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There was some confusion around the term "manufacturing a firearm" for some time. ATF was taking the position that common gunsmithing alterations to an existing firearm constituted "manufacture" of a new firearm and required payment of the excise tax. I may be foggy on the exact details as it has been awhile. Congress passed a law to clarify the issue a couple of years ago.
Maybe your LGS is thinking about that problem and hasn't heard of the changes?
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