I have been getting a lot of questions regarding setting up a FFL. While we help many people setup proper FFL’s, once it your FFL is set up you may consider joining FFLGuard as they have many benefits for their members. Here is an overview of their services:

FFLGuard is an innovative legal services program offered by firearms-trained attorneys, The Chiafullo Group, LLP, where the group acts as National Coordinating Counsel to participating clients. The FFLGuard program is designed to provide participating Federal Firearms Licensees with cost-efficient access to legal professionals, including firearms lawyers, subject matter experts and other qualified personnel (some of whom are former ATF employees), to deliver educational training and rapid response services, with a focus on safeguarding the viability of the client’s FFL. FFLGuard’s mission is to promote compliance before, during and after ATF inspection, while providing its clients with the tools to be compliant and the attorneys to back them up.

Inconsistency in the ATF’s interpretation of the law leads to mistakes by the dealer, and increases the chance of a FFL losing their license. According to the National Shooting Sports Foundation, sponsors of the SHOT SHOW each year, a single violation, without warning, is enough to have your FFL revoked. Thus, failure to engage firearms savvy counsel like those from FFLGuard to intervene, assess all inspection activity, interface with ATF inspectors and agents throughout the process, and compare actions by ATF to inspections conducted elsewhere, could possibly result in the revocation of your FFL. The industry demands legal compliance services, and participating in FFLGuard is you best chance at keeping you FFL pristine and your business viable. Please visit the FFLGuard website for additional information. www.fflguard.com

An agent acting under a power of attorney for an individual who has rights to own, possess, or use NFA firearms as an individual or in a NFA Firearms Trust, may not take possession, hold, use, or have access to the NFA firearms.

There is only one situation when an agent may do so. After the death of an individual who has rights to or owns NFA Firearms individually or who is current beneficiary of the NFA firearms, the court will appoint a Personal Representative. The court appointed Personal Representative only and not one who is only named in a will, may have access, and transfer the NFA firearms within a reasonable period of time. There is no guidance on what the ATF considers reasonable, but I would suggest starring the process as soon as possible so that the definition of reasonableness is not determined in a case involving you.

The easy way to deal with this for those of you who own Firearms in a NFA trust is to modify to the trust to allow the person who is the agent to be a trustee in the trust. Remember you can add or remove people from a NFA Trust at any time with a simple amendment.

First let me say there is no $500 one-time tax for unlimited transfers. There is a $500 yearly fee for a FFL to obtain a Class 3 SOT which allows them unlimited transfers for that year from other dealers for items owned by their FFL. This fee needs to be paid yearly and may be in addition to other fees necessary depending on what the FFL will be doing. If you are interested in setting up a FFL, please Contact Us as we can put you in touch with someone to help you create your FFL and have the systems necessary to not create problems with the BATFE. You can buy cheap products out there that will help create the FFL, but just because you create n FFL does not mean it will be done correctly and you will understand what your duties and responsibilities. Our package helps you protect yourself from unintentional violations.

In regards to personal ownership, it is unfortunate but you, your company, or your trust will need to pay $200 for each silencer you purchase.

We often get calls from clients asking how many original trusts should they have or sign. Our instructions state that a copy of the trust is the same as an original. Using this logic, it would seem clear that there is no benefit to having multiple original copies of your Gun Trust. In fact, it could create problem to have multiple originals because each copy that is separately executed is technically a separate trust and amendments to one Gun Trust would not create changes to the other Gun Trusts. It could be difficult to determine which Gun Trust owns an asset and if amendments were made to that Gun Trust or not.

I think you can see that not only is it not necessary to execute multiple copies but it could cause problems and create situations where you or other family members or friends are in violation of the law.

So Remember Sign One, make many copies.

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There are many benefits to shooting with a suppressor. One common benefit becomes apparent when teaching children to shoot. This image, from the NFATCA, shows a young child learning to shoot with a suppressor. The reduced noise and recoil make it an ideal way to teach children or new shooter how to shot without having to deal with the typical issues that arise from the noise and recoil that are traditionally associated with shooting.

Pistol_Permit_Application.jpgSome of our clients in North Carolina regularly ask about pistol permits and trusts. In response to this, we asked a North Carolina Gun Trust Lawyer ® to explain how the North Carolina Pistol Permit (Click for a Sample Permit) works and what is prohibited. Here is his response:

North Carolina G.S. Section 14-402 requires that any person obtaining a pistol by purchase or other transfer must first get a permit from the sheriff in his county of residence. The sheriff conducts a criminal background check to make sure the receipt of the pistol would not violate state or federal law. Trustees of NFA trusts are not exempt from this requirement, so for any handguns transferred to or purchased by a gun trust a permit must first be obtained. Section 14-403 states that a permit shall be issued to “any person, firm or corporation,” which is broad enough to cover trustees. Thus, if the trustee passes the background check, there shouldn’t be a problem in getting the permit.

§ 14‑402. Sale of certain weapons without permit forbidden. (a) It is unlawful for any person, firm, or corporation in this State to sell, give away, or transfer, or to purchase or receive, at any place within this State from any other place within or without the State any pistol unless: (i) a license or permit is first obtained under this Article by the purchaser or receiver from the sheriff of the county in which the purchaser or receiver resides; or (ii) a valid North Carolina concealed handgun permit is held under Article 54B of this Chapter by the purchaser or receiver who must be a resident of the State at the time of the purchase.

Once of the benefits of working with a Gun Trust Lawyer® is that should you move from one state to another, you can make any changes to your Gun Trust that are necessary to keep you in compliance with both state and federal laws. Similar situations occur if an authorized user is located in another state or relocates after the trust is created or funded.

NO. While a FFL with a Class III SOT is licensed to purchase and sell TItle II firearms, you as an individual, through a Gun Trust – Available at Gun Trust Lawyers®, or as a business entity do not have to have a FFL(in most states). In the past some states like Missouri required a FFL or C&R license to purchase Title II firearms. Late last year Missouri changed the law and a FFL is not required. We are not aware of any other states that current have this requirement.

The Gun Trust is a specific trust created by David Goldman in 2008 and is only available through Gun Trust Lawyers®. While others may use the words Gun Trust, unless it contains out copyright, it is not our trust. To make sure your documents cover all of the NFA issues, check to see if they are copyrighted by David Goldman. If you would like to find out about becoming a Gun Trust Lawyer® please Contact Us.

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We are regularly asked to help people setup their FFL properly. One of the biggest problems with many FFL’s is that they use regular operating agreements or corporate bylaws. There are some specific issues why using a canned or shell company documents may not be appropriate and why you should consider using agreements that are specifically drafted for FFLs.

  • If the business entity is used correctly, the business entity can stop the liability from going to the owners and managers. Many corporate and LLC docs can prohibit some of the activities that FFL, their owners, managers, and employees engage in. If you are violating the terms of your agreement, your business entity may not shield you from the actions or liability
  • Properly drafted agreements allow for growth including taking on new members or shareholders which could provide additional resources to the business. Today a prohibited person may not know they are prohibited and traditional operating agreement do not shield them from prohibited transactions or activities. Your agreement should help a person determine if they are prohibited as well as guide them in which activities they may and may not participate and who needs to be updated upon such a change.
  • A properly drafted business agreement can help you sell the entire business with the licensing already in place. Most FFL’s when sold have to go through a new authorization process because they are not properly structured and/or do not allow for this type of transition.
  • Thinking about how the ownership of the business is structured and dealing with this in the business agreements can allow the business to pass down through the generations and keep it within the family.
  • Your Operating Agreement or By-Laws needs to deal with specific FFL related issues as well as issues that are common to the firearms industry. Prohibited Person issues must deal with not only the owners or manages as mentioned above, but also employees. These documents should mandate policies that need to be in place for issues regarding federal and state requirements and recommendations.
  • Part of the process included determining the proper licenses as we often see that FFLs are confused about what is manufacturing and what is gunsmithing and the requirements of each. Many FFLs sell parts and then assemble them for clients and are actually manufacturing firearms because of the way the transaction and work is structured. They often do not have the licences nor collect the required excise taxes.

In addition to the industry specific business agreements, it is important to properly prepare your FFL and/or SOT applications so that they are not rejected and they should be designed and incorporated into an overall plan to provide insulation from problems down the road.

FFL’s are historically weak in business and the understanding of the complex rules and regulations regarding the firearms industry. Many have skated by in the past, but with the new 100% compliance audits, it is more important than ever to be setup correctly or modify your existing business rules and documents to comply with the industry.

If you would like to schedule a time to discuss your circumstances and goals, Contact Us by using the form on this page or by call us to discuss a review or creation of FFL specific business documents to comply with the regulations.

If you are already a FFL, you may consider using a service like FFLGuard for instant updates of what is going on in the industry and what you can do to help improve your policies and procedures. They are involved in FFL audits on a weekly basis and allow FFLs to be instantly updated by the trends and techniques used by the BATFE.

I felt that I should disclose that I do work for FFLGuard as an independent contractor in regards to NFA and Trust issues for their FFL’s but do not receive any compensation from FFLGuard in regards to their FFL services which are included in the products and or services they offer to the FFL community.

EmbosserNB.jpgWe often get asked questions regarding sending the original trust to the ATF. You should never send your original trust. You should only send a copy. The ATF have been known to have lost applications in the past and they never send back your original trust.

If your Gun Trust was novelized with a raised seal, you should shade the seal with a pencil and then send a photocopy of the trust. This way the seal will show in the photo copy. Most jurisdictions have gone away from using raised seals because of the problems they create when copying.

On Jan 31st the Georgia Senate passed a bill to authorize the use of silencers on hunting firearms under certain circumstances and repeal conflicting laws. On Feb 1st 2012 the bill was sent to the house. Here is a link to see the current status and the bill.

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