Manufacturers licence

The FFL holder that I buy guns through has told me that I need to have a manufacturers license to sell 19ll frames that I've built for use with conversions. I do this as a retirement hobby and only do a couple frames a year. 

Does anyone know if this is a fact?

http://bulletin.accurateshooter.com/2014/09/when-do-gunsmiths-need-a-firearms-manufacturing-license/

Thanks Jim. Good information!

keep in mind the ATF has hoops a 07 has to jump thru that a 01 usually does not, 

Zoning is one they look at hard

07? 01? Please explain.

07 is a manufacturer,   usually has to have an address that is in an area zoned such,

as in they may not grant you a license to work out of your basement in a residential neighborhood (or they may, depends on the mood , time of day, and past history)

and 01 is a standard FFL. buy sell trade, or basic gunsmithing as listed in the link another in another post, 


I currently have an 01, in a residential area, 
used to be a 07 when my father had the license as a sole proprietor

since he passed , we (brother and I) opted to go 01/SOT and not a 07 
(SOT is Special Occupation Tax, as in Class III dealer for NFA stuff, that is a separate tax stamp attached to our license yearly)

however since our shop has been continuously open since 1983.. we could change that to a 07 at my next renewal with no problems (grandfathered in place)


I know several folks that applied for a 07 that were refused , as far as address, and had to open up in a rented location to appease the licensing branch, 

all rented a small space from an existing shop, or location in the properly zoned area

one is a local muffler shop,  he set up his 07 using his muffler shop (separate area in his shop for the side business) to make silencers 

another was a local lawyer, he rented an office (read that as room)  in his building to himself for his license, 

ATF in this area is very friendly and helpful,  has been for a good while, but they look hard at the zoning,  

maybe different in your area,

JKR wrote:07? 01? Please explain.

A little more info. but you have to dig into them to find requirements like physical place of business.
- Dave

FFL License Types

Before applying for an FFL license, it’s important to know which type is going to suit your needs the best. The different types of licenses allow you to be a ffl dealer of different types of weapons or provide different types of services. And so, without further ado, here are the various types of FFL licenses:

Type 01 FFL – Dealer in Firearms / Gunsmithing (firearms repair)

This license allows you to buy, sell, and repair firearms. This is the most basic of FFL licenses and what you would find most gun shops have. Its $200 to apply, and $90 to renew every three years. Some limitations of the license that we cover in more detail, this type is dropping in popularity.

Type 02 FFL – Pawnbroker

This license allows you to do everything a type 01 does but is for pawnshops. Consignment of firearms. These license types are inspected much more frequently for obvious reasons.

Type 03 FFL – Collector of Curios and Relics

This license, also known as a C&R, is solely for adding antique firearms to your personal collection of curio and relic firearms. It does not allow you to both buy and sell (for that you’d need a type 01). Also, this license has a different application form, which is explained further in the guide. The one good thing about this license is that it is only $30 to apply and $30 to renew.

Type 06 FFL – Manufacturer of Ammunition for Firearms

This license allow you to only manufacture ammunition, other than ammo for destructive devices or armor piercing ammo. Unless the only thing you want to do is manufacture ammunition, we suggest getting a type 07 and cover how to do this.

Type 07 FFL – Manufacturer of Firearms & Ammunition

This license is the “biggest bang for your buck” type. It allows you to do everything a type 01 does (buy, sell, and repair) but also allows you to assemble and manufacture. This license is perfect for the person who wants to assemble or manufacture AR style rifles, as we find is very popular among our members. A type 07 license is $150 to apply and $150 to renew every three years. We cover the additional steps and potential options on how to get approved for this popular type of FFL.

Type 08 FFL – Importer of Firearms/Ammunition

The type 08 license allows you to import firearms (other than destructive devices) and ammunition (other than ammunition for destructive devices or armor piercing ammunition).

Type 09 FFL – Dealer in Destructive Devices

Destructive devices include grenades, firearms with a bore of over one half inch, including some semi-automatic shotguns. Although destructive devices are legal, some states have banned transfers to civilians. This license is $3,000 to apply.

Type 10 FFL – Manufacturer of Destructive Devices, Ammunition for Destructive Devices, or Armor Piercing Ammunition

Exactly as the name states. This license is $3,000 to apply.

Type 11 FFL – Importer of Destructive Devices, Ammunition for Destructive Devices, or Armor Piercing Ammunition

Once again, exactly as the name states. This license is also $3,000 to apply.
That covers the basic synopsis of the different types of FFL licenses. They are covered more fully in the guide. As you might guess, there are certain types we recommend over others.

Thanks for the information guys! 

I'm not looking to get an FFL or license to manufacture. I build a couple frames a year, shoot them a little until I'm bored with them and then get rid of them like I would with any other firearm I'm bored with. In the past they were given to family and friends. I have one now that I'd like to sell but it's been hinted that it's not legal for me to do so. There's such a wealth of knowledge here that I thought I'd ask. I figured some of you have had the same experience.

I believe if you transfer it from your 01 FFL to yourself then you can dispose of it as if it was made by someone else.  But check with a Firearms lawyer first.

7a the JKR wrote:The FFL holder that I buy guns through has told me that I need to have a manufacturers license to sell 19ll frames that I've built for use with conversions. I do this as a retirement hobby and only do a couple frames a year. 

Does anyone know if this is a fact?

As a standalone statement, it is not a pure fact, but in general it is close to correct.  You need a license if you are assembling a complete firearm from parts, even an 01 FFL can’t do that.  If a gun store (usually type 01 FFL) had every part of a 1911 for sale, it could not assemble them into one and sell it.  You must have the 07 license to do that.

That is a rigid example, there are conditions and situations where having an FFL may or may not apply to you.  I am not going to get into details.  I am going to recommend that YOU get into the details!

Here is the gist.  

The ATF does not want a random person doing things that requires FFL licensing and acting like they are in business to do those things.  They do not want one type of FFL doing the work that requires a different type of FFL and acting as if they are in the business to do those things.

You may be able to get away with saying that you are not in business, just as a hobby.  The ATF may determine otherwise.

You may be able to get away with saying your paper work shows you are just selling guns (serialized receiver) you bought, fixed up, owned for a bit, and want to sell.  The ATF may determine otherwise.

You may be able to get away with saying you are doing it for a friend or family member.  The ATF may determine otherwise.

You may be able to get away with saying it is not a completed firearm that can shoot a projectile.  Actually, you will NOT.  You have substantially enhanced a receiver through adding parts so it is ready to have an upper added and be fired.  The ATF may treat you as part of a chain of 07 licensees on the way to a completed gun.

You see where this is going?  The ATF has published many rulings to go alongside the law.  If anything, they show that the ATF interprets things as needed or directed from above.  You may get a slap on the wrist or you may be the one they hang in the public square as a deterrent!

I am awaiting my 07 FFL interview as we speak, so I would like to think I have been making a decent study of things as they currently stand.  However, I too am learning.  It is convoluted and meant to be so.

Your side hustle is not a black and white issue, you could technically be legal or illegal and THAT is your problem.  You are on the lighter shade of gray to be sure, but do not forget that what you are doing in the strictest sense is performing FFL 07 activities, even though you may not be “in business”.  

If you are dealing in unserialized frames or being anything less than perfect in your paperwork trail, then you better watch out for sure.  Just stay informed by learning what the right thing to do is.  The ATF will not give a care that you did not read the rules and doubly so when tell them you learned the rules from some chumps off the internet.

This link takes you to the page where you can download and peruse 237 pages of the
Federal Firearms Regulations Reference Guide - 2014 Edition (ATF P 5300.4)

https://www.atf.gov/firearms/docs/guide/federal-firearms-regulations-reference-guide-2014-edition-atf-p-53004

It is about as much fun to read as you think it might be! 

the ATF has said you can , as an 01  put together a few firearms or do a few steps that you would otherwise need a 07 to do, 

thing is, ask 15 ATF guys and you will get 15 ATF guys give you a different number, 

reminder,  a few, is not a number, 

so best to not do it for a living, 


what the OP says he does,  suggests the the build , give away, build maybe sell might work, 
go thru the FFL if you feel the need, 

however, a  call to the local ATF branch, or even the Licensing Branch (Martinsburg Wva,) would give the best answer, 

either way,  have fun!

Yeah lyman1903, you are definitely right about a “few” things.   

There is a lot in the law that is subject to interpretation and I think the vagueness is there to allow some flexibility, but you don’t and won’t know if that flexibility works for you or against you until the ATF knocks on your door at 4:00 in the morning with 3 agents and a search warrant. 
 (This actually happened to a friend of mine recently that worked in a local gun shop that came under investigation for possessing a “few” NFA items that improperly crossed state lines from another FFL owned by the same people.  He had nothing to do with it, but the ATF digging for missing automatic weapons in your house is not a situation you want to be in.)

So yeah, the best thing is to not be in a gray area.

We haven’t even brought up liability issues.  I would not want to lose my home and business and savings in a lawsuit so some guy can have a lower!

Don't worry Jim.  I promise I will visit you in jail.  Some of the ones I have seen on TV are long enough, we can shoot matches:-)

Chip

JKR wrote:The FFL holder that I buy guns through has told me that I need to have a manufacturers license to sell 19ll frames that I've built for use with conversions. I do this as a retirement hobby and only do a couple frames a year. 

Does anyone know if this is a fact?

Good article from AR-15 Lowers, there are 10's of thousands of AR's built from serialized and 80% receivers and some of them get sold when the builder wants to move on to another project, not very many of those get sold for a profit.  The ATF is really vague but many people point to the “If an individual is engaged in the business as a manufacturer or seller of firearms then that person must obtain a federal firearms license.” wording but the ATF doesn't address the person that may build a gun then decide to sell said gun or parts of it.  The ATF likes it better when their options are open.

There may be State laws that apply too.

- Dave
crap shoot with fairly good odds

Yup. It's all a little too vague for me. I thought it would be fun to build one now and then and offer it for sale. But I now see that it's way more complicated than I ever thought. Guess I'll take my wife's suggestion and build bird houses for her to sell at her annual garage sale. Or do I need a license for that too? I think my contractors license has expired!

Jim

JKR wrote:Yup. It's all a little too vague for me. I thought it would be fun to build one now and then and offer it for sale. But I now see that it's way more complicated than I ever thought. Guess I'll take my wife's suggestion and build bird houses for her to sell at her annual garage sale. Or do I need a license for that too? I think my contractors license has expired!

Jim

just build them for yourself and sell them as you tire of them. My FFL doesn't require it coming from a FFL.

I'll chime in, as most likely I'm the culprit of this thread.  TMBK, issue boils down more to LE than to ATF.  If firearm is built on serialized lower, good chance that ATF will not consider such as manufacturing, - Chris is absolutely correct in suggesting that no one restricts from building firearm(s) for own use, and subsequently selling them.  You just need to follow laws of the buyers state.  And even IL has law permitting private firearm sale, provided seller checked IL State Police website and confirmed validity of buyers FOID.  If sale is done across of the state lines, in case of IL transfer must be done via FFL.  However there are loopholes, like sale at the gun shows, etc.  Issue raises up when firearm is built up on 80% lower.  Such lower isn't serialized, and subsequently "untraceable".  If such firearm is used in crime, - that is when hell brakes loose, and everyone gets busy tracing it.
Just contributing my pennies......
AP

All I know is Alcohol, Tobacco and Firearms should be a convenience store, not a government agency

PhotoEscape wrote:I'll chime in, as most likely I'm the culprit of this thread.  TMBK, issue boils down more to LE than to ATF.  If firearm is built on serialized lower, good chance that ATF will not consider such as manufacturing, - Chris is absolutely correct in suggesting that no one restricts from building firearm(s) for own use, and subsequently selling them.  You just need to follow laws of the buyers state.  And even IL has law permitting private firearm sale, provided seller checked IL State Police website and confirmed validity of buyers FOID.  If sale is done across of the state lines, in case of IL transfer must be done via FFL.  However there are loopholes, like sale at the gun shows, etc.  Issue raises up when firearm is built up on 80% lower.  Such lower isn't serialized, and subsequently "untraceable".  If such firearm is used in crime, - that is when hell brakes loose, and everyone gets busy tracing it.
Just contributing my pennies......
AP

loophole?

Valid question, Lyman1903!
Read it "so called loopholes".
I stand corrected! Thank you.
AP

Please be aware that the specific case presented by the OP all boils down to "intent". If you manufacture 1911 frames with intent to sell them, then you are required to have an 07 FFL. You are required because of the record keeping and tracing requirements.

Now, if you are making one every few years, then you will probably get away with the "intent" of making it for yourself as described above. If you do "a few" a year, then whether you claim to be doing it for yourself, and then getting bored and selling, the ATF will very likely see if differently. Basically, you are risking some ruling at a later date judging your actions.

I spoke with my ATF agent today and was emailed a PDF that helps clarify if you are manufacturing. It has to do with ITAR registration, but basically my agent will look towards these standards to help define what you are doing.  There is nothing in there about being “in business” or not.  It is assumed you are in business, because you will have an FFL as a prerequisite.

Just check under item 1 for non manufacturing, check under item 2 for manufacturing.

If you do not do anything further than #1 you are “gunsmithing” as an 01.  You can see, this is “Gunsmithing Lite” for very minor and quick repairs and mods, but not substantial upgrading.

If do anything under #2, then you are “manufacturing” and have to register with the DDTC (ITAR) and require an 07.

It goes beyond just handling a frame with or without a serial number.  Are you machining with a power tool (milling machine)? Are you accurizing? Are you chambering?  You need an 07.

Ex. An 01 can install a “drop-in” compensator, but only an 07 can cut the threads for it.

Yes, this getting WAY beyond the OP’s intent, but we have a lot of folks that do stuff on the side and there is not a lot of solid info and boatloads of “Well, I heard that...”   Maybe by sharing this info with each other we can all learn how to stay within the law, but still have a good time.

This is excellent document!!  Thank you, willnewton!  Seeing your location, - I hope, you and yours are doing fine there.  Be safe!!

Jim, I think, you are fine switching back from building bird houses to prepping frames.  Please ping me when next is ready.

AP

You’re welcome.  I will share what I can as it becomes available.

Please note that PDF did not clear the OP from ATF requirements just because OP may not be “manufacturing” he is still “gunsmithing” by dropping parts into a frame which is an 01 FFL activity.

I know you are excited, but a post telling him to get to work and sell you a pistol frame pretty obviously completes Part 2 of the equation and puts him “in business” and that is NOT what you want without having a license.  

I am sure you meant you hope Jim will continue his personal experimentation and learning.  In the future maybe he will even eventually pass a “few” of these projects along as he tires of owning them.

As for the hurricane, I was fortunate this go around, my sister is south of me and nearer the coast and is an insurance agent as well, so is having a heck of a time on all fronts.  BE pistolsmith KC Crawford is also having hurricane issues as well.  I lost the bottom half of my house in hurricane flooding many years ago and it is not an experience I would wish on anyone.