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View Full Version : Need an 07 FFL to build ARs?


THT
10-25-2010, 6:52 PM
If I wanted to build and sell ARs from the ground up using an off-the-shelf stripped lower receiver, would I need to have an 07 FFL? Or because I'm not manufacturing the firearm, the serialized lower receiver, would having an 01 FFL be sufficient? If I wanted a lower receiver with my own rollmark, I would need an 07 FFL, right?

ke6guj
10-25-2010, 6:58 PM
ATF says that you would needto be an 07 since you are building up firearms for sale.

01FFLs who have taken receivers and assembled the rest of the parts to make a complete firearm in order to sell them have run afoul of ATF in the past.

JeffM
10-25-2010, 7:03 PM
Stripped lowers have not had the FET paid on them. You need to be an 07 and pay the 11% Federal Excise Tax on the sale price of the gun (if you do more than 49 per year). 01 FFLs can do it "occasionally" but from past discussions on the topic that could be any number. That provision would only legally cover an 01 FFL for 1 build per year if the BATFE really wanted to push the issue.

THT
10-25-2010, 7:07 PM
Thanks, gents.

So an 07 would then incur the wrath, I mean, overhead of ITAR, yes?

JeffM
10-25-2010, 7:08 PM
Thanks, gents.

So an 07 would then incur the wrath, I mean, overhead of ITAR, yes?

Only if you plan to export IIRC. I haven't looked at the regs in a long time. The BATFE is actually really helpful if you talk to them. Not at all like the CA DOJ.

GoingQuiet
10-25-2010, 7:37 PM
Only if you plan to export IIRC. I haven't looked at the regs in a long time. The BATFE is actually really helpful if you talk to them. Not at all like the CA DOJ.

ITAR is manufacturing - PERIOD. Exporting is another license from DOS entirely.

It has been my understanding that any manufacture or assembly with intent to resell requires an 07.

When I got my FFL application in, it was as an 01. I asked ATF at my premises inspection regarding the difference in 01 and 07. Specifically, I wanted to know if I had a Remington 870 with a broken stock that required repair if it could be sent to my gunsmith who is an 07, have him repair it and then resell the gun.

The answer was no. Intent to resell, even though work not performed by an 07 that isn't you = manufacturing.

By extension, if I buy a Glock 17 with a broken front sight and put on a new front sight as a Glock Armorer and intend to resell that gun, I need to be an 07.

So I'm an 07.

YMMV.

JeffM
10-25-2010, 7:49 PM
ITAR is manufacturing - PERIOD. Exporting is another license from DOS entirely.

It has been my understanding that any manufacture or assembly with intent to resell requires an 07.

When I got my FFL application in, it was as an 01. I asked ATF at my premises inspection regarding the difference in 01 and 07. Specifically, I wanted to know if I had a Remington 870 with a broken stock that required repair if it could be sent to my gunsmith who is an 07, have him repair it and then resell the gun.

The answer was no. Intent to resell, even though work not performed by an 07 that isn't you = manufacturing.

By extension, if I buy a Glock 17 with a broken front sight and put on a new front sight as a Glock Armorer and intend to resell that gun, I need to be an 07.

So I'm an 07.

YMMV.

Learn something new every day.

franklinarmory
10-26-2010, 9:42 AM
+1 on ITAR. Don't mfg unless you've paid the $2250 to the US State Department. They'll pretend to do a background on you and simply take your money. However, if you don't pay, you could spend 8 years in the Federal Pen!!!

Don't forget the state MFG license too. If you produce more than 99 units, you need a state license. (There's also a second tier license that costs more if you produce more.) The biggest bummer with this is that you can't apply for it until you have your 07FFL. Nothing is concurrent with these agencies. :(

Table Rock Arms
10-26-2010, 8:58 PM
ITAR is manufacturing - PERIOD. Exporting is another license from DOS entirely.

It has been my understanding that any manufacture or assembly with intent to resell requires an 07.

When I got my FFL application in, it was as an 01. I asked ATF at my premises inspection regarding the difference in 01 and 07. Specifically, I wanted to know if I had a Remington 870 with a broken stock that required repair if it could be sent to my gunsmith who is an 07, have him repair it and then resell the gun.

The answer was no. Intent to resell, even though work not performed by an 07 that isn't you = manufacturing.

By extension, if I buy a Glock 17 with a broken front sight and put on a new front sight as a Glock Armorer and intend to resell that gun, I need to be an 07.

So I'm an 07.

YMMV.

This is correct. If you make any modification with intent to resell it is manufacturing. And according to the TTB website, anything you modify with intent to resell makes you liable for excise tax. I am trying to qualify that but TTB is not real good about getting back to me.

What I am trying to figure out, is at what point do you have to mark the gun or barrel with your company info. Obviously if you repair a broken stock on a Remington 700 you wouldn't have to. But if you are changing the gun from semi auto to single shot would you have to then? I was under the impression that if you are part of the manufacturing process of the final product you either have to have a variance or your info must go on the gun, but there are some people saying otherwise. Do you have any idea on this?

GoingQuiet
11-04-2010, 4:42 PM
What I am trying to figure out, is at what point do you have to mark the gun or barrel with your company info. Obviously if you repair a broken stock on a Remington 700 you wouldn't have to. But if you are changing the gun from semi auto to single shot would you have to then? I was under the impression that if you are part of the manufacturing process of the final product you either have to have a variance or your info must go on the gun, but there are some people saying otherwise. Do you have any idea on this?

I'm not sure, that is a FTB question regarding semi to single conversions.

When taking a stripped lower and doing an SBR build - I have to engrave makers mark and serial number to 3 thousandths and 1/16th height. Besides that kind of extensive re manufacturing I have no idea.

I'll ask ATF.

Table Rock Arms
11-04-2010, 4:49 PM
I'm not sure, that is a FTB question regarding semi to single conversions.

When taking a stripped lower and doing an SBR build - I have to engrave makers mark and serial number to 3 thousandths and 1/16th height. Besides that kind of extensive re manufacturing I have no idea.

I'll ask ATF.

I would love to know. I called the number I have to FTB, and I only have the option to leave a message. They called me back and I missed the phone and they left a message to call them back at the same number which I did and they haven't called me back again. I am going to try again next week. If you get an answer, I would love to know it.

Ryan

rbetts
11-04-2010, 5:36 PM
Q: Must a person who engages in the business of manufacturing and importing firearms have a separate license to cover each type of business?
Yes. A separate license is required to cover each of these types of businesses.

[27 CFR 478.41]

Q: May a person licensed as a manufacturer of ammunition also manufacture firearms?
No. A person licensed as a manufacturer of ammunition may not manufacture firearms unless he or she obtains a license as a firearms manufacturer.

Q: May a person licensed as a manufacturer of firearms also manufacture ammunition?
Yes. The person may also manufacture ammunition (not including destructive device ammunition or armor piercing ammunition) without obtaining a separate license as a manufacturer of ammunition.

Q: Is a person who reloads ammunition required to be licensed as a manufacturer?
Yes, if the person engages in the business of selling or distributing reloads for the purpose of livelihood and profit. No, if the person reloads only for personal use.

[18 U.S.C. 922(a) (i) and 923(a), 27 CFR 478.41]

Q: Must a licensed manufacturer pay excise taxes?
Yes. Licensed manufacturers incur excise tax on the sale of firearms and ammunition manufactured. See Item 17, “Federal Excise Tax” in the General Information section of this publication.

Q: May a person engage in gunsmithing under a dealer’s license (type 01), or do gunsmiths need to be licensed as “manufacturers” of firearms?
Generally, a person engaged in gunsmithing requires only a dealer’s license (type 01). There are circumstances in which a gunsmith might require a manufacturing license. Generally, a person should obtain a license as a manufacturer of firearms if the person is: 1. performing operations which 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 3. is performing the operations for the purpose of sale or distribution of the 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.

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 which 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.

7.An individual acquires frames or receivers and assembles firearms for his 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 or revolvers and modifies the slides to accept new Style f 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.

Munk
11-04-2010, 7:25 PM
rbetts... great post.


How about if the FFL in question buys frames, then sells "Kits" that are comprised of all the component parts off a functional AR-platform rifle?

As in, serialized frame. Upper, stock etc.... Without actually selling it as a complete firearm?

In this scenario you only need an 01 as you are selling the frames and are not MFGing a firarm correct?

jtmkinsd
11-04-2010, 8:14 PM
rbetts... great post.


How about if the FFL in question buys frames, then sells "Kits" that are comprised of all the component parts off a functional AR-platform rifle?

As in, serialized frame. Upper, stock etc.... Without actually selling it as a complete firearm?

In this scenario you only need an 01 as you are selling the frames and are not MFGing a firarm correct?

Correct...or, you buy everything as parts, DROS the receiver and on the day of pick up you turn around and give me everything to assemble...I've taken it out of my bound book, and brought it back in as a "repair". :D

THT
11-06-2010, 6:55 AM
So based on that, a customer can buy a stripped lower and every other part and the 01 FFL can assemble it without needing a manufacturer's license. However, the 01 FFL cannot take a stripped lower, build it into whatever configuration they want and then attempt to sell it.

Table Rock Arms
11-06-2010, 9:51 AM
So based on that, a customer can buy a stripped lower and every other part and the 01 FFL can assemble it without needing a manufacturer's license. However, the 01 FFL cannot take a stripped lower, build it into whatever configuration they want and then attempt to sell it.

I haven't looked into it too deep as I am an 07 FFL so I could do it anyway, but I believe you can do it if the customer brings the gun to you, and it is not something you do all the time. But if you sell the lower and then build it up and make a habit of those kind of transactions, that won't fly. I could be wrong.

jtmkinsd
11-06-2010, 11:30 AM
So based on that, a customer can buy a stripped lower and every other part and the 01 FFL can assemble it without needing a manufacturer's license. However, the 01 FFL cannot take a stripped lower, build it into whatever configuration they want and then attempt to sell it.

Correct...the whole restriction comes into play when you manufacture for sale. But if you build one or two a year ATF isn't going to come down on you IMHO.

franklinarmory
11-08-2010, 7:10 AM
rbetts... great post.


How about if the FFL in question buys frames, then sells "Kits" that are comprised of all the component parts off a functional AR-platform rifle?

As in, serialized frame. Upper, stock etc.... Without actually selling it as a complete firearm?

In this scenario you only need an 01 as you are selling the frames and are not MFGing a firarm correct?

Because you are selling a complete firearm (even though it is not built out,) the TTB will still want their excise tax of 11% if you sell enough of them. So be sure to factor that into your cost.

Table Rock Arms
11-08-2010, 7:30 AM
Because you are selling a complete firearm (even though it is not built out,) the TTB will still want their excise tax of 11% if you sell enough of them. So be sure to factor that into your cost.

This is a fact. I was on the phone with TTB 10 minutes ago and the guy told me this even though I never asked about it.

Ryan

Purple K
11-08-2010, 7:50 AM
What about minor things like installing scopes, bullet buttons, etc?

GoingQuiet
11-08-2010, 4:46 PM
What about minor things like installing scopes, bullet buttons, etc?

Installation of parts on customer request = gunsmithing. That is an allowable practice as an 01.

Installation of parts on your behest with intent to improve for resale = Manufacturing.

If a customer comes in and wants you to bolt a scope on, no problem.

When you start thinking hey, I can add this and this and this and sell it as a package, you owe Uncle Sam FET.

Munk
11-09-2010, 5:20 PM
This is a fact. I was on the phone with TTB 10 minutes ago and the guy told me this even though I never asked about it.

Ryan

Perhaps if it's a receiver on one transaction, and a "build kit" as the next transaction? Note: The build kit would be a distinct item that may be used with any lower, not just the one that was purchased minutes before.

(this is mostly theoretical jackassery on my part, If i do get into the business I fully intend to get MFG status so I can do proper builds for people.)

GoingQuiet
11-10-2010, 6:04 PM
*snip*

GoingQuiet
11-10-2010, 6:04 PM
This is correct. If you make any modification with intent to resell it is manufacturing. And according to the TTB website, anything you modify with intent to resell makes you liable for excise tax. I am trying to qualify that but TTB is not real good about getting back to me.

What I am trying to figure out, is at what point do you have to mark the gun or barrel with your company info. Obviously if you repair a broken stock on a Remington 700 you wouldn't have to. But if you are changing the gun from semi auto to single shot would you have to then? I was under the impression that if you are part of the manufacturing process of the final product you either have to have a variance or your info must go on the gun, but there are some people saying otherwise. Do you have any idea on this?

Don't know if this helps but.....

http://www.goingquiet.com/GunbrokerPhotos/ATF%20Markings.jpg

Table Rock Arms
11-10-2010, 7:16 PM
Don't know if this helps but.....

http://www.goingquiet.com/GunbrokerPhotos/ATF%20Markings.jpg

Good info. The reason I am trying to contact them is in regards to converting a semi auto pistol to single shot and dropping in a longer barrel to meet regulations in order to ship the gun into California. According to all the info that I have read from ATF, I can't imagine that I wouldn't have to engrave it with my info, but there have been a couple people who told me it is considered gunsmithing and you don't have to. I am basically 100% sure that if I am buying the gun then modifying it for the purpose of reselling it then I have to log it into my manufacturing bound book, engrave my info in it, and pay excise tax if I do over 50 of them. Which is exactly what I am doing until I hear otherwise. However it would make things cheaper and easier if I didn't have to so I am looking into it.

Ryan