Private party NFA transfers

[timelinex]

This is regarding in-state NFA transfers (Arizona).

I know that technically all you have to do to do for a private party transfer is a form 4. The issue is that you are stuck in a limbo state where for a year the seller has both the item and the money or the seller has to trust a stranger will pay him a year later when the item is officially not his anymore.

So then I have questions for 2 other possible situations:

1. I know that you can also do a double stamp transaction where the seller form 4's it to the dealer and the dealer form 4's it to you. In this situation, the SOT dealer can hold the item from day 1 correct? If so, this seems safer and worth $200 extra when dealing with a MG. However, I am guessing you can't have both forms concurrently processing, which means it will add ~100 days correct? Lastly, private party sales do not have sales tax here in AZ. But would I now have to pay sales tax on the purchase now that the dealer is the intermediary? Since at a certain point the item is in the dealers name and then it goes to mine, does that make it a retail purchase? I know in regular between state transfers, I would not since the dealer is just considered to be transfering the item. But here it seems messier since at a certain point it's in their name.

2. If the seller of the item has the item in a trust, can he just add me as a co-trustee. That way I am allowed to hold onto the item while my form 4 processes. I know adding someone as a trustee instead of doing a form 4 transfer is a gray area in the NFA community because it can be seen as tax evasion. But I don't think this would apply as tax evasion since we would not be removing the original owner, so it's not "transferring" anything. More importantly, I will also simultaneously be filing the form 4 and paying the tax immediately. This doesn't seem to be tax evasion any more than having a beneficiary or adding a trustee at a later time to your trust so they can use the weapon (Which is legal).

Let me know.

Thanks

 

[KnowNothing256]

So, my responses to your questions and assertions are somewhat of a mixed bag, here we go:

- You state that the seller has both the item and the payment in this case. That's exactly how it works, even with a dealer, and I wouldn't worry too much as the buyer, because once the deal is struck and payment rendered, retention of the firearm by the seller could quite plausibly be considered a very well-documented theft of an NFA item. The ATF and local CLEO will have records of both parties agreeing to the sale (through your NFA paperwork), and if the seller doesn't hand over the goods, they'd pretty much have to disappear to get out from under that particular cloud. Seems pretty darn low-risk to me.

- Yes, my personal experience has been that FFLs charge sales tax when you pick up the goods, based on the local tax rates and the declared sales price. Going through a dealer makes it no longer a private transaction, so it'll be taxed. You could try to game this by only declaring a small sale price to the FFL, at your own risk. Obviously I don't endorse that route.

- #2 sounds like the way to go, by a country mile. I'd even dispute the tax evasion statement if you remove the original "owner," because that's not what you're doing, you're removing the original trustee. The owner, the trust itself, has already paid the tax, and the item never changes ownership, the trust still owns it. Just because the trustees get shuffled around doesn't mean the owner of record changes. If it's the only item on the trust, I'd strongly recommend you just take over the whole trust and write the original trustee out of it. Legal (consult a lawyer if you like), takes the same time and cost as your proposed #2, and you don't have to deal with the ATF.

 

[CoryT]

No, the dealer must wait for the transfer to clear before taking possession. No sales tax though, as the dealer is not buying it for resale. Not at all worth the extra tax though.

A parson could be added to a trust, but it’s a challenge now that prints, photos and a background check are required, same as a transfer. Might just as well wait for the Form 4. Its pretty normal to pay half upfront and half on the form approval. Even paying in full is not unusual. If you are somehow worried about the seller or the transfer, have your lawyer write up a sales contract.

 

[CoryT]

As above, if the trust is solely for the single NFA item, taking over the trust could work, but might cost more than the $200 transfer in legal fees and sticks you with a trust you may not want, depending on the structure.

 

[timelinex]

- #2 sounds like the way to go, by a country mile. I'd even dispute the tax evasion statement if you remove the original "owner," because that's not what you're doing, you're removing the original trustee. The owner, the trust itself, has already paid the tax, and the item never changes ownership, the trust still owns it. Just because the trustees get shuffled around doesn't mean the owner of record changes. If it's the only item on the trust, I'd strongly recommend you just take over the whole trust and write the original trustee out of it. Legal (consult a lawyer if you like), takes the same time and cost as your proposed #2, and you don't have to deal with the ATF.

This obviously sounds like THE BEST way to do things. The logic you use for why it shouldn't be illegal also sounds bulletproof. However, any time I have seen the topic come up on forums there is always a ton of people saying it's illegal and tax evasion. Since I'm not a lawyer, that has me worried!

No, the dealer must wait for the transfer to clear before taking possession. No sales tax though, as the dealer is not buying it for resale. Not at all worth the extra tax though.

A parson could be added to a trust, but it’s a challenge now that prints, photos and a background check are required, same as a transfer. Might just as well wait for the Form 4. Its pretty normal to pay half upfront and half on the form approval. Even paying in full is not unusual. If you are somehow worried about the seller or the transfer, have your lawyer write up a sales contract.

From my understanding, adding a trustee AFTER approval of the form 4/trust does NOT require you to involve the atf or sending aynthing to them. correct me if I am misunderstanding the process. Here is where I got the infor from:

https://www.atf.gov/file/107196/download#:~:text=A.-,Yes.,who%20will%20receive%20the%20firearm.

Will new responsible persons, added after the making or transfer, be subject to the same requirements? A: Once an application has been approved, no documentation is required to be submitted to ATF when a new responsible person is added to a trust or legal entity. However, should a responsible person change after the application has been submitted, but before it is approved, the applicant or transferee must contact the NFA Branch for guidance.

 

[CoryT]

That’s pretty dated, back to 2016. You can check withNFA Branch, but that’s the last word i got, file prints and photos like a new application

 

[KnowNothing256]

This obviously sounds like THE BEST way to do things. The logic you use for why it shouldn't be illegal also sounds bulletproof. However, any time I have seen the topic come up on forums there is always a ton of people saying it's illegal and tax evasion. Since I'm not a lawyer, that has me worried!

From my understanding, adding a trustee AFTER approval of the form 4/trust does NOT require you to involve the atf or sending aynthing to them. correct me if I am misunderstanding the process. Here is where I got the infor from:

https://www.atf.gov/file/107196/download#:~:text=A.-,Yes.,who%20will%20receive%20the%20firearm.

You're correct, adding a trustee after the tax stamp is issued to the trust doesn't require anything other than modifying the trustee list through whatever mechanism the trust provides for that. There are a couple ways to do it:

- Most trusts have a built-in method for adding/changing trustees that's clearly spelled out in the trust document itself, typically just requires that an existing trustee and whoever is being added both fill out a document (that's provided with the original trust) then sign it in front of a notary public and get it notarized.
- You can amend the trust, which is basically just overwriting the whole thing. Essentially, you buy a new trust from one of any number of reasonably reputable gun trust vendors online, then take both the old trust and the new one and get the new one notarized. I used Gun Trust Guru when I converted my Silencer Shop SingleShot to a multi-item trust, it's easy as pie. Downside of this method is that you have to buy the new trust on top of everything else, and I'm less sure that this method is kosher for fully swapping out a trustee; in my mind (not a lawyer here), you'd be safer keeping the original trustee as a co-trustee on the new, amended trust then writing them out of it. That way there's a paper trail showing them signing off on it, but if you go this route, you might as well just use the first method I describe in this post.

Clear as mud? Also, to all those grouchos yelling that it's tax evasion, who are they saying is evading the tax? The silencer never changes legal hands, and the owner (the trust) already paid its taxes.

 

[timelinex]

You're correct, adding a trustee after the tax stamp is issued to the trust doesn't require anything other than modifying the trustee list through whatever mechanism the trust provides for that. There are a couple ways to do it:

- Most trusts have a built-in method for adding/changing trustees that's clearly spelled out in the trust document itself, typically just requires that an existing trustee and whoever is being added both fill out a document (that's provided with the original trust) then sign it in front of a notary public and get it notarized.
- You can amend the trust, which is basically just overwriting the whole thing. Essentially, you buy a new trust from one of any number of reasonably reputable gun trust vendors online, then take both the old trust and the new one and get the new one notarized. I used Gun Trust Guru when I converted my Silencer Shop SingleShot to a multi-item trust, it's easy as pie. Downside of this method is that you have to buy the new trust on top of everything else, and I'm less sure that this method is kosher for fully swapping out a trustee; in my mind (not a lawyer here), you'd be safer keeping the original trustee as a co-trustee on the new, amended trust then writing them out of it. That way there's a paper trail showing them signing off on it, but if you go this route, you might as well just use the first method I describe in this post.

Clear as mud? Also, to all those grouchos yelling that it's tax evasion, who are they saying is evading the tax? The silencer never changes legal hands, and the owner (the trust) already paid its taxes.

Awesome. This makes things ALOT easier. I think I will still end up transfering from the original trust to a new trust, as it makes things clearer and on an expensive item like a MG, $200 is worth it in case there are any issues down the line (everything from selling it to passing it down). But it is comforting knowing that I will be able to take possession of the MG after laying down a huge chunk of change.

 

[KnowNothing256]

Awesome. This makes things ALOT easier. I think I will still end up transfering from the original trust to a new trust, as it makes things clearer and on an expensive item like a MG, $200 is worth it in case there are any issues down the line (everything from selling it to passing it down). But it is comforting knowing that I will be able to take possession of the MG after laying down a huge chunk of change.

Ok, so that's basically your original Option #2, go for it. Ask for a copy of the trust before paying the monies, and read it carefully to make sure it allows you to do what you're planning. Assuming it all works out, when you go for your new trust, I found Gun Trust Guru's setup to be very easy to use, would highly recommend.

 

[KnowNothing256]

One last caution I thought of: I assume the seller is the "settlor" in the trust, which gives them ultimate control of adding and removing trustees. My SingleShot Trust doesn't make the process very clear, but the newer Gun Trust Guru trust I have is much clearer: the settlor and newly-assigned trustee sign a paper to add that person, and the settlor signs a paper to remove a trustee. So, in your case and assuming that mechanism applies to the trust currently holding the NFA item (fairly big assumption), the current settlor could put you on the trust, but also remove you from it at a later date after you've paid and without your permission. I'd start the new paperwork for the new trust ASAP to begin the paper trail of the new trust owning the item rather than the old trust, to prevent that from biting you.

 

[timelinex]

One last caution I thought of: I assume the seller is the "settlor" in the trust, which gives them ultimate control of adding and removing trustees. My SingleShot Trust doesn't make the process very clear, but the newer Gun Trust Guru trust I have is much clearer: the settlor and newly-assigned trustee sign a paper to add that person, and the settlor signs a paper to remove a trustee. So, in your case and assuming that mechanism applies to the trust currently holding the NFA item (fairly big assumption), the current settlor could put you on the trust, but also remove you from it at a later date after you've paid and without your permission. I'd start the new paperwork for the new trust ASAP to begin the paper trail of the new trust owning the item rather than the old trust, to prevent that from biting you.

Good point. Makes the case for putting it in a new trust asap even stronger.

It sounds like the worst case scenario is where I pay them, they add me as a trustee and then sometime before the transfer goes through, they use their power as Settlor to remove me. Honestly, I wouldn't be too worried though. The point of adding me was so I could gain legal possession of the MG after they have the money. I would also then have the trust in my possession and a bill of sale saying it was sold from the original trust to the new one. Maybe they find a way to still legally change it as you suggested, but it seems like a losing game for them all around. How would they physically get the MG back? For what purpose would they go through all this when in best case scenario they legally have to surrender it within the year anyways. etc... I'm not saying it wouldn't get messy, but either way, even in the worst case scenario, it is still a better scenario for me than just leaving it in their trust and crossing my fingers they don't disappear.

 

[CoryT]

Well, if you get removed from the trust while in possession, you go to jail and the property returns to the trust, albeit after the trial. Just write up a sales contract and do the transfer.

 

[timelinex]

Just spitballing here, but I think a way to get around this is by him adding me as a trustee, removing himself from being a trustee and then lastly adding an amendment to change the trust from revocable to irrevocable. Once it is irrevocable, he can no longer change the trust (so cannot remove me from it)..

 

[Tiger_Shilone]

No free lunch with NFA items. Bottom line, You pay $200 and wait for the stamp approval before getting it.

Playing trust games like redefining the trust settlor and making a revocable trust non-revocable isn’t worth it. Penalties in the NFA world are too high to take chances playing with fire. Really sounds like you are trying to do this on the cheap, NFA isn’t cheap. At least consult an NFA lawyer.

BATFE is a real stickler for bureaucratic paperwork done to a T and loves finding paperwork fuck ups during an audit. I had a paperwork delay and Q&A session over a missing hyphen in a serial number because their online forms didn’t accept a hyphen, but some how it was my fault. That fun getting that cleared up

This is almost as bad as the wife and sbr thread going on now as well. You have to know the rules to play in the NFA

Using someone else’s SBR

I recently submitted a Form 1 to convert my CZ Scorpion into an SBR for home defense. Figuring my wife will be more accurate shooting a shoulder fired weapon vs a handgun in an emergency. But now I’m wondering will she legally be allowed to shoot that weapon without me being present? I know...

www.snipershide.com

https://www.snipershide.com/shooting/threads/using-someone-else’s-sbr.7080099/#post-9538603


edit add link to sh thread

 

[Choid]

Almost 100% positive you do not need to submit anything to add trustees to a trust. I know you rarely do for other legal trusts, and I don't think an NFA trust is different that way.

That said, I wouldn't fuck around with a way to transfer. Just do the paperwork. But if you want to add your wife to your trust, I am pretty sure no photo or fingerprints necessary.

 

[RGStory]

This is regarding in-state NFA transfers (Arizona).

I know that technically all you have to do to do for a private party transfer is a form 4. The issue is that you are stuck in a limbo state where for a year the seller has both the item and the money or the seller has to trust a stranger will pay him a year later when the item is officially not his anymore.

So then I have questions for 2 other possible situations:

1. I know that you can also do a double stamp transaction where the seller form 4's it to the dealer and the dealer form 4's it to you. In this situation, the SOT dealer can hold the item from day 1 correct? If so, this seems safer and worth $200 extra when dealing with a MG. However, I am guessing you can't have both forms concurrently processing, which means it will add ~100 days correct? Lastly, private party sales do not have sales tax here in AZ. But would I now have to pay sales tax on the purchase now that the dealer is the intermediary? Since at a certain point the item is in the dealers name and then it goes to mine, does that make it a retail purchase? I know in regular between state transfers, I would not since the dealer is just considered to be transfering the item. But here it seems messier since at a certain point it's in their name.

2. If the seller of the item has the item in a trust, can he just add me as a co-trustee. That way I am allowed to hold onto the item while my form 4 processes. I know adding someone as a trustee instead of doing a form 4 transfer is a gray area in the NFA community because it can be seen as tax evasion. But I don't think this would apply as tax evasion since we would not be removing the original owner, so it's not "transferring" anything. More importantly, I will also simultaneously be filing the form 4 and paying the tax immediately. This doesn't seem to be tax evasion any more than having a beneficiary or adding a trustee at a later time to your trust so they can use the weapon (Which is legal).

Let me know.

Thanks

Regarding Option 2.
I suggest reviewing the following article by Ryan M. Cleckner, Esq. In it he notes that you will still need to fill out the attached form for every responsible party as a result of recent ATF rule changes.

Gun Trust Guide [2023] Everything You Need to Know about NFA Trusts - RocketFFL

Many people looking to purchase NFA Firearms wonder if they should put the guns into a special kind of trust called an NFA Gun Trust. As you’ll see below, we don’t think using a regular firearms trust is worth it anymore. Sure, there was a time when a gun trust was a smart idea for […]

rocketffl.com

I have attached a copy of the form for ease of reference.

 

[KnowNothing256]

Regarding Option 2.
I suggest reviewing the following article by Ryan M. Cleckner, Esq. In it he notes that you will still need to fill out the attached form for every responsible party as a result of recent ATF rule changes.

Gun Trust Guide [2023] Everything You Need to Know about NFA Trusts - RocketFFL

Many people looking to purchase NFA Firearms wonder if they should put the guns into a special kind of trust called an NFA Gun Trust. As you’ll see below, we don’t think using a regular firearms trust is worth it anymore. Sure, there was a time when a gun trust was a smart idea for […]

rocketffl.com

I have attached a copy of the form for ease of reference.

I read the linked article, and it’s only discussing adding an NFA item to a trust, not modifying an existing trust with associated NFA item(s). Nobody disputes that all RPs must submit fingerprints, photos, and RPQs when adding an NFA item to a trust (even if it’s the first item on that trust), that’s well understood, even by the dealers.

But the advice to call the NFA and ask is solid, it certainly can’t hurt. But nobody in this thread has yet submitted verifiable evidence that fingerprints, etc. are required to add a trustee to an existing trust. I’d certainly like to know if anyone has any such evidence.

 

[timelinex]

Regarding Option 2.
I suggest reviewing the following article by Ryan M. Cleckner, Esq. In it he notes that you will still need to fill out the attached form for every responsible party as a result of recent ATF rule changes.

Gun Trust Guide [2023] Everything You Need to Know about NFA Trusts - RocketFFL

Many people looking to purchase NFA Firearms wonder if they should put the guns into a special kind of trust called an NFA Gun Trust. As you’ll see below, we don’t think using a regular firearms trust is worth it anymore. Sure, there was a time when a gun trust was a smart idea for […]

rocketffl.com

I have attached a copy of the form for ease of reference.

Where do you see him make that claim? From my reading of his page, here is an exact quote about the new changes:

"1. “Responsible persons” must complete a specified form and submit fingerprints and photographs when the trust makes or acquires an NFA firearm"

Notice my bold emphasis. Seems consistent with what I was saying?

 

[RGStory]

Where do you see him make that claim? From my reading of his page, here is an exact quote about the new changes:

"1. “Responsible persons” must complete a specified form and submit fingerprints and photographs when the trust makes or acquires an NFA firearm"

Notice my bold emphasis. Seems consistent with what I was saying?

I read the linked article, and it’s only discussing adding an NFA item to a trust, not modifying an existing trust with associated NFA item(s). Nobody disputes that all RPs must submit fingerprints, photos, and RPQs when adding an NFA item to a trust (even if it’s the first item on that trust), that’s well understood, even by the dealers.

But the advice to call the NFA and ask is solid, it certainly can’t hurt. But nobody in this thread has yet submitted verifiable evidence that fingerprints, etc. are required to add a trustee to an existing trust. I’d certainly like to know if anyone has any such evidence.

Mr. Cleckner references the new "responsible person" definition of ATF. He clarifies, "In short, anyone who may lawfully posses an NFA firearm in the trust is now a “responsible person” and is subject to the new application, photograph, fingerprint, and CLEO notification requirements."

I have quoted the ATF page in italics below and provided a link to the direct page.

"

Who is a Responsible Person?​

In the case of an unlicensed entity, including any trust, partnership, association, company (including any Limited Liability Company (LLC)), or corporation, any individual who possesses, directly or indirectly, the power or authority to direct the management and polices of the trust or entity to receive, possess, ship, transport, deliver, transfer, or otherwise dispose of a firearm for, or on behalf of, the trust or legal entity.

In the case of a TRUST, those persons with the power or authority to direct the management and policies of the trust include any person who has the capability to exercise such power and possesses, directly or indirectly, the power or authority under any trust instrument, or under State law, to receive, possess, ship, transport, deliver, transfer, or otherwise dispose of a firearm for, or on behalf of, the trust.

Examples of who may be considered a responsible person of a trust or legal entity include:

• Settlors/Grantors
• Trustees
• Partners
• Members
• Officers
• Board members
• Owners
• Beneficiaries – if said beneficiary has the capability to exercise any of the powers or authorities enumerated above."

See -> https://www.atf.gov/rules-and-regul... final rule,firearms registered to a decedent.


Please note, that I am not going to give legal advise on a public forum, especially in an area outside of my professional expertise. If you are going to treat NFA Trusts like SPAC's, then I will merely advise caution as you navigate a new and probably un-litigated area that is clearly intended to circumvent existing legislation and rules. I do like the idea, and the method could prove to be sound with proper execution and adequate construction of the trust documents.

It should be noted that Trust transfers of this nature are not without precedent in other aspects of real property law. There is a whole branch of the legal profession who specialize in trusts and they may be worth consulting. It is my understanding that real property transfers through trust instruments are not immune to tax considerations in all cases.

However, Trusts are a very old construction that predate even our own constitution. Property Trusts and their transfer is derived from English Common Law dating to the pre-fire arm age. They were created by and for very rich, powerful and influential people for the explicit purpose of protecting their property. As such the bulk of legal interpretations and judicial rulings were aligned to insulate the strength of those entities from government encroachment.

So you may be on to something here. Unfortunately, abuse of the protections that trusts offered has resulted in the slow erosion of those protections over the past 100 years or so. (Thinking of you Southern District of New York.)

Additionally, there are also functional considerations to be wary of, even should the concept prove sound. When and how to effectuate the physical transfer of the firearm, protection against malfeasance, suitably crafted indemnification clauses and properly defining and accounting for the inventory at the time of transfer, are some of the immediate considerations that will require special attention due to the nature of the property. Doubtless there are more. All of this will need to be gone over and negotiated with a possible stranger that may be geographically remote and involving high value items and further complicated by the exchange of funds.

Those considerations are not impossible to overcome, but there are risks in being the first to carve an uncharted path.

Or... just pull a cowboy move, say "fuck it", do it, and see what shakes out. Either way I am intrigued.

 

[timelinex]

I know the simplest thing to do is just buy from a trusted dealer. But thats not the question.

The seller has the MG registered as an individual, so any trust work is no longer an option.

I think I've got a new idea.

What if I pay the seller for the rifle, send the form 4, take off all the non-registered parts and take them. Then we get a locked container and put the lower into the locked container. He keeps the key and I take the locked container. He writes a letter stating he is allowing the MG to be stored at my house.

I think that abides by ALL pertinent laws.

According to the atf:

"The firearm could also be left or stored in the former state of residence at the house of a friend or relative in a locked room or container to which only the registered owner has a key. The friend or relative should be supplied with a copy of the registration forms and a letter from the owner authorizing storage of the firearm at that location."

This makes sense as you are allowed to store your nfa items in the same residence as others, AS LONG AS, its in a locked container that they can't open. So it's using the same idea. I believe the reason for the letter is for LEO to know it's not stolen since it's not the same address of owner. Coincidently, the seller I am talking with right now actually literally is moving out of state soon, so even if it didn't apply without that portion of the situation, it really does apply.

What do you guys think?

 

[CoryT]

If you have that little trust in the seller, just wait for something else. That said , is it legal? Seems so. Would I do that? No.

 

[KnowNothing256]

Actually OP, your solution seems elegant and explicitly allowed by the ATF. Send it.

 

[timelinex]

If you have that little trust in the seller, just wait for something else. That said , is it legal? Seems so. Would I do that? No.

I appreciate everyone's responses but I'm not sure why everyone is getting worked up. I'm overall ok with doing a private party transaction. It will likely be face to face too, which is another level of protection. I get that there is a 99%+ chance everything will go smoothly.

But I've done all sorts of deals for business as ane even when we implicitly trust each other, it is ALWAYS better for EVERYONE for terms to be clear and to do it in the least risk exposure way possible. That's all I'm trying to do. To learn about the process and make it as smooth as possible. An ounce of prevention is worth a point of cure.

It's as much about respect/protection for the seller as it is for me. Even though he has the money, he would now have to keep safe an expensive item for me which isn't great for them either.

Hope that clears things up.

 

[RGStory]

Elegant, simple, and legal.
It abides by both the intent and apparently the letter of the law. Please keep us up to date on how it works out.

 

[sgtsmmiii]

Or.............another possibility...............take the non-registered parts, lock the registered parts in the box to which he only has the key, pay him 50% of the sale price as a down payment, with the remaining 50% to paid when the stamp and parts are delivered. Provides some incentive to provide the stamp and registered parts in a timely manner.