Articles Posted in ATF / BATFE

This weekend, I was shocked to read an article on Facebook that was from a popular gun website that instructed people that they did not have to engrave a firearms that they “made” using a Form 1 unless they were going to sell the firearm.  This author claims to have asked ATF a question and received a response from an individual who is associated with the ATF.

This is equivalent to asking a police officer to interpret the law.  Not only do they often make mistakes, but you cannot reply on what they tell you, because they are permitted to lie to you.

The biggest issues seems to be the confusion between the definitions for the words “Make” and “Manufacture” as defined in 27 C.F.R. 479.11

Make. This term and the various derivatives thereof shall include manufacturing (other than by one qualified to engage in such business under this part), putting together, altering, any combination of these, or otherwise producing a firearm.

Manufacturer. Any person who is engaged in the business of manufacturing firearms.

Using a Form 1 does not involve manufacturing under a license, but does involve making or manufacturing by one without a license to manufacture.

In other words, we are recommending that our clients continue to engrave when the make a firearm on a Form 1.  Be careful out there, there are lots of things written on the Internet that could cause a loss of liberty and freedom if act on bad information.

41F was published today in the Federal Register.  Here is a Link to 41F as filed which is similar to the draft that has been circulating.

Our Gun Trusts are fully 41P compliant and ready.  If you have a gun trust from a Gun Trust Lawyer® (with our copyright information on it) your trust is fine to use and will not have problems with 41F.

Some people will want to make some changes to their Gun trusts based on the new requirements of 41F.  Contact a Gun Trust Lawyer® to help you amend or amend and restate your current trust to help protect you and your family and deal with 41F in the manner you desire.

Some individuals will want to change their trust to a Gun Trust Lawyer® trust for:

  1. Privacy reasons;
  2. Asset Protection
  3. Protection from having to disclose their Schedule B firearms  or Non NFA firearms to the ATF;
  4. The ability to limit the number of responsible persons;
  5. Multi generational ownership
  6. Proper determination of responsible persons by removing beneficiaries from these who must submit fingerprints;
  7. The ability to clarify who the beneficiaries are to avoid having to submit additional wills or trusts to the ATF;
  8. The ability to easily add and remove trustees or co-trustees or beneficiaries; or to
  9. Clarification on who can use and possess NFA firearms.

41F will become effective 180 days from today or on Wed July 13, 2016.  Applications filed prior to July 13, 2016 will be handled under the old rules and the NICS check requirement.  Applications filed with the ATF after July 13 will have the CLEO notification, fingerprint and photograph requirement for responsible persons.

The biggest change for Gun Trusts and other legal entities between 41P and 41F is the change from the CLEO certification to a CLEO Notification for each responsible person.  In addition ATF significantly limited the definition of a “responsible person” as compared to what was originally presented in 41P.  The CLEO notification in 41F appears to be limited to trustees and co-trustees in most trusts, but can be expanded because of the terms of the trust to also include beneficiaries and others with the ability to manage and possess the NFA firearms.  These changes happened after more than 9500 comments  were received in response to 41P. – For links to the major comments see our 41P page.

The final rule attempts to clarify the definition of “responsible person” for trusts and legal entities but a lot of ambiguity because of the way it that it was written.   While it is clear that a trustee or co-trustee is a responsible person, many other trusts will create responsible parties by giving individuals the power to receive, possess, ship, transport, deliver, transfer, or otherwise dispose of a firearms for, or on behalf of the trust.

The important part here, is that if your trust gives the power to receive, or possess (hold or use) a firearm regulated by the NFA, those individuals will be considered a responsible person under 41F and be subject to CLEO notification and the other requirements.

In a gun trust a beneficiary or successor trustee would not normally be considered a Responsible person, but in many of gun trusts I have reviewed, the trust permits beneficiaries or others named in a trust or will or separate document to have possession and use the firearms.  These people, in my opinion, would be responsible persons under the the  Definition found in 27 CFR 479.11

The ATF has indicated that if a trust references another document, schedule or exhibit it will need to be submitted along with the trust when the application to make or transfer a NFA firearm is submitted. (After 180 days)

Some lower priced Gun Trusts seem to refer to beneficiaries named in your will or some other document outside of the trust.  This would mean that you would have to submit your will  or the other documents along with your trust for approval.  If you do not have a will, your trust may not be valid or your application may not be approved.  If your Gun Trust names another document for your beneficiaries, you may want to amend your trust to list your beneficiaries.

As additional form are released by the ATF, we will update our example pages and provide instructions and examples on how to fill out the forms.  Links to the current forms for a Form 1, 3, 5, 20 and other useful information on additional configurations and engraving can be found on https://www.guntrustlawyer.com/signing

This rule adds a new section to 27 CFR part 479 to address the possession and transfer of NFA items registered to a decedent but this does little other than to codify how the ATF previously dealt with estates.  To learn more about Gun Trusts from a Gun Trust Lawyer® complete the information request at the top right of this page.

Recently the ATF updated their final action date from December 2015 to January 2016.  For a complete list of articles and issues on ATF-41P see our 41P update page.

The most significant comments are listed on the 41P page link above.  What does the update mean? We believe that ATF will attempt to move forward with changes sometime within the next few months.  If you are considering forming a Gun Trust for NFA purchases, now may be the time to create your gun trust before changes are made.

Many people have been reporting that 41P will end the opportunity to take advantage of the benefits of a Gun Trust.  This is simply not true, it will not end gun trusts nor do away with many of the advantages of a gun trust.  ATF is talking about making responsible parties provide a modified CLEO authorization and other information, but this proposal was made prior to the ATF stating that the person purchasing an item with a Gun Trust sill needs a NICS check. The new position on the NICS requirement seems to do away with the CLEO certification as it is more comprehensive.

Joshua Prince has written a review of many of the issues which can be found here.

His summary states

Hence, all information currently suggests that if your application is pending at the time any new regulation goes into effect, your application will be grandfathered, as it complied with the regulations, when it was submitted. Obviously, everyone will want to know what constitutes pending (e.g. mailing, receipt or cashing of one’s check). Again, unfortunately, we don’t know; however, there are pretty good arguments that it should be triggered upon ATF’s receipt. For this reason, if you’re planning to file a Form 1, you may want to do such electronically through the eForms system and as soon as possible.

 

Can_Cannon_Production_2Many of our Gun Trust Clients have purchased a Can Cannon.  Previously the use of a Can Cannon was not regulated by the NFA, but recently the ATF determined that the use of the Can Cannon in conjunction with a receiver or a pistol creates an item regulated by the NFA.  This may be problematic if the NFA item is not legal in your state, but if they are legal there may be a relatively inexpensive way to solve the problem for those who already have an SBS.

X Products warned their customers that the ATF evaluated the Can Cannon and determined that it would be considered an SBR if placed on a rifle receiver, and an AOW if used on a pistol AR. See the ATF letter on the Can Cannon. The ATF has defined the Can Cannon as a shotgun. However, the device by itself is not a firearm and is perfectly legal to own. Attaching it to a firearm is illegal unless the user has the proper federal licenses.

If you have an SBS, you can add the Can Cannon as an additional configuration to your SBS by using this Additional Configuration Form we have prepared for use with our Gun Trusts, SBSs and multiple configurations.  Here is a link to using multiple configurations with a Form 1 for those not familiar with it

X Products claim to be working on a modification which may eliminate this need, but for now we would recommend that any of our clients using a Can Cannot by X products either use a Form 1 to build the appropriate NFA item or add it as an additional configuration to an existing SBR to be used with an SBR that has already been registered.  If you do not have a Gun Trust, contact us for more information on how forming a well drafted Gun Trust can permit you to legally use your Can Cannon and protect others from potential violations of the NFA.

ATF continues to let the date slide on a decision of when and how to implement 41P.

DOJ/ATF RIN: 1140-AA43 Publication ID: Spring 2015

Title:

Machine Guns, Destructive Devices and Certain Other Firearms; Background Checks for Responsible Persons of a Corporation, Trust, or Other Legal Entity With Respect to Making or Transferring a Firearm

Abstract:

The Department of Justice is planning to finalize a proposed rule to amend the regulations of the Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF) regarding the making or transferring of a firearm under the National Firearms Act. As proposed, the rule would; (1) add a definition for the term “responsible person”; (2) require each responsible person of a corporation, trust or legal entity to complete a specified form, and to submit photographs and fingerprints; and (3) modify the requirements regarding the certificate of the chief law enforcement officer (CLEO).

 

To see a history on 41P as well as major comments see our 41p update page.

We are often asked if you have to be 21 to build an SBR or Suppressor.  If you are manufacturing a firearm under the NFA using an ATF Form 5320.1  you only need to be 18 under federal law.  Likewise, if you are purchasing a firearm using an ATF Form 4 from an individual, trust, or non FFL you only need to be 18 years old.  If you are buying one from an FFL, you must be 21 years old under federal law.  Your state may impose stricter requirements.

Below is an excerpt from the attached letter  from ATF explaining the age requirement.

This is in response to your letter of November 16, 2006, to the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) advising that you are 18 years of age, the owner of a AR-15 type receiver, and wish to register it has a short-barreled rifle using an ATF 1 application.You ask whether ATF would approve the application submitted under these circumstances.

You state that your understanding of the Gun Control Act prohibits the transfer of Short Barreled Rifles, but that you cannot find any language in the GCA nor the NFA dealing with the already possessed rifle receiver. You are correct. The GCA does establish age requirements for the sale of firearms by licensees and the NFA is silent on age restrictions.

Accordingly, since the GCA does allow possession of rifles by persons under the age of 21, you would not be prohibited from applying on a Form 1 to make a short-barreled rifle.

While an application by an individual would need photographs and a certification from your chief of police or sheriff, an application using a Gun Trust would not.

Form1-18yr-old

 

 

In the April 27th issue of Bullet Points, the NSSF wrote the following update

NO IMPLEMENTATION YET SEEN FOR NOTICE 41P AS FINAL RULE . . . NSSF has confirmed with ATF that the bureau is unlikely to publish Notice 41P (NFA Trusts) as a Final Rule for quite some time. This is in part because EPS resources are being diverted to help process the 310,000 public comments received in response to the armor piercing ammunition framework proposal. In addition, it seems ATF has not prepared to revise the NFA database so that it can track “responsible persons” for NFA trusts. The proposed rule would require the responsible person(s) on an NFA Trust be fingerprinted.

This seems consistent with the statements made by the ATF at the Annual Firearms Seminar in Nashville earlier this month when we reported on many of the statements ATF made including poorly written trusts.  Remember, a properly written gun trust should give you and others involved with the trust guidance what you can and can’t do instead of leave it up to the individual to determine what to do.

For a complete listing of our posts on 41P see our 41P webpage at http://www.guntrustlawyer.com/41p.html

Many individuals have purchased thread adapters to permit the use of an oil filter as a “solvent trap”.  The problem is that this adapter can also be used and is often intended to be used to create a suppressor.   The resellers on ebay who sold these adapters have all seemed to have disappeared and many of their customers are reporting being contacted by local ATF agents to collect the parts they purchased.

Recently we have had several clients contact us about purchasing these “solvent trap parts” and using them to make a Suppressor with a Form 1.  Apparently there is someone marketing these parts including baffles as a solvent trap to be used for gun cleaning.  It would not surprise me, if ATF shut down the ability of companies to sell parts as cleaning kits or solvent traps and then began targeting the customers of these parts in much the same way as the ATF continues to contact the customers of the companies who previously sold them eBay.

ATF has taken the position, in the past, that a part to a suppressor is a suppressor and under this theory, if you purchase these parts, the parts may in and of themselves be considered suppressors.  Paying the tax stamp on a Form 1 does give you the permission to manufacture a suppressor, but not necessary to purchase a suppressor manufactured by someone else.  We would caution clients who are considering manufacturing their own suppressors from parts that ATF considers a suppressor as the purchase of these parts may require an approved Form 4.

For those who state that no one has ever been convicted of charges related to a homemade suppressor, you might see this article. Lots of people are charged and convicted of illegal suppressors.  Sometimes people get the concept of people rarely being convicted of the  use of a  legally owned suppressor with the common occurrence of people being charged and or convicted of possession or use of an illegal suppressor.

I know many will say it is perfectly legal to purchase these items. ATF  has previously indicated that it is legal a company to sell “solvent traps”  and parts to “solvent traps” and It is legal to use them as “solvent traps”.  The problem is that most people who purchase them intend to use them as suppressors or parts to a suppressor and not as a solvent trap.  Even those who do not intend to use them as suppressors, sometimes do.  Looking at what has happened with other products in the last year we can see that ATF seems to be moving from intent to use, to classify a firearm.  Whether this is reasonable or proper for them to do, it is probably not a fight you as an individual can afford.  It is our opinion, that the cost of defending your position, regardless of the outcome, is not something that makes sense for the average individual.   The ATF is not stupid, the fact that you are even reading this article would indicate to most that your intention or interest in purchasing these items is not to use them as a solvent trap.

If you purchased a suppressor (solvent trap adapter) off ebay or somewhere else, you may want to contact a criminal law attorney in your area to talk with you about how to properly deal with the parts without creating liability or reducing the risk of liability.  Just because you haven’t been contacted yet, does not mean they will not contact you.  Even this week, we have had reports of people being contacted by the ATF in regards to the purchase of these items.

While at the NRA Firearms Law Seminar in Nashville,  ATF ‘s attorney William Ryan made some interesting comments about the ATF, NFA, GCA and Gun Trusts:

  1. A trust can be a beneficiary of a will or other trust and obtain a tax free transfer using a Form 5 if the trust or will is drafted correctly.
  2. A Trust can be a beneficiary of a will if there is an order from the probate court directing the distribution to a trust, otherwise one might have to transfer to an individual on a Form 5 and then pay $200 to transfer items to a trust.
  3. ATF is still reviewing the 9500+ comments filed on 41P.
  4. ATF is not concerned about an executor being a prohibited person. (This seems to conflict with the original reason for 41P in the first place.)
  5. ATF likes lawyer drafted trusts, most trust problems are from gun store trusts, free trusts, or trust form that individuals try to create themselves.
  6. ATF examiners do not know the law, and have often made mistakes that can be cleared up by having your lawyer contact their legal department.
  7. ATF has seen many trusts which name the same individual as the beneficiary. It would appear that all of those people are just copying  the trust from someone else.  They believe that one day this random person could inherit thousands of NFA firearms.
  8. Between 2003 and 2012 trust applications increased 80,000 %.
  9. ATF stated that Gun Trusts can purchase and own both Title I and Title II firearms (those under the GCA and NFA).

With the recent increase in poorly written online trusts that have become available, ATF feels there will be a big business in fixing them down the road for those who have unknowingly received the free or fill in the blank trusts.

In my opinion, one of the worst examples of an online trust we have seen is the Easytrust being promoted by Silencerco.  According to them, there may be as many as 1000 people who have already received this trust which contains numerous problems. For a trust that is only 4.5 pages long, it appears to have even more problems than a Gun Trust drafted from Quicken.  The list of problems is huge, but the biggest problems include:

  • The trust permits a trustee to easily violation the NFA  throughout the document by not clearly prohibiting these violations.
  • The trust permits any trustee to sell your guns without your consent.
  • The Trust permits trustees to take away your gun rights, (from within the trust) if in their opinion you can’t handle your own affairs. Of course, your legal gun rights under the 2nd Amendment will not be removed, but your ability to use and have access to the guns in your trust can.
  • The trust directs distribution to beneficiaries upon your death without any written permission (a violation of the NFA)
  • The instructions incorrectly state that the trust needs to be registered in many states where it does not (seems to be similar to the problem we reported with the quicken trust)
  • Directs you to obtain an EIN number for their trust when it is not necessary, if requested from your bank. The instructions should state why an EIN number is not required and direct you on a proper response to provide the bank or how to deal with this common misunderstanding to tax law that many banks can initially make

(Updated 4/19/15 for a clarification).

I guess you get what you pay for.  Some people are only concerned about purchasing items and do not think about the consequences to themselves nor others.  It is wise to do a little research on Gun Trusts and learn why you would want a Gun trust for all your firearms and not one limited to NFA Guns like Easytrust or many other trusts which are not supported by lawyers.

Joshua Prince, a PA Gun Trust Lawyer, has written about the ATF statements on his blog Shocking Statements/Concessions by ATF at the NRA Firearms Law Seminar

ATF has a history of approving Form 4 transfers to invalid trusts.  Today,  I received another example of an invalid trust that ATF had already approved a transfer for a suppressor.  As more people are learning about gun trust we are seeing more poorly written and in some cases invalid gun trusts.

Most invalid trusts are invalid because they do not name a beneficiary or someone lists themselves as the beneficiary. With the trust we received today, the trust did not meet the minimum signing requirements for the state where it was created.

I recently purchased a trust from a major suppressor manufacture, that had the same problem and while I live in Florida, the trust that was created online would would not be valid in Florida.  In addition, I made a typographical error entering the information and my repeated attempts to contact the company to fix the issue have been ignored.  For a company who prides themselves on customer service, this has been disappointing.   For the time being we would warn people to stay away from “easytrust” which is being advertised by a suppressor manufacture.  The trust  has many of the  problems associated with traditional trusts that can create liability for the trustees and beneficiaries of a poorly written gun trust and the one I received would not be valid in my state unlike their claims.

While talking with the client of the invalid trust, it turned out that he  had received the trust from a friend of his who told him it was prepared by a lawyer.  It would appear that the trust was not prepared by a licensed attorney or the lawyer was not familiar with trust law, gun law, or both.  A Gun Trust is very different than a revocable trust and one needs to consider each and every power and instruction in a trust and how they will interact with firearms owners and their desires to draft a well written gun trust.

With many online gun trusts popping up it is important to realize that a trust is not valid, nor is possession legal, just because the ATF approves a transfer.  If you have an invalid trust and are in possession of a firearm restricted by the NFA, you in violation of the NFA and could face both civil and criminal penalties.

A few benefits of a properly drafted Gun Trust include:

  1. The ability to tell your representatives how to properly transfer these firearms upon your death regardless of the state that they live in;
  2. The ability to move states and maintain a trust that is easily recognized as valid in other states;
  3. The ability to deal with co-trustees and beneficiaries in multiple states;
  4. The ability for your minor children to use the NFA firearms with adult supervision and parental consent;
  5. The ability to transfer assets to children, even below the age of 18, when they reach an appropriate age, while giving the someone the ability to make distribution decisions based on mental state,  physical location, legality of the transfer, and age;
  6. The ability to make unequal distributions so that firearms do not have to be liquidated to give equal distributions;
  7. The ability of the Trustee to refuse assets transferred by will or other means when  the NFA and state requirements are not complied with; Continue reading

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