I have posted this on the African Hunting Forum since many members have their guns customized.

From the Outdoor Wire Monday April 3, 2006

Firearms Fight

When does customization of a firearm become manufacturing? That seemingly simple question is occupying the near undivided attention of the
firearms industry. Observers say it is a question with the potential to become a
firestorm that could put custom gunsmiths out of business; if not behind bars.

The controversy began with a Bureau of Alcohol, Tobacco & Firearms inspection of Competitive Edge Gunworks in Bogard, Missouri. BATF and tax agents appeared and began examining the company's records. When they finished, owner
Larry Crow was told he potentially faced felony charges for manufacturing firearms without a license.

Crow says he was stunned.

>Agents went on to tell him that his manufacturing status would mean
liability for federal excise taxes - and penalties - from the beginning of his
business.

There is, they told the thunderstruck Crow, no statute of limitations for failing to file Federal Excise Taxes, but there were serious penalties.

"I'm confused, " an obviously shaken Crow told The Outdoor Wire during a telephone conversation last Thursday, "and more than a little concerned."

Since the BATF visit, Crow hasn't done any gunsmithing, but has initiated the licensure process necessary to change his classification from gunsmith to manufacturer. He also says he's agreed with the BATF to settle the whole
matter as quickly as possible. In the meantime, Crow says he's struggling financially, but despite the costs of waiting for his licensure process to be completed, he told The Outdoor Wire "I'm not doing any more work until
the manufacturing paperwork's complete."

Whether Crow's is a single case brought by an overzealous agent or the opening shot of a BATF campaign against gunsmiths has the entire firearms industry abuzz.
>
If it proves to be the first shot of another fight, the stakes are very high. The fallout would be felt by virtually any company or individual involved in the gunsmithing business; from individual gunsmiths and educators teaching firearms repair to companies like Brownells or Midway USA. Those companies
primarily supply componentry to gunsmiths, but also produce instructional material. The firearms they produce in the course of those
instructional pieces are apparently enough to qualify them as manufacturers in this
very narrow interpretation. Likewise, custom gunsmiths' samples are also apparently under scrutiny.

Consequently, the National Shooting Sports Foundation, the Second Amendment Foundation, the National Rifle Association and others are looking for clarification of a single question: at what point does gunsmithing become manufacturing?

BATF regulations appear to offer a solid definition of manufacturing.It would appear, says experts, that a new, and considerably narrower definition is being used against Crow. A definition that has the potential to make
virtually any change, from changing parts inside the lockworks to re-barreling or changing firearm calibers enough to constitute manufacturing. Enough, for example, to make any gunsmith's show samples or writers' samples "manufactured" and subject to taxes and penalties.
>
Should that become the new working definition for ATF and IRS enforcement agents, gunsmiths we've contacted the effect would be immediate and would bankrupt what they consider "one of America's remaining cottage industries."
>
Hamilton Bowen, of Bowen Custom Arms in Louisville, Tennessee, is a longtime gunsmith and member of the prestigious gunsmiths' guilds. He feels the narrow definition "won't stick" should it come to a fight. He also says the
fight itself might be sufficient to put gunsmiths out of business.

"We might win the fight," Bowen said, "but the loss of business along with the associated legal fees for the fight would more than put most of us out of business."

"If the ATF came in and told me that I was liable for federal excise taxes and penalties for all the years I've been in business, I'd just hand them the keys and head to the unemployment office," he said. "ATF is charged with writing regulations to enforce Congressional statutes. They have the ability to
clarify statutes, but this one's anything but clear."

>San Antonio, Texas gunsmith Alex Hamilton agrees. "I'm essentially a sole proprietor," he says, "if the ATF came in here and started an in-depth investigation, I couldn't work for a couple of reasons. First, I'd be afraid not to be with them the whole time they were here.

Secondly, the anxiety their even being here would cause would keep me from doing my job anyway."

The issue isn't licensure; manufacturing licenses are relatively inexpensive, although they add another layer of paperwork and compliance to a small business group that says it already spends a disproportionate amount of
working time on compliance paperwork. A retroactivity tax liability could spell significant enough economic damage to shut most gunsmiths down.

Off the record, industry officials say they're starting to receive reports of other gunsmiths being "visited" by BATF officers. Despite those
unconfirmed reports, they remain confident the situation can be clarified and a confrontation avoided.

That might be the equivalent of whistling in a graveyard.Battles between the firearms industry and the BATF have historically been bitter, protracted affairs. Passage of recently-introduced legislation
giving gunsmiths a 50-firearm annual tax exemption passed late in the prior Congressional session. The battle to get the legislation introduced,however, took 15 years. It still lacked the support to win the retroactivity
gunsmiths had hoped for.

Although they unwilling to say so on the record, some gunsmiths feel the BATF may be getting a little "payback" for the passage of legislation they so vehemently opposed.

In the meantime, the National Rifle Association is attempting to mediate what may have the potential to blossom from a skirmish into a bitter war.

Eric Schwartz, clerk to the NRA's Chief Legislative Counsel, told The Outdoor
Wire, "we believe there are inconsistencies by ATF and the IRS that make it difficult, if not impossible, for a law-abiding gunsmith to practice their trade."

"We'd like to see, if necessary, steps taken to address any inconsistencies and make it crystal-clear what acts are manufacturing acts and which are gunsmithing acts so our members can ply their trade in a law-abiding
manner."

That might be easier said than done.

One obstacle in the way of "crystal clarity" is a multitude of statutes, regulatory language and opinions; many of which appear to contradict
each other. Another; the simple fact that the question lies squarely at an intersection of IRS and BATF regulatory and enforcement areas.

Both agencies have reputations as ferocious opponents to any perceived weakening of their enforcement powers.

The Federal Excise Tax itself may prove to be a bone of litigation should a gunsmith be deemed to be a manufacturer. As observers have pointed out,a Federal Excise Tax on the firearm had already been paid - by the original manufacturer.

Deeming a firearm to have been "manufactured" in the course of customization and subject to FET appears to be a BATF attempt at "double dipping" the firearms industry.

Further, in customization and gunsmithing, labor is the major cost. The gunsmith would have already paid federal income tax on that labor.
Again, this creates an apparent attempt at double-taxation.

And what about record keeping? For income tax purposes, businesses are required to maintain their records for a clearly-defined period. BATF has implied no statute of limitations on the potential FET liability for gunsmiths that find themselves declared manufacturers. Consequently, there would be a requirement that records be kept in perpetuity. That creates what legal experts call a "practical impossibility" - a situation where one federal agency creates a requirement that's "practically impossible" to satisfy. Small businesses normally operate in small spaces, i.e., tax records outside the IRS maintenance requirements are routinely destroyed as each year's taxes are filed.

Whether the BATF visit to Competitive Edge was a single agent operating under a personal interpretation of regulations or the first shot in another war between the firearms industry and the BATF is, at this point, irrelevant.

Another genie has been released from another bottle.

quote:

A definition that has the potential to make
virtually any change, from changing parts inside the lockworks to re-barreling or changing firearm calibers enough to constitute manufacturing.

That's complete in my opinion.

THIS MUST BE FOUGHT TO THE END!!!

I thought the Bush admin. was supposed to be focusing on anti-terrorism.

quote:

Originally posted by 500grains:
I thought the Bush admin. was supposed to be focusing on anti-terrorism.

The Bush Admin is becoming a joke.

quote:

Originally posted by ACRecurve:

quote:

Originally posted by 500grains:
I thought the Bush admin. was supposed to be focusing on anti-terrorism.

The Bush Admin is becoming a joke.

The heck with becoming - they have arrived....

quote:

Originally posted by ACRecurve:

quote:

Originally posted by 500grains:
I thought the Bush admin. was supposed to be focusing on anti-terrorism.

The Bush Admin is becoming a joke.

I'll second that!!!

I don't feel it is a direct reflection of the sentiment of the Bush administration.

The ATF has been IMO a corrupt federal organization bent on the destruction of the firearms industry since even before Clinton.

This is just nonsense, contradictory even to what it means for something to be a firearm. As far as the stuff about rebarreling or rechambering, even restocking... these are just add-ons of the actual 'firearm', the receiver.

It does not surprise me however, as the ATF often does not seem to care about the law, they do what they please.

-Spencer

It has always been my understand that if a gunsmith takes an action, new or old and rebuilds the gun and sells it, he is respnsible for the excise tax. A law was passed by a Montana legislator, with testimony by SDH, that gives a 50 gun exemption for gunmakers regarding the excise tax. If the action is owned by the customer then the excise tax is his responsiblilty if and when he ever sells the gun. That is one reason that custom gunmakers would rather that the custom supplied the action.

The issue with being a manufacturer or FFL is a new issue though. The excise tax is not.

The stupidest thing with the old excise tax requirement was they said you owed the tax if you increased the value of the rifle you rebuilt! Duh!!!!!!!!!!

What would be the point in rebuilding a rifle in order to lower its value??????????

the jack-booted thugs are alive and well in washington.

i look for the nra to be in the mix here real soon with their shirt sleeves rooled up and ready.

one problem for them though is the cases they are still fighting in san francisco and new orleans.

nra is pouring a lot of money in these two areas for attorney staff.

so in a few months when nra gives you a call and asks for a donation lets everybody moan and groan.

in the past two months kansas and nebraska have passed ccw bills in those states thanks to their legislatures being educated by the nra.

just my 2 cents worth.

If you think you have trouble finding a
'good gunsmith' now, loosing this fight will literally destroy the gunsmithing industry as we know it.

Now is the time to contact your Senator and Congressman! Ask them to look into this and put a stop to it. Posting here is entertaining but it does not change anything.

Can you tell I am ticked about this?

I tend to be cautious of media reports today. You only hear what they want you to, and neither side is ever represented fairly. I am all for the rights of lawful gun owners and for the right of gunsmiths to make a living. My only caution would be, was he doing something that is not mentioned in the article?

Not trying to start anything at all. Just saying to keep an open mind. I hate the media more than useless government agencies.

quote:

I hate the media more than useless government agencies.

I have to agree with you on that point.

quote:

Originally posted by Hutty:
I have posted this on the African Hunting Forum since many members have their guns customized.
.
.
.
Whether the BATF visit to Competitive Edge was a single agent operating under a personal interpretation of regulations or the first shot in another war between the firearms industry and the BATF is, at this point, irrelevant.

Another genie has been released from another bottle.

Corporate government would just as soon that our guns were purchased retail and used as is, I suppose. Makes it easier to know and control who has what.

Cars are more or less like that, now, the days of Holleys and cams and headers on the street are about gone. You can still put different wheels and tires on and paint it up if you want, but 200 mph street cars are few and far between. Most of us drive store-bought stuff, and they like it that way.

go here and read the BATF tax code.

Not to piss on anyones shoes, but its pretty clear. By tax code the definition of a firearm doesn't include the words "serial number" anywhere.
You will notice that if you start with a reciever, add a barrel and a stock, then you have manufactured a firearm by tax code, not criminal code.

Don't confuse the two.

I was totally unware there are two definitions of a firearm untill yesterday when I went looking. I am guilty of ignorance, luckily I haven't built any firearms under tax code or criminal code.

Under tax code if a customer where to send you a rifle and told you to scrape everything but the reciever and then you built up a new rifle, the customer would be responsable for the FAET when they sell that rifle.
If the smith started with a rifle, built a new one and then found a buyer, the smith is responsable for the FAET.
Remember this is by Tax Code not Criminal Code.

If you’ve ever noticed, congress seldoms uses clear and specific language when writing any law including tax laws. There would be no need for courts and lawyers if they wrote them in in clear, plain language. Not a bad idea...but not likely to happen since most members of congress are lawyers.

As Customstox pointed out, as long as the customer is supplying the serialized “firearm†to the gunsmith then it is the customer who is responsible for the federal excise tax should he ever sell it.

If, however the gunsmith builds a complete rifle from parts and a serialized receiver that he has purchased (and has title to) then he is responsible for the tax when and if he sells it.

It all pretty much boils down to who had the title to the serialized action that the weapon was built from.

The tax only applies to complete firearms (or firearms in kit form) and does not apply to receivers/frames unless and until they are assembled into complete firearms.

quote:

Originally posted by Rick 0311:
What would be the point in rebuilding a rifle in order to lower its value??????????

The buyer determines a gun's monetary value. My custom 35 Whelen is not a high-end job, but since Winchester quit making M-70's, some folks might feel it's worth less because it's not still an original 270 Standard Rifle.


Okie John

I didn't see Customstox's responce, it got lost amoungst the political banter.
I havn't needed to be aware of the FAET yet, I'm glad I know about it now though.

quote:

Originally posted by okie john:

quote:

Originally posted by Rick 0311:
What would be the point in rebuilding a rifle in order to lower its value??????????

The buyer determines a gun's monetary value. My custom 35 Whelen is not a high-end job, but since Winchester quit making M-70's, some folks might feel it's worth less because it's not still an original 270 Standard Rifle.


Okie John

Slight correction...the customer may decide what he is willing to pay for something, but when it comes to figuring excise tax the “value†is decided by the taxing agency.

quote:

Originally posted by Rusty Marlin:
I didn't see Customstox's responce, it got lost amoungst the political banter.
I havn't needed to be aware of the FAET yet, I'm glad I know about it now though.

Yup, as long as you, the gunsmith, don't provide the action, then you are the subcontractor and the tax obligation falls to the owner of the action. Like Chic, that is how I've always understood it. Thanks Rusty for the confirmation...

I think the FAET is using interesting language with the use of the term "title". I have a title to my home and property. Boats and motor vehicles have a title. I was not aware that firearms had a "title", or that gunsmiths or anyone else ever held "title" to a firearm. I certainly have never received a piece of paper that would be confused with a "title".

Perhaps then, the attornys could argue the act invalid??? I wonder how many gunsmiths actually pay this with "custom" rifle work?

Roger

quote:

Since the BATF visit, Crow hasn't done any gunsmithing, but has initiated the licensure process necessary to change his classification from gunsmith to manufacturer. He also says he's agreed with the BATF to settle the whole matter as quickly as possible.
In the meantime, Crow says he's struggling financially, but despite the costs of waiting for his licensure process to be completed, he told The Outdoor Wire "I'm not doing any more work until
the manufacturing paperwork's complete."

I find this part of the article a bit odd. If he is currently licensed, I don't see where his waiting for a manufacturing license should prevent him otherwise, from practicing his trade as a gunsmith. I'd be repairing guns and paying the bills.

quote:

Originally posted by ShopCartRacing:
I don't feel it is a direct reflection of the sentiment of the Bush administration.

The ATF has been IMO a corrupt federal organization bent on the destruction of the firearms industry since even before Clinton.

It does not surprise me however, as the ATF often does not seem to care about the law, they do what they please.

-Spencer

SCR -

I agree with you. It goes farther than that, though. ALL federal government departments now act that way.

Department of Interior agents have actually killed small landholders who would not sell their property(often held for generations) to the government. Acting under the guise of middle of the night "probable cause" raids and or search warrants based on false testimony by agents, federals have kicked in doors, then shot those rudely awakened inside when they armed themselves fearing it was a home-invasion robbery or worse.

Look at the application of the ESA. In 1966 I sold one of my units of old growth & mixed timber to an investor in Springfield, Oregon. He nurtured the land for another 30+ years. When he went to selectively and ecologically soundly log it, the Forest Service refused to allow him to do so. It became a test case, where some chuckle-headed left wing judge decided to make law, rather than enforce it. That case became precedent where-in the Forest Service can apply a law intended to regulate operations on public land to "save" named species,by applying the public land law to private property. So, in effect he lost his original investment in growing timber on his own private land, and all the money that investment might have earned elsewhere, as well as the money he spent on thinning, and other maintenance & fire protection of that crop, and property taxes paid over the entire 30 years.

Incidentally, those taxes still go up every year, based on the calculated increase in board footage of timber on the land x the market value per thousand board feet. So he gets taxed by the government on the theoretical increase in value of the crop, which the government will not let him sell. If the law does not change in its application to him, one of these days he will just have to walk away from the land and his investment because he won't be able to justifiably pay the taxes. Thus the government will take over the land (which is likely what they want anyway), and add it to the 640,000 acres of the Siusalaw (SP?) National Forest which it borders. Then it will be off the tax rolls forever but will increase the cost of adminstering that National Forest each and every year.

Now the Forest Service has finally learned that Spotted Owl numbers are still diminishing primarily because it is losing habitat to another native american specie of owl, not because it requires "old growth"to live in. It doesn't. So, what is their solution? To hire hunters to kill off the OTHER native species so the Spotted Owl won't have to compete with it!! Good Plan! that way they can increase employees, who will need supervisors and all sorts of support (vehicles, fuel, guns, ammo, lunch allowances, etc.), thereby increasing the department's budget and empire. And to pay for them, ,they will implement another "user fee" to charge every person who evens parks in the area or walks on the land...even though in theory it belongs to those people, not the bureacracy which is supposedly acting for them.

Everyone should ask some basic questions of the whole government. Such as why the Department of Agriculture has more employees than there are farmers in the United States? Why does the Department of Agriculture need SWAT teams, complete with helicopters?

Why is the IRS selling copies of individual tax returns (including social security numbers) to private businesses? Why are Freedom of Information Act requests commonly stone-walled and ignored by all departments even after judicial orders to produce the requested info have been obtained?

Without going on too long, the answer is chillingly simple:

THE BUREACRACY HAS GROWN TO THE POINT WHERE ITS "EMPIRES" CANNOT BE CONTROLLED BY EITHER THE PRESIDENT, CONGRESS, OR THE COURTS!!!

Thinking about that makes me glad I am old and won't be here too many more years.

quote:

Slight correction...the customer may decide what he is willing to pay for something, but when it comes to figuring excise tax the “value†is decided by the taxing agency.

In all other parts of life the sale price would establish the value, but your probably right that the agency would try to set the value, lawyers love this stuff.

One thing that all people would do well to keep uppermost in their minds at all times is that THE GOVERNMENT IS NOT YOUR FRIEND. Never has been...Never will be. A government (any government) has only two functions...1) take and waste as much of its citizens money as possible, 2) continue to grow in size and grab as much power as possible.

Here is the latest update


H.R. 5092: BATFE MODERNIZATION - OR REFORM?

On Monday, April 3, The Outdoor Wire first reported on the Bureau of Alcohol, Tobacco and Firearms (BATF) having threatened master gunsmith Larry Crow of Bogard, Missouri with felony charges based on the BATF's interpretation of just what constituted "manufacturing" firearms.

Under the interpretation apparently applied to Mr. Crow, virtually any modification to a firearm, from changing barrels or calibers to the relatively minor installation of scope rails and optics would qualify -thus making the newly "manufactured" firearm subject to the Federal Excise Taxes collected on every manufactured firearm. That tax liability, would apply to every firearm "manufactured" by the gunsmith.

Suffice to say, the report kicked off a firestorm in the firearms industry. Whatever the reason for "the Crow incident", the firearms industry has sounded the alarm and prepared to go to battle - again - with the BATF.

Simultaneous to that visit to Crow, hearings were underway in Washington to look at reported abuses of authority by that same BATF.

In response, U.S. Representatives Howard Coble, (R-North Carolina) and Bobby Scott (D-Virginia) introduced House Resolution 5092, a bill that would "modernize and reform" the Bureau of Alcohol, Tobacco, Firearms and Explosives.

H.R. 5092 revises the current enforcement system , including expanding the currently limited options for administrative penalties applied to licensed dealers, manufacturers and importers of firearms. Todatm for most violations, BATFE has only two options: issue FFL holders a warning, or revoke the license. 5092's "modernization" would allow a series of clearly-stated fines and/or license suspensions for less serious violations; limiting license revocation to serious criminal violations that could potentially block criminal investigations or put guns in the hands of criminals.

Equally significant is 5092's apparent intention to clarify the standard for violations. The proposed legislation allowing penalties for "intentional, purposeful violations of the law" but not for simple paperwork mistakes. The bill also improves the due process under which BATFE imposes these penalties; allowing for appeal of BATFE penalties to a neutral administrative law judge - rather than to an employee of BATFE itself. A frequent criticism from observers is that BATFE is incapable - or unwilling - to hear appeals in an unbiased manner.

In 1986, Congress passed the Firearms Owners' Protection Act, believing these problems were corrected with that passage. Instead, the government has ignored the FOPA, even arguing in court the changes were "without practical significance."

To avoid the kind of nebulous situation that Larry Crow now finds himself, H.R. 5092 would demand that the Bureau establish clear investigative guidelines - and require the Inspector General of the U.S. Department of Justice to review AFT's gun show enforcement operations.

Both are frequent points of contention due to what NRA-ILA spokespersons have characterized as "inconsistencies by ATF that make it difficult, if not impossible, for a law-abiding gunsmith to practice their trade."

H.R. 5092 also speaks to one of the continual criticisms of the BATFE by gunsmiths: the Bureau spends too-much time and effort investigating gunsmiths instead of investigating "real" criminals.

H.R. 5092 would focus BATFE's enforcement efforts on violations of firearms, explosives, arson, alcohol and tobacco laws, rather than non-jurisdictional areas.

Simply put it would clarify BATFE's purpose by directing efforts toward criminals, removing the firearms industry from what they now characterize as their status "low-hanging fruit" for ATF enforcement efforts.

As you can imagine, H.R. 5092 is getting widespread early support from the firearms industry and shooting enthusiasts. The response from BATFE, while neither official nor "for attribution" has been decidedly less positive.

What ever happened with this??
gunmaker

Or the bigger question, what is going to happen now after yesterdays election?

John

One could lodge a complaint with his representative or senator.....but they're mostly Democrats now....they gonna go to bat for you?

quote:

Originally posted by vapodog:
One could lodge a complaint with his representative or senator.....but they're mostly Democrats now....they gonna go to bat for you?

It depends on where your bat is.
gunmaker

quote:

Originally posted by ShopCartRacing:
I don't feel it is a direct reflection of the sentiment of the Bush administration.

The ATF has been IMO a corrupt federal organization bent on the destruction of the firearms industry since even before Clinton.

This is just nonsense, contradictory even to what it means for something to be a firearm. As far as the stuff about rebarreling or rechambering, even restocking... these are just add-ons of the actual 'firearm', the receiver.

It does not surprise me however, as the ATF often does not seem to care about the law, they do what they please.
-Spencer

The FEDERAL MAFIA? Perhaps a real war is
the proper response? You know, actually USE the second amendment! Nah! We Americans no longer have the balls!

quote:

Originally posted by Don Slater:

The FEDERAL MAFIA? Perhaps a real war is
the proper response? You know, actually USE the second amendment! Nah! We Americans no longer have the balls!

Don- Now that Nancy Pelosi is very likely to be the next Majority Leader, it is EXTREMELY unlikely Congress will do _anything_ to help out gun owners. She has long stated that her view is "Mr. & Mrs. America, turn them all in!!" And the Majority Leader pretty well controls what if any actions reach the floor for a vote.


Yes, George Bush had become a bad joke. But, that was no reason for America to shoot itself in the heart by turfing all the pro-gun Congresspersons.

For those who did not see to it that their friends and family voted pro-gun, THANKS ONE HELL OF A LOT, FOLKS.



(And Don, though anyone has the right to think, believe, and even act on the sentiments you expressed, it is not wise or long-tem effective to express them on a federally-monitored electronic communication system.)

I don't think the Feds care one bit, AC.

We Americans don't have the intestinal fortitude, and they know it!