Gun Laws And Legislation For this assignment, please summarize the following: • Key Principles of Federal Law Applicable to Firearms Transactions • Natio

 

For this assignment, please summarize the following:

• Key Principles of Federal Law Applicable to Firearms Transactions

• National Firearms Act

• Concept of a Prohibited Person

Information is located here:

Chapter 1 – Gun Laws and Legislation

APPENDIX 1 — NATIONAL FIREARMS ACT 

APPENDIX 4 — ATF INSPECTIONS 

APPENDIX 7 — LICENSING UNDER THE GCA 

APPENDIX 11 — PROHIBITED PERSON 

Shooting Sports Management

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ISBN: 978-1-945697-16-6

Rev. 6.21

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Contents

Chapter 1 – Gun Laws and Legislation . . . . . . . . . . . . . . . . . . . . . . . 1

Chapter 2 – Setting Up a Business . . . . . . . . . . . . . . . . . . . . . . . . 29

Chapter 3 – Promoting Your Business . . . . . . . . . . . . . . . . . . . . . . 57

Chapter 4 – Business Records and Bookkeeping . . . . . . . . . . . . . . . . 85

Chapter 5 – Appraising Firearms . . . . . . . . . . . . . . . . . . . . . . . . . 113

Chapter 6 – Trading in Used Guns . . . . . . . . . . . . . . . . . . . . . . . . 131

Chapter 7 – Selling New Guns . . . . . . . . . . . . . . . . . . . . . . . . . . .159

Chapter 8 – Importing Firearms . . . . . . . . . . . . . . . . . . . . . . . . . . 177

Appendices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .199

Shooting Sports M
anagem

ent

INTRODUCTION 3
YOUR FEDERAL FIREARMS LICENSE 7

Advantages of a Business Entity or Gun Trust 9
Keeping Records 9
Transfer Between Licensees 10
Know Your Customer 11
Straw Purchase 12
Sales To Law Enforcement Officers 12
NFA Gunsmithing 15

QUESTIONS AND ANSWERS 17
General Questions 17
Unlicensed Persons 19
Firearms Transaction Record 23
Required Records 23
Additional Questions 25

C
hapter 1 – G

un Law
s and Legislation

2

3

Introduction
One of the most difficult issues confronting
firearms businesses and firearms owners is the
need for fully trained, competent gunsmiths.
Unfortunately, there are many people out there,
some of them federal licensees, who claim to
be gunsmiths but have very little knowledge or
skills in that area. Gun owners often complain
that these people hold their guns for unreason-
able periods of time and, when they finally get
them back, the necessary repairs have either
been made poorly or not made at all. This is
often not discovered until the gun owner has
paid for the repairs that have supposedly been
made, forcing him into a decision on whether
it is worth the expense of taking legal steps to
recover his money or just to go to another gun-
smith and start the repair process over again.

The information in this book is current at time of
printing, since gun laws are continually changing,
it is suggested you check with the state and local
government along with the ATF to f ind current
information. www.atf.gov.

4

The poor state of our economy forces many gun
owners to delay purchasing new firearms until
their finances are in better shape.
In addition, the machine gun ban of 1986 says
that private citi zens can only own machine
guns that were manufactured and transferrable
be fore May 19, 1986. As these firearms get
older, many of them will need to be repaired.
Remember, some parts of a machine gun are
considered a machine gun. If these parts break,
they cannot be replaced unless the replacement
machine gun was also manufactured before
May 19, 1986 [18 USC 922(o)].
These problems, along with the threat of more
regulation and additional laws restricting fire-
arms sales that seem to come with the public-
ity surrounding every mass shooting, may result
in the curtailment of new gun sales. Therefore,
there may be an even larger demand for the
knowledgeable gunsmith in the near future.
Existing firearms will have to be maintained,
and broken guns will need repairs, often re-
quiring the gunsmith to manufacture new gun
parts. Collectors and museums will want their
collector pieces restored and preserved. At this
moment, most areas in the United States could
use more gunsmiths, and this demand will most
likely increase in the future. It is estimated there
will be a need for many more skilled gunsmiths
in the United States during this decade than are
currently available. Anyone with the knowledge
of firearms (including their repair and restora-
tion) cannot help but fare well.
Besides needing a thorough knowledge of fire-
arms, their operating characteristics, and how to
repair them, the modern gunsmith is faced with
numerous rules and regulations that he or she
must abide by. Learning all of these laws may be
difficult at first, but eventually they will become
second nature.

This lesson covers the basic laws governing fire-
arms at the present time. However, these laws
are modified frequently. When you receive your
Federal Firearms License (FFL), you will also
receive a booklet titled Your Guide to Federal
Firearms Regulation (ATF Publication 5300.4),
shown in Figure 1, and another book titled
Federal Firearms Licensee Quick Reference and
Best Practices Guide (ATF Publication 5300.15),
published by the Bureau of Alcohol, Tobacco,
and Firearms (ATF). If for some reason these
books do not arrive with your FFL, request
copies immediately. Read the first 11 pages
of the ATF Publication 5300.15. Look at the
sample Acquisition & Disposition Record on
pages 13 and 14 and briefly look at the sample
forms on page 15 of the regulation book. Read
the questions and answers in ATF Publication
5300.4, which are written in plain English. Take
a look at the regulations referred to in the an-
swers for the sections concerning “Licensing,”
“Form 4473,” “Records Required,” ”Conduct
of Business,” “Manufacturers,” “Gunsmiths”
and “Brady Law.” Don’t worry about memo-
rizing any of the answers or the regulations
cited. Concentrate on understanding the con-
cepts involved and how these requirements tie
into the purpose of keeping firearms away from
prohibited people. Before you obtain your FFL,
an ATF Industry Operations Investigator will
review these regulations with you and answer
any questions you have. Then, keep both books
handy at all times to review in case certain ques-
tions arise. If you are in doubt about a rule or
regulation and you do not find the answer in
one of these books, or aren’t sure you understand
the answer you found, call your nearest ATF of-
fice for assistance. In most cases, they will be
able to give you a ruling on the spot.

5

Figure 1: Obtain, read, study and keep a copy handy of
the latest edition* of the Federal Firearms Regulations
Reference Guide.
*The 2014 edition is the current copy available at the
time of printing.

Key Principles of Federal Law Applicable to
Firearms Transactions
• A “prohibited person” can never legally

possess a firearm.

• A person who is buying and selling fire-
arms with the intent of making a profit is
“engaging in business” and must obtain a
Federal Firearms License.

• In a sale between two licensees, the seller
is required to verify the license status of
the buyer.

• The Firearms Transaction Record and
InstaCheck (NICS) were designed to
prevent prohibited people from acquiring
firearms from licensees.

• In any sale from a licensee to a non-
licensee, a Firearms Transaction Record
must be completed and an InstaCheck
must be conducted.

• Under federal law, a sale between two
non-licensees does not have to go
through a licensee. However, take note of
the following:

• The buyer and seller must be resi-
dents of the same state.

• The buyer cannot be a prohibited
person.

• A licensee can “acquire” firearms
anywhere. He can only “dispose” of
firearms at his licensed premises or
at a “gun show” in his home state.

National Firearms Act weapons, such as
machine guns, are the only firearms that are
registered under federal law.
• All transactions in NFA weapons must

be approved by ATF before they can take
place.

• A “making tax” and “transfer tax” are
imposed on NFA transactions involving
non-licensees.

• Licensees who wish to manufacture,
import, or deal in NFA weapons must
pay an occupational tax to do so, in
addition to their license fee.

• Payment of the tax exempts them
from the “making tax” if they are
manufacturers.

• A sale or “transfer” between two NFA
licensees is exempt from the “transfer tax.”

6

What is a “Prohibited Person”
A prohibited person is an individual who may
be characterized by any of the following:
• Has been convicted in any court of a

crime punishable by imprisonment for a
term exceeding one year.

• Is a fugitive from justice.

• Is an unlawful user of or addicted to any
controlled substance This includes medi-
cal and recreational marijuana even if legal
in your state. If it is prohibited Federally,
it makes you a prohibited person.

• Has been adjudicated as a mental defec-
tive or has been committed to a mental
institution.

• Is an alien illegally or unlawfully in the
United States or an alien admitted to the
United States under a nonimmigrant visa.

• Has been discharged from the Armed
Forces under dishonorable conditions.

• Having been a citizen of the United
States, has re nounced his or her citizen-
ship. There are specific requirements to
renounce your citizenship.

• Is subject to a court order that restrains
the person from harassing, stalking, or
threatening an intimate partner or child
of such intimate partner

• Has been convicted of a misdemeanor
crime of do mestic violence or where the
underlying charge was one of domestic
violence.

• Cannot lawfully receive, possess, ship, or
transport a firearm.

• A person who is under indictment or
information for a crime punishable by
imprisonment for a term exceeding one
year; such person may continue to law-
fully possess firearms obtained prior to
the indictment or information.

7

Your Federal
Firearms License
Anyone who engages in a business engraving,
customizing, refinishing or repairing firearms
must obtain an FFL. You will also need a license
if you personally manufacture firearms, buy guns
or ammunition for resale to others at wholesale
or retail prices; reload ammunition for others; or
take possession of someone else’s firearms, for
even simple maintenance as part of a business
[27 CFR 478.11; 27 CFR 478.41].

To qualify for an FFL, shown in Figure 2, you

• must be 21 years of age or over;

• must not be prohibited from shipping,
transporting, receiving or possessing fire-
arms or ammunition;

• must not have willfully failed to disclose
any material information, or made any
false statement, as to any material fact
in connection with an application for an
FFL; and

• must have premises from which you con-
duct your business, or from which you in-
tend to conduct a dealer’s business within
a reasonable period of time.

You must also certify all of the following:
1. The business to be conducted is not

prohibited by state or local law at that
location.

2. Within 30 days of the approval of the
application, the business will comply
with applicable state and local law
requirements.

3. The business will not be conducted until
the requirements of state and local law
have been met.

4. You have sent a copy of the application to
the chief law enforcement officer where
the premises is located notifying that of-
ficer that you have applied for a license.

5. Secure gun storage or safety devices
will be available at any place where fire-
arms are sold to non-licensees [27 CFR
478.47(b)].

An FFL entitles you to buy and sell, at whole-
sale or retail, firearms and ammunition to resi-
dents of your state. You may also, depending on
state laws, sell to residents of other states that
share a common border [18 USC 933(b)3; 27
CFR 478.41(b); 27 CFR 478.96].

Figure 2: Sample of FFL you will receive if you qualify.

8

You may operate out of your home, a garage,
an outbuilding, or a regular place of business,
but you must be open to the public during the
hours you specify on your application [27 CFR
478.11].
Some local zoning laws may prohibit you from
operating any business out of your home, or
may prohibit the manufacture or storage of am-
munition. So be sure you look into your local
requirements for a business license to operate
from your home before applying for an FFL [18
USC 923(d)(1)].
When you specify “open to the public” on your
application, you need only open your doors for
the time specified. If you are a gunsmith only,
you can also open “by appointment only,” pro-
vided you set core hours when you will usually
be available for ATF inspection. Many part-
time gunsmiths have a regular job working for
another firm. Therefore, they prefer to open
their own business a couple hours each day, for
example, from 6 p.m. to 8 p.m. weekdays, and
from 9 a.m. to noon weekends. This is perfectly
legal, as long as those are the hours listed on
your application. You only need to be open to
the public you intend to serve, presumably gun
owners requiring repairs [18 USC 923(d)(1);
ATF Ruling 73-13].
If you are a dealer and a gunsmith, an FFL also
entitles you to do gun repairs on the same prem-
ises, providing this phase of your business is also
open to the public during the hours listed for
non-repair services. The cost for an FFL en-
titling you to buy, sell, and repair guns is $90
every three years after the $200 fee for the first
three years [18 USC 921(a)(11)(B) 27 CFR
478.42; 27 CFR 478.47(b)].
To apply for your FFL, call 202-648-6420 to
request an application package from the ATF
Distribution Center. You may also contact your
local ATF Industry Operations Office. To find
your local ATF Office, check your local telephone
directory or go to the ATF website, www.atf.gov.
Click on “Contact ATF” and then on “Contact
by State” to find all ATF offices in your state.

Request an Application package to obtain a
Federal Firearms License. You will then receive
an application and instructions for filling it out.
At this point, you should seriously consider
speaking with an attorney, preferably one inti-
mately aware of federal firearms laws, regarding
forming some form of business entity to protect
you in case you are sued. Furthermore, if you
elect to form some form of business entity, you
will apply in the name of the business entity, not
your own name.
In approximately two months, after attending
the initial interview with your local Industry
Operations Inspector, you will receive your FFL
if you qualify. It should be displayed promi-
nently in your place of business. Do not sign
your license. Have a few dozen copies made at
your local office supply store or library [27 CFR
478.47].
When ordering firearms or ammunition for the
first time from a manufacturer or supplier, send
a copy of your license with an original signa-
ture with your order. When requesting catalogs
also send a copy of the license; most suppliers
require a copy of an FFL as proof that you are
entitled to trade discounts [27 CFR 478.94].
Your license is in effect until the expiration date
shown on the license. It covers operations only
at the location shown on the license, and under
certain restrictions, at gun shows and similar
activities. When it is time to renew your FFL,
the ATF will send a renewal application to you
about 60 days before the expiration date shown
on your license. If you do not receive your re-
newal application 45 days before the license
expiration date, and you want to stay in busi-
ness, immediately notify your local ATF of-
fice or the Federal Firearms Licensing Center.
You can contact the licensing center by phone
at (866)662-2750. See the ATF website (www.
ATF.gov) for the mailing address [27 CFR
478.49; 27 CFR 478.45].
To renew your FFL, complete and send the
application, with the fee attached, to the Post
Office Box listed on the renewal application

9

before the license expiration date. Filing your
renewal application on time gives you the right
to continue operations until the ATF acts on
the application, no matter how long it takes. If
necessary, you can obtain a “Letter of Authority”
from the ATF documenting your timely renew-
al and right to operate for your suppliers. (27
CFR 478.45)

ADVANTAGES OF A BUSINESS
ENTITY OR GUN TRUST
NFA firearms can be purchased and owned by
individuals, business entities, or trusts. Over
the past few years the gun trust has become the
most widely used entity for purchasing NFA
firearms because of flexibility that comes with
a gun trust. A gun trust is a form of trust that
has been written to address the unique aspects
of purchase, use, transfer, and devise of firearms.
Not all trusts are gun trusts and many so-called
gun trusts advise people to do things that are in

violation of the law. It is important that unless
you are a lawyer, you not provide legal advice or
help people create a gun trust. In many states, it
is a violation of the law for a non-lawyer to fill
out a trust form for another individual. You can
download a brochure with more details about
gun trusts at www.guntrustlawyer.com/NFA_
Gun_Trust_brochure.pdf.

KEEPING RECORDS
Gunsmiths and dealers must maintain a sepa-
rate permanent record of all firearms acquired
and disposed of. This includes firearms received
in pawn, curios and relics, and firearms received
for repair [27 CFR 478.125].
Firearms must be logged in when received
and logged out as they are disposed of, using a
Firearms Acquisition and Disposition Record (A
& D Record) like the one shown in Figure 3
[27 CFR 478.125(e)].

Figure 3: Sample entries for Acquisition and Disposition Book for Federal Firearms licensee Brian Smith for Brian’s
Sport Shop. It is important to keep accurate records.

10

You will have to prepare Form 4473, the
Firearms Transaction Record, covering the trans-
fer of each firearm to a non-licensed person.
Read this form carefully; it is the most impor-
tant form or record you will keep. These forms
must be kept alphabetically by name of pur-
chaser, chronologically by date of disposition,
or numerically by transaction serial number.
Form 4473, Part I, shown in Figure 3 is used
for over-the-counter sales. Form 4473, Part II, is
used for non-over-the-counter sales. Form 4473
Part II can only be used if the transaction is ex-
empt from the requirement for an InstaCheck.
No licensee should use Form 4473 Part II until
he completely understands the requirements
of 27 CFR 478.124(f ) and 27 CFR 478.96(b)
[27 CFR 478.102; 27 CFR 478.124; 27 CFR
478.96(b)].
Form 4473 does not have to be prepared to cov-
er the return of a repaired firearm to the same
person who gave it to you for repair. However,
to qualify for this exemption, the person you’re
returning the firearm to must be the exact same
person who brought it in, not a friend or relative
acting on his or her behalf [27 CFR 478.124(a)].
You must also keep a record of all armor-pierc-
ing ammunition received and disposed of (see
27 CFR 478.11 for the definition of Armor-
Piercing Ammunition). Records of the sale of
armor-piercing ammunition to law enforcement
or government agencies must be kept for two

years. Other records must be kept for 20 years.
The information should be kept in a bound
book with the information listed as shown in
Figure 4. Be sure that all of the information is
filled out on the form. Ammunition and fire-
arms record books are available from a num-
ber of sources, including Brownells [27 CFR
478.125]. To keep a computerized record of this
type of information, you need to request a vari-
ance [27 CFR § 478.125(h) i].

TRANSFER BETWEEN
LICENSEES
Licensees may freely buy and sell firearms and
ammunition among themselves. They do not
have to prepare Form 4473 on transfers to other
licensees; however, these transactions must be
recorded in a bound record book. The licens-
ee receiving the firearms or ammunition must
furnish a signed copy of his or her license to
the licensee selling, or otherwise disposing of,
any firearm prior to making the transaction.
Licensees may also ship interstate to other li-
censees [27 CFR 478.94].
Dealers may take orders for firearms and am-
munition at any location, but the orders must
be filled only at your licensed premises or a gun
show in the licensee’s home state. This includes
sales or dispositions to other licensees [27 CFR
478.41; 27 CFR 478.50; 27 CFR 478.100].

Figure 4: Ammunition disposition record should contain the above information.

11

KNOW YOUR CUSTOMER
Before delivering any firearm or armor-pierc-
ing ammunition, identify the buyer by name,
date of birth, residence address and a photo-
graph. This information must be verified from
a Government-issued Identification Document
[27 CFR 478.11; 27 CFR 478.124(c); 27 CFR
478.102(a)(3)].
Under federal law, the minimum age for pur-
chasers of firearms and ammunition may be ei-
ther 18 or 21 years, depending on the item be-
ing purchased. You may not sell a handgun or
handgun ammunition to persons under 21 years
of age. You may not sell shotguns or rifles, or
shotgun and rifle ammunition, to persons under
18 years of age. You may sell ammunition that is
interchangeable between rifles and handguns to
a purchaser who is at least 18 years of age, if you
are satisfied that he or she will use the ammuni-
tion in a rifle [27 CFR 478.99(b)].
If you sell or deliver a handgun to a non-licensed
person, that person must be a resident of the
state in which your licensed premises is located.
If you sell or deliver a rifle or shotgun to a non-
licensed person, that person must be a resident
of the state in which your business is located.
In some cases, you may sell rifles and shotguns,
but not handguns, to a resident of another state.
This latter condition is valid only if the buyer’s
state allows an out-of-state purchase and if the
licensee’s state allows a sale to an out-of-state
resident [27 CFR 478.96(c)].
In addition to these requirements, you may not
lawfully sell or dispose of any firearm or ammu-
nition to prohibited people, such as convicted
felons. In addition, a licensee may not make a
sale or disposition of a firearm to anyone if the
sale or disposition would violate any state or lo-
cal law [27 CFR 478.99(b)]. Remember that in
most states no background check is required to
sell ammunition, but you cannot sell ammuni-
tion to someone you know or should know is a
prohibited person.

If firearms are lost or stolen, you should im-
mediately contact your local law enforcement
authorities and report the theft or loss to ATF
within 48 hours after the theft or loss is dis-
covered. Licensees must report thefts or losses
by telephoning 1-888-930-9275 (nationwide
toll free number) and by preparing ATF Form
3310.11, Federal Firearms Licensee Theft/Loss
Report [27 CFR 478.39a].
NOTE: If you deliver more than one handgun
to the same individual non-licensee within five
consecutive business days, this must be reported
to the ATF on Form 3310.4. The original copy of
this form must be mailed to the ATF’s National
Tracing Center (244 Needy Road Martinsburg,
West Virginia 25405) at the end of the business
day on which the sale occurs. A second copy
is sent to the Chief Law Enforcement Officer
where the sale took place. A third copy is retained
by the licensee [27 CFR 478.126a].
NOTE: If you hold a firearm in for repair for
more than 30 days, you must now complete
a 4473 when the firearm it returned to the
customer.
Licensed collectors may buy or acquire firearms
classified as curios and relics from any source.
If they have firearms in their collection they no
longer want, these firearms may be disposed of
to another licensee anywhere, or to non-licensed
residents in the collector’s home state, just as a
non-licensee can. A licensed collector maintains
a modified version of the A & D record main-
tained by licensed dealers. A licensed collector
does not prepare Forms 4473. A licensed col-
lector is not conducting a business. A person
conducting the business of buying and selling
curios and relics should be licensed as a dealer
[27 CFR 478.11; 27 CFR 478.41(d); 27 CFR
478.93; 27 CFR.125(f ).
If a licensee moves his or her business location,
the Chief of the Federal Firearms Licensing
Center must be notified at least 10 days before
moving the firearms and ammunition to a new
address [27 CFR 478.52].

12

Figure 5: Be sure to understand the laws regarding selling
and working with law enforcement off icers’ f irearms.

If you go out of business, the following rules
must be observed:
• Within 30 days after the licensee sells or

otherwise discontinues the firearms or am-
munition business, written notice must be
given of this change in status to the Chief
of the Firearms Licensing Center.

• If a licensee goes completely out of busi-
ness, the records and forms required to be
kept by the regulations must be delivered to
the ATF Out of Business Records Center
within 30 days.

• If the business is sold to a new owner, these
records and forms can either be trans-
ferred to the new owner, sent to the Out
of Business Records Center or to any ATF
Office in the Field Division in which the
business is located. (Some licensees do not
want to assume responsibility for their pre-
decessor’s records) [27 CFR 478.57; 27
CFR 478.127].

STRAW PURCHASE
A straw purchase for firearms or ammo occurs
when someone purchases a firearm or ammo for
someone else whether they are a prohibited per-
son or not. While it is ok to purchase a firearm as
a gift, it is not permitted to allow someone else
to purchase a firearm when the intended owner
will be someone else. ATF has been aggressively
pursuing straw purchases and bringing charges
against individuals and dealers who partici-
pate in this illegal activity. The most common
charge is for making a false statement on the
4473 where you must certify that the firearm is
for your own use. While a background check is
not required in most states with the purchase
of ammo, sale of ammo to someone you know
or should have reason to know is a prohibited
person is also a straw purchase.

SALES TO LAW ENFORCEMENT
OFFICERS
Section 925(a)(1) of the Gun Control Act of
1968 (GCA) exempts law enforcement agen-
cies from the transportation, shipment, receipt,
possession or importation controls of the act
when firearms are to be used for the official
business of the agency.
If a law enforcement officer is issued a certifica-
tion letter on the agency’s letterhead, signed by
a person in authority within the agency (other
than the officer purchasing the firearm), stating
that the officer will use the firearms in perfor-
mance of official duties, and that a records check
reveals that the purchasing officer has no con-
victions for misdemeanor crimes of domestic

13

violence, then the officer specified in the certifi-
cation may purchase a firearm from you, regard-
less of the state in which he or she resides, or
in which the agency is located. The seller is not
required to prepare a Form 4473 covering such
a sale; however, the transaction must be entered
in the permanent record. The certification letter
from the officer must be kept in your files.
The ATF considers the following as persons
having the authority to make certifications that
the law enforcement officer purchasing the fire-
arms will use the firearms in the performance of
his or her official duties:
• In a city or county police department, the

director of public safety or the chief or
commissioner of police.

• In a sheriff ’s office, the sheriff.

• In a state police or highway patrol
department, the superintendent of the
supervisor in charge of the office.

• In federal law enforcement offices, the
supervisor in charge of the office to which
the federal officer or employee is assigned.

The ATF also recognizes the validity of some-
one signing on behalf of a person of authority,
provided there is a proper delegation of author-
ity and overall responsibility has not changed in
any way.
Before making a sale to a law enforcement of-
ficer, check with the appropriate officials in your
home state and the purchasing officer’s home
state to make sure the sale is legal under state
law. The most important thing to remember is
that this exemption only applies to duty weap-
ons. A law enforcement officer purchasing a
firearm for personal use is considered a private
citizen [27 CFR 478.134].

This is only a brief overview …

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