View Full Version : Becoming a Class III dealer

Rant Casey
April 6, 2008, 04:17 PM
What exactly is involved? Any Class III dealers on here? Now what if one were to become a class III dealer and not have a store front or even sell Class III weapons? Is that legal?

April 6, 2008, 04:24 PM
It has to be a legitimate business. You don't have to have a store front, but you do have to be in business.

Rant Casey
April 6, 2008, 04:26 PM
So I could do a few NFA sales/transfers here and there and have it not be a full time thing and it would be legit?

April 6, 2008, 04:50 PM
So I could do a few NFA sales/transfers here and there and have it not be a full time thing and it would be legit?

It would all depend on the agent who does your compliance inspection. If you're thinking you can get the license and have all the cool cheap toys(post 86 samples) and just run a "front" business, it's already been tried. You need someone to write the demo letters for you so you can get what you need for the demo etc. Best case they pull your license, worst case they prosecute to the fullest. i.e. tax evasion, conspiracy to commit fraud, fraud, etc. IMHO, It's not worth taking a chance if you're not planning on it being a legit business.
With that said, an FFL and SOT are in my plans to supplement my soon to be retirement income. Hopefully by Christmas for the FFL.

Rant Casey
April 6, 2008, 04:54 PM
Yeah, i'm not looking to scam the atf, that's a whole world of trouble im not interested in, I just wasn't entirely sure on exactly how that worked.

April 6, 2008, 08:33 PM
There is an NFA dealer here in Denver that only does it part time during his regular job...

April 6, 2008, 08:50 PM
There is an NFA dealer here in Denver that only does it part time during his regular job...

There is no problem with that, the problem is when you have an FFL/SOT a bunch of items, but do no transactions other than to yourself or the business in your bound book.

April 21, 2008, 01:56 AM
You can become a home based SOT. You will first need to obtain a business licence for your home premisis (zoning laws will come in to play), you will then need to apply for your 01 FFL. This is a long and wierd application. You'll have a couple ATF "Compliance Inspections" from the ATF. They will want to know you do intend to do business. Once the FFL is granted you need to be aware that your ENTIRE premisis will be up for inspection at their discression for "compliance inpsections"... Although the rules state that only the space designated for business is inspectable, they will inspect your entire house (I have a friend that was home based until he got inspected.. then he moved his operation to a work-shed he keeps in his yard. It has a seperate address and all that so now the ATF can't come into him home)... Once you get the FFL granted, you then apply for a Class 3 SOT (its a simple 1 page form) and attach a $500.00 check to that. That will come back approved in about 2/3 months (if you can have an FFL you will be granted the SOT). Every year the SOT will cost you $500.00.

When you get the SOT you can purchase pre-86 dealer sample & transferable machinguns, Short shotguns & rifles, and AOWs. For post-86 dealer sample guns you HAVE to have a LEO Demonstration letter signed. Once you have that you can aquire that particular model gun and keep it as long as you maintain your SOT status. When you give up your SOT status you either have to sell beforehand, torch to ATF Specs, or turn/transfer to police departments all your Post-sample guns. The rest transfers tax-free into your personal inventory (thats what the 500.00 tax is there for.. its pre-pays the transfer tax.. this is why people that use the SOT for personal reasons and not for business get busted for tax evaison and fraud)... ALL YOUR HOME BASED FFL's /SOT's do it for the fun of it. For the personal gain & to aquire NFA WITHOUT having to They just use the SOT's to make a little extra money on the side.. and the ATF is ok with this.. it does not have to be full time..)

Federal Paperwork requirements (State Rules Vary):

1. Every time an item moves (in or out of inventory, reguradles of reason) you will have to input that into your "Bound Book" also known as "Disposition Record".

2. Every time you make a sale you are REQUIRED to maintain the 4473 indefinetly. These forms DO NOT EXPIRE.

3. For EVERY sale except NFA you will have to make a telephone call to your State's NIC Check center. BEFORE the customer can take posession of the item.

4. There are no minimun sales requirement set. Thats up to the individual SAIC stationed in your local ATF Branch. You want to try VERY HARD to get as many sales as you can. You HAVE to make a decernable effort to attract and aquire business! You annual compliance checks they are looking for this...

5. You have to keep meticulous records in your Bound Book! They will nit-pick the $hit out of this! They will also inspect your filing system of your 4473's and other state required paperwork.

6. For your first couple years you can expect a few inspections a year. By not just the Feds, but the local authorities as well. And dont expect them to call ahead of time. If you're at your full time job, be prepaired to leave early to come home to let them in... (they CANNOT break into your home for this, you MUST be present).

7. Also be prepaied for them to be rude. They are doing this on purpose. They want to see how well you handle yourself with their afrontofness. Do NOT be rude back to them. Be sturn, but professional AT ALL TIMES. If they insult you ask them to leave. Its rather simple actually.. but a LOT to get right.

8. They do not expect a new FFL to have everything right the first time around. They will give you a lot of grief over your mistakes, but they generally will not make you talk to the magistrate unless its the same mistakes over a couple inspections. If you are attempting to do it right they will answer all questions you have. The interviews they give prior to the ATF inspections is the best time to pick their brains on proper paperwork handeling questions. Get on Brownell's and purchase their copy of the ATF Dealers Disposition Record/Bound Book.. Ask other FFL's in your area how they do theirs... most FFL's that you're friendly with will help you out... They also expect that you know a good deal on how to do this BEFORE you apply for your FFL.

Just my 2 cents. Doug

(p.s I cant spell fer crap, and I aint gunna worry about usen Microsuft Werd rite naw.)

April 21, 2008, 08:47 AM
My dealer is an doctor who became a dealer just to have cool NFA toys and does it from his house, so it can be done.

But as pointed out above, you have to actually be doing transfers, rather than just amassing a Terminator type armory for when the Machines rise up. ;)

April 27, 2008, 12:03 AM
"But as pointed out above, you have to actually be doing transfers, rather than just amassing a Terminator type armory for when the Machines rise up."

Funny, never heard that one. All of the ones I have dealt with out here just make the rare sale (little cash never hurts) but mostly stockpile for investment and to have fun.

This guy gave the NRA museum a run for it's money in Class III. He died of cancer a few years back though. Never said a word or had a complaint about ATF.

May 1, 2008, 04:35 PM
I'm applying for my 07 FFL and will be getting my SOT2 thereafter. I will be manufacturing machine guns and dealing in NFA for LE agencies and will be making suppressors for both LE and civilian sales. MI is unclear whether or not manufacture of SBR, SBS, or AOW by licensed companies is allowed. If it is, I will be manufacturing them for civilians too.

I just have to get the certificate back for my LLC filing with the state and then I can mail out the FFL app.

May 26, 2008, 02:03 PM
If I get a 01/SOT and set up a shooting range/gun store. Can rent out my post dealer samples to civi's that come to the range to shoot?

May 26, 2008, 02:16 PM
They can shoot them, yes. They must not leave the premises and I'd have an RO right next to them.

May 26, 2008, 04:44 PM
You're gonna need the PD 'love letter' to obtain those samples in the first place...

May 26, 2008, 07:52 PM
If you want to rent Posties, you will want to get a 07FFL/C2 SOT. This is a manufacturer FFL/SOT status. This way you can make/convert weapons to fire full auto and do not need the LEO Demo Letter. If you want to aquire a ready-made you will still need the letter.

The BATFE frowns upon heavely the rental of Post Sample/Any dealer sample machine guns. Although there are no legalities preventing the rental of post samples, they have tried to stick the "illegal tranferance of a machine gun" on people that have rented them out in the past. If you keep them on your premisis with a Range Officer with them there isn't a whole lot they can do to stop you from renting them out. It will -CENSORED--CENSORED--CENSORED--CENSORED- them off, but they can eat a.... cucumber...