FFL Question

[Hansel&Grendel]

A retired friend has built dozens of ARs for others to promote 2A. He is well off financially. Because of discounts that he receives, it's easier for him to buy build parts including stripped lowers, with the latter going through a FFL. When he learns word of mouth that someone is interested in a build, he meets the person to size him/her up and then does a custom build. He charges only his cost and actually puts some of his own money into each build to promote 2A (meaning he does each build at a slight loss). Upon completion, he and an end user do a transfer through a FFL.

Another mutual friend says that he needs a FFL because of his volume of builds for others. Another friend, whom I tend to agree with, says that he does not need a FFL because he is not doing the builds for a profit; he actually incurs a slight loss on each build as stated. A couple of us have tried calling various ATF offices and can't get a live body.

What do you all think? Is a FFL required given the volume of builds for others even though he is not making any profit whatsoever?

[grayfox]

That's really a question for a lawyer who is versed in not only federal laws/regs, but also in your own state.
This because in addition to building some quantity of arms, it will also of necessity involve an ffl transfer from one person (the owner) to another of firearm. This is true at least in my state, maybe so in others.

In addition, when he fills out his federal 4473 at time of buying his lower receiver, he answers a question saying are you the real owner/user of this firearm (words to that effect). An over-zealous Batfe/law enforcement person could argue he is straw purchasing arms... big red flag.

So he really, really, needs to talk with a lawyer to make sure what he's doing is all squared away.
Might not have been the case 30 years ago but today is a different ballgame.

[Happy2Shoot]

he does each build at a slight loss). Upon completion, he and an end user do a transfer through a FFL.

That is all you need to know.

He is not in the business of selling firearms, and there is no "straw purchase".

Stop calling the ATF.

You: hey ATF, is my buddy a felon?

ATF: I don't know let's go to his house and find out.

[Hansel&Grendel]

I called several ATF offices for my friend who had Covid and lost his voice. Only one that answered is NY state (not the State where my friend resides). The ATF Agent said that it's best to get a FFL Home Dealer either Type 1 or Type 7 (the latter with more options) because of the volume involved. I pointed out that it's not being done for profit, but the Agent came back to volume. Although, the ATF Agent didn't seem that sure of himself but stated that it's best to obtain a FFL to play it safe even though my friend isn't doing the builds for profit.

I see the point about Form 4473 but the end user isn't known at the time my friend acquires a stripped lower. He does do a FFL transfer with each ultimate end user. The ATF agent asked if 80% parts are used and I said that my friend only uses serialized lowers. So, a FFL is used when my friend purchases several stripped lowers at a time and then a FFL is used for each ultimate end user. No straw purchase situation involved.

This ATF publication appears to give considerable weight that a FFL is required IF profit is the motive for doing builds or for selling acquired already assembled guns. For my friend, clearly profit is not the motive because he only charges parts cost and actually puts some of his own money into each build as a means of promoting 2A. And, once again, a FFL is involved twice for each lower, as stated.

https://www.atf.gov/firearms/docs/guide/atf-p-53102-do-i-need-license-buy-or-sell-firearms/download

Frustrating.

[grayfox]

I still think he is at a pretty great risk. What's the difference between what he does and a dealer who's not very business-smart and loses money b/c of expenses...
I think that the fact you and he have questions in your minds, shows your intuition is telling you something.
But hey, it's only your neck and his on the line... yours/his call.

He needs a good lawyer.

[mtnlvr]

A common problem with ATF...they don't all interpret the laws or rulings the same. Depending on the day and/or the agent you talk to you can get different answers.

[Rivercityjeff]

The cost of Type 1 and Type 7 are $200 and $150 for 3 year licenses. $67 or $50 per year. When I shot trap, I'm sure I spilled more powder than that in a year.

[Happy2Shoot]

https://www.nraila.org/articles/20220321/democratic-administrations-flip-flop-flip-on-gun-dealer-licensing

Small article on a big problem.

ATF is specifically trying to find THE SMALLEST errors to blackmail the small time FFL to surrender his license. $200 for a 3 year license, till you have to drop 10 grand on an attorney.

No good way to do this except, build it all minus the receiver. Have the new shooter buy a stripped receiver and build it together.

Never call the feds, never answer the door, never answer questions. If the feds had enough "evidence" to nail you they will, no matter what you do.

[yoni]

I know of a police officer that was doing the same thing. He was arrested and convicted for being a dealer without the proper permits from ATF.

[lazyengineer]

TBH, if one is doing this often and heavy enough to justify asking the question, that's probably too much. The few time I've helped a friend with a build, I have them go buy the stripped lower themselves, and point to them where to go. I suggest your friend switch policy to doing the same.

If he is doing this heavily, he's probably buying stripped lowers in multi-packs. When you do that, the dealer is required to notify the ATF of a multiple sales of scary guns - and here is the guys name and address, just FYI. ATF can and does follow-up to see if someone is buying and transporting firearms for resale. FWIW, this is how they catch gun runners who are buying lots of guns, who is then driving to an NYC/whatever inner city location and selling guns out of the back of the car to people illegally and often for criminal inner city usage. That actually does sometimes happen, and my enmity to ATF when they catch someone doing that, is not particularly high when so.

Your friend could well fall under their "follow up with this guy and investigate" flag to investigate someone maybe doing that - and the investigation, once started, may result in overzeroulous easy-conviction follow-through. Obviously in your friends case few actually support that type of enforcement, but it can happen.

Frankly, I get it - it's a fun hobby to build AR's, and it's cool to help people out with one's honed skill. And if you do it just once or twice with a previously purchased receiver, nobody cares. But don't do this by being the one bulk buying the receivers. An easy: "here's Primary Arms that has stripped lowers for <$50, and here's the local gun dealer who has a $20 transfer fee"; is not an unreasonable start. Heck, if they live in Houston, just have them drive to Primary Arms (or PSA if in the Carolina's) and skip all the fee's.


As to calling the ATF, that's mostly fine - as I'm not aware of them using such contacts as a route to identify and harass people later (that I know of, not saying for sure it can't happen). The bigger issue is the answers don't generally mean much. In the higher power authority of the Judicial branch, I once saw it stated: "It is not the purview of the Executive branch agencies to interpret the law, that is the purview of the Judiciary." That struck a note and explains a lot actually. We've seen plenty of times ATF saying something is or isn't OK, and it not actually playing out the way they stated. This topic of what is or is not engaging in the practice of gun-dealing without a license is ill-defined. The ATF can and has nailed random guys for buying and selling guns "too much".

[TomSawyerNW]

A common problem with ATF...they don't all interpret the laws or rulings the same. Depending on the day and/or the agent you talk to you can get different answers.

This.