included. That's fine though, I don't mind and I'm not trying to hide anything, just want to do what's right. The main idea for the 07 was to buy a few Savage Stevens a year, rebuild them, GunKote, etc. and sell them for my time.

I've got another year before my renewal date, maybe I'll change it then. Thanks for your help and great topic!

Mike

 

[Idaho CTD]

Re: FFL 07 quandary

Thanks for the help as well. I'm about to submit my application also.

 

[Rthur]

Re: FFL 07 quandary

Thanks for the help gents, I'm going with the 01 for now.

 

[STR]

Re: FFL 07 quandary

<div class="ubbcode-block"><div class="ubbcode-header">Originally Posted By: Rthur</div><div class="ubbcode-body">Thanks for the help gents, I'm going with the 01 for now. </div></div>

Great choice.