Are any of you having issues with BATF claiming that custom gunsmith work requires one to be licensed as a manufacturer? I read their own letter defining who is and who is not and I do not see the application to a gunsmith who customizes a rifle or handgun for a client.



U.S. Department of Justice
Bureau of Alcohol, Tobacco,
Firearms and Explosives
Firearms Technology Branch
August 15, 2008
Martinsburg, West Virginia 25405
www.atf.gov

Manufacturing of Firearms

Below are examples of operations performed on firearms and guidance as to whether or not such operations would be considered manufacturing under the Gun Control Act (GCA). These examples do not address the question of whether the operations are considered manufacturing for purposes of determining excise tax. Any questions concerning the payment of excise tax should be directed to the Alcohol and Tobacco Tax and Trade Bureau, U.S. Department of the Treasury.



Generally, a person should obtain a license as a manufacturer of firearms if the person:



1) is performing operations that create firearms or alter firearms (in the case of alterations, the work is not being performed at the request of customers, rather the person who is altering the firearms is purchasing them making the changes, and then reselling them);


2) is performing the operations as a regular course of business or trade; and (1) should be the operative here...and if so you are not a manufacturer)


3) is performing the operations for the purpose of sale or distribution of the firearms. (not the case)



1. A company produces a quantity of firearm frames or receivers for sale to customers who will assemble firearms. The company is engaged in the business of manufacturing firearms and should be licensed as a manufacturer of firearms.



2. A company produces frames or receivers for another company that assembles and sells the firearms. Both companies are engaged in the business of manufacturing firearms, and each should be licensed as a manufacturer of firearms.



3. A company provides frames to a subcontractor company that performs machining operations on the frames and returns the frames to the original company that assembles and sells the completed firearms. Both companies are engaged in the business of manufacturing firearms and should be licensed as manufacturers of firearms.



4. A company produces barrels for firearms and sells the barrels to another company that assembles and sells complete firearms. Because barrels are not firearms, the company that manufactures the barrels is not a manufacturer of firearms. The company that assembles and sells the firearms should be licensed as a manufacturer of firearms.



5. A company receives firearm frames from individual customers, attaches stocks and barrels, and returns the firearms to the customers for the customers’ personal use. The operations performed on the firearms were not for the purpose of sale or distribution. The company should be licensed as a dealer or gunsmith, not as a manufacturer of firearms.



6. A company acquires one receiver, assembles one firearm, and sells the firearm. The company is not manufacturing firearms as a regular course of trade or business and is not engaged in the business of manufacturing firearms. This company does not need to be licensed as a manufacturer.



None of the following applicable :



7. An individual acquires frames or receivers and assembles firearms for his or her personal use, not for sale or distribution. The individual is not manufacturing firearms for sale or distribution and is not required to be a licensed manufacturer.



8. A gunsmith regularly buys military-type firearms, Mausers, etc., and sporterizes” them for resale. The gunsmith is in the business of manufacturing firearms and should be licensed as a manufacturer.



9. A gunsmith buys semiautomatic pistols and modifies the slides to accept a new style of sights. The sights are not usually sold with these firearms and do not attach to the existing mounting openings. The gunsmith offers these firearms for sale. This would be considered the manufacturing of firearms, and the gunsmith should be licensed as a manufacturer.



10. A gunsmith buys government model pistols and installs “drop-in” precision trigger parts or other “drop-in parts” for the purpose of resale. This would be considered the manufacturing of firearms, as the gunsmith is purchasing the firearms, modifying the firearms, and selling them. The gunsmith should be licensed as a manufacturer.



11. A gunsmith buys surplus military rifles, bends the bolts to accept a scope, and then drills the receivers for a scope base. The gunsmith offers these firearms for sale. This would be considered the manufacturing of firearms, and the gunsmith should be licensed as a manufacturer.



12. A gunsmith buys surplus military rifles or pistols and removes the stocks, adds new stocks or pistol grips, cleans the firearms, then sends the firearms to a separate contractor for bluing. These firearms are then sold to the public. This would be considered manufacturing of firearms, and the gunsmith should be licensed as a manufacturer.



13. A company purchases surplus firearms, cleans the firearms, then offers them for sale to the public. The company does not need to be licensed as a manufacturer.



14. A company produces firearms or firearm receivers and sends the firearm/receivers out for colorizing (bluing, camouflaging, phosphating, or plating) and/or heat treating. Do the companies performing the colorization and/or heat treating need to be licensed as manufacturers, and are the companies required to place their markings on the firearm? ATF has determined that both colorization and heat treating of firearms are manufacturing processes. The companies performing the processes are required to be licensed as manufacturers. If the companies providing colorization and/or heat treating have not received variances to adopt the original manufacturer’s markings, they would be required to place their own markings on any firearm on which they perform the manufacturing process of colorization and/or heat treating.

This has been a rather debated issue of late. The ATF has been changing definitions of gunsmithing to potentially include manufacturing. When I applied for my license I applied for a 07 Manufacturers license, there were other reasons, but this issue was one.

Before I graduated the Colorado School of Trades the ATF did a little presentation about becoming an FFL, information about the ATF, etc. Included in that session was a bit about changing the definition of gunsmithing (the first I had heard about it) The ATF agent described it like this:

If a customer walks in and hands you a rifle and asks you to drill and tap it, that is gunsmithing, requiring an 01 license.

If YOU (the gunsmith) take a rifle, drill and tap it, with the intention of selling it, it is considered manufacturing requiring an 07 license.

Fast forward: I asked my agent about specifics. If I add a trigger group is that manufacturing? Install new sights? Replace the stock? Make stock repairs? Touch up Bluing? Re-Blue? All considered manufacturing if done for resale. If done for a customer… it is just gunsmithing.

My ATF agent was actually a little surprised when I told her this was one of the reasons I applied for a 07. However she said that this is the current trend. The ATF is moving in this direction. I think it has a lot to do with trying to increase revenue…

As always... your ATF agent may vary.

I think the change in direction is due more to the current feeling that they want to eliminate the "basement" gunsmiths; the guys who are buying and selling for their own.

One thing I will say from my experience based on over 30 years of Government service, no two ATFE agents have a supervisor who will agree with each other, both will have a different opinion of a regulation. On top of that, not one will offer a written explanation of that opinion.

I went through a "compliance check" almost two years ago. The two agents, good cop, bad cop routine, started to tell me I need a manufacturers, 07 license. There definition was if "I changed the concept of the gun", IE, a rebarrel to a differnt caliber. I debated that point and asked for a clarification. They returned about a week later with a change. Now, as stated above, if I worked or customized a customer owned firearem, it was not considered manufacturing. If I owned an action, for instance, and turned it into a rifle for sale, it was.

John Bivins went through this heartache many years ago and it caused him to quit making guns for others. The ATF accused and convicted him of 'manufacturing' his muzzle-loaders and made him pay lots of back taxes. There's a 10% excise tax on all firearms manufactured in this country and he had to pay 10% taxes on all the ones he had built in the past many years. Instant bankruptcy.

The ATF of that time said that, in order to be in compliance with the 'gunsmith' definition, the customer would hafta have first bought the lock or action and then stepped outside the shop with it and then re-entered the shop with instructions on how he wanted the rifle assembled.

Nowadays apprently even THAT Mickey Mouse procedure will not protect the smith. Please be FULLY aware that Big Brother WILL blindside you with this 10% manufacturer's excise tax.
Regards, Joe

Musta been a few months ago that happened the excise tax is 11% now!

As an 07 Manufacturer, you do have 50 firearms that are "tax free". After 50 you are required to start paying taxes. So, for a small shop like me, I just keep any manufacturing under 50. Of course, with the broad definition of manufacturing, it does not take much!

quote:

Originally posted by Fal Grunt:
Musta been a few months ago that happened the excise tax is 11% now!

About 30 years ago now, and my memory is often at fault so it coulda been 11% then too. I think it was begun as a result of the Pittman-Robertson Act which was supposed to earmark the money for wildlife conservation.

In any event I wish you luck!
Regards, Joe

Just being a smart@#$ concerning wasted taxes always going up, and up, and up.



Sorry to hi-jack your thread! I will shut up now.

I do believe maybe a small clarification here. The "50" gun provision stops at 49. I believe the law states "up to" fifty. In other words one can do 49 without the tax kicking in. However, in any one year, and not necessarily a calinder year, if the total hits fifty, the tax may apply to all of the fifty.

(How do you spell calinder?)

I think it is Calender? Someone correct me if I am wrong. Jim, you are correct, it is up to fifty. Now whether that is from anniversary date to anniversary date, finacial year, or calender year, I do not know.

Are you sure it is not calendar?

The NRA should take these "changes" to the courts.

If you take an already "manufactured" gun and modify it in any way, that is Gunsmithing, not manufacturing.

The BATF should not be able to create their "own" definition of certain words.

The NRA is working on this:

http://www.nraila.org/Legislat...al/Read.aspx?id=6016

Require BATFE to establish clear investigative guidelines.

· Clarify the licensing requirement for gunsmiths, distinguishing between repair and other gunsmith work and manufacture of a firearm. This would stop BATFE from arguing that minor gunsmithing or refinishing activities require a manufacturers’ license.

I think that the BATF is calling a used gun a new gun by that interpretation. It can't be both.

The BATFE is trying to have it both ways and they themselves have the very argument answered in their own agency, the NFA Branch. Believe it or not the NFA Branch of the BATFE is very user friendly.

If you turn a rifle or shotgun into a Short barrel rifle or shotgun, you become the Maker and you must engrave your name and address or abbreviation. The original manufacturer's info and serial is also listed.

If the manufacturer, i.e. Rock River made it a Short barreled rifle from the start, they are the manufacturer. If you build one from scratch, i.e. built the receiver yourselve from a piece of metal, you would be the manufacturer.

quote:

Originally posted by airgun1:

If you turn a rifle or shotgun into a Short barrel rifle or shotgun, you become the Maker and you must engrave your name and address or abbreviation. The original manufacturer's info and serial is also listed.

This is what my ATF agent told me concerning manufacturing. If I "manufacture" a rifle by say drilling and tapping, then I would put my address and serial number on the rifle.

So unfortunately Jeff, a new barrel would make a new serial number. Now, on the other hand, the ATF gave me zero guidlines about the actual number used (there are guidlines on placement, depth, etc) so I could retain the original serial number.

What I thought was funny, was that if I "manufacture" a rifle (ie build a custom rifle), assign it a new serial number, I cannot remove the old serial number and markings (according to my ATF agent).

One thing to keep in mind, an 07 is actually 50 bucks cheaper and they don't care if you have a storefront as long as you are obviously engaged in gunsmithing and manufacturing of firearms for profit. There is a question as to how much ITAR applies to a small volume 07, though. STI got nailed with a huge State Department excise under ITAR that nearly killed the company.



State Department excise enforcement is currently all over the map.

Safer to have an 07 though. And it costs less money, but make sure that excise taxes are paid...

Friend of mine just bugged out of RSA to NZ instead of the USA because their laws as to what is and isn't manufacturing and gunsmithing are a lot simpler and less ambiguous than US laws.

RE

"What I thought was funny, was that if I "manufacture" a rifle (ie build a custom rifle), assign it a new serial number, I cannot remove the old serial number and markings (according to my ATF agent)."

Unless it's a parts kit gun, and then you just have to put your own serial number on it, as the dewatt upper/lower/frame, depending on type of firearm, isn't considered anything but lumps of metal, so you don't have to preserve the old number if you don't want to when you weld it back together.

These rulings brought to you by the people that consider AR uppers non-firearms, even though they contain the bolt and contain the propellant force and consider AR lowers firearms when all they are are fire-control groups, but many other arms (even selectable ones) they consider the lowers unregulated and the uppers are the firearm.

Welcome to the rabbit hole of federal gun law. I can't prove they "took both pills", but at times it seems that way.

You need a tax stamp on a M-16/AR auto-sear all by itself but you can have a pile of PKM fire control groups laying around and they don't care...

One friend retired over all of this, from his 01, as he's 78 and reckoned it was just too much hassle and liability to keep up...

I went round and round with an ATF agent about if I should get an 01 or 07 a while back and I couldn't get a straight answer. Closest I got was "I suppose that would depend on the instincts of investigators and compliance officers..." No joke. So don't bother calling BATFE and asking.

quote:

Originally posted by airgun1:
The BATFE is trying to have it both ways and they themselves have the very argument answered in their own agency, the NFA Branch. Believe it or not the NFA Branch of the BATFE is very user friendly.

If you turn a rifle or shotgun into a Short barrel rifle or shotgun, you become the Maker and you must engrave your name and address or abbreviation. The original manufacturer's info and serial is also listed.

If the manufacturer, i.e. Rock River made it a Short barreled rifle from the start, they are the manufacturer. If you build one from scratch, i.e. built the receiver yourselve from a piece of metal, you would be the manufacturer.

Please don't confuse the NFA $200 TAX stamp with normal gunsmithing. Rebarreling a rifle to a new caliber DOES NOT change it from Title 1 to Title II status. We are not talking about drilling a couple of holes in an AR-15 to make an M-16 which falls under special tax provisions of the ATF/NFA Branch.