Based on the ATF letter requiring NICS checks for Trusts, the ATF may have accidentally opened the registry for new Machine Guns when registered in the name of a trust which is not a person under the GCA.
The Prince Law Blog quotes the same letter I wrote about a few days ago where the ATF determined that “Unlike individuals, corporations, partnerships, and associations; unincorporated trusts do not fall within the definition of “person” in the GCA.” And therefore, as a result,
Because unincorporated trusts are not “persons” under the GCA, a Federal firearms licensee (FFL) cannot transfer firearms to them without complying with the GCA. Thus, when an FFL transfers an NFA firearm to a trustee or other person acting on behalf of a trust, the transfer is made to this person as an individual (i.e., not as a trust). As the trustee or other person acting on behalf of the trust is not the approved transferee under the NFA, 18 U.S.C. 5812, the trustee or other person acting on behalf of a trust must undergo a NICS check. The individual must also be a resident of the same State as the FFL when receiving the firearm.
So, ATF, trying to be cute and find a way to require NICS checks without Congressional action, declared trusts not to fit the definition of a “person” under the GCA. No big deal, especially for us in Pennsylvania, as Pennsylvania Instant Check System (PICS) checks are already required for all NFA firearms, except silencers. But, not so quick…let’s look at Section 922(o) of the Gun Control Act…
Section 922(o) provides:
(1) Except as provided in paragraph (2), it shall be unlawful for any person to transfer or possess a machinegun.
(2) This subsection does not apply with respect to-
(A) a transfer to or by, or possession by or under the authority of, the United States or any department or agency thereof or a State, or a department, agency, or political subdivision thereof; or (B) any lawful transfer or lawful possession of a machinegun that was lawfully possessed before the date this subsection takes effect.
So, we have a prohibition on any “person” transferring or possessing a machinegun which was not lawfully registered before May 19, 1986. BUT, an unincorporated trust is not a “person” under the GCA, so this provision cannot apply to it.
In turning to the National Firearms Act, as amended, 26 U.S.C. 5801, et seq., we find that a “person” is defined as including a trust, pursuant to 26 U.S.C. 7701. Yet, there exists no 922(o)esque provision in Section 5801, et seq.
Therefore, pursuant to 26 U.S.C. 5812 and 5822, an unincorporated trust may lawfully transfer and make machineguns, as it is not a “person” for purposes of the GCA and Section 922 only applies to “persons” as defined by the GCA.
Before anyone rushes to complete a Form 1 to make a new machine gun, they should understand that the ATF will likely reject this and if they want to push the issue they should be expect to litigate the issue. Even if litigating there is no guarantee of prevailing.
That being said, I believe I will submit a Form 1 for permission to manufacture a new machine gun along with a memo regarding the issues so that the opportunity to litigate the issue would be available after an expected rejection.