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Old June 5, 2012, 12:19 PM   #1
smgreen
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taking guns in on trade, Texas

I own a welding business in Southern Texas, and I was contemplating taking in firearms for trade. Some of my clients have expressed the desire to trade, rather than pay cash/credit. Being a huge collector/buyer of firearms, the concept of trading my services for them is of a high interest to me. As the economy gets worse, a lot of my more frequent clients are hurting for money, but EVERYONE in this state seems to own guns. I'm NOT wishing to sell guns; I merely want to trade my services as a welder for firearms, when the opportunity presents itself amongst a select few customers.

My first question is this: Is this "legal" and do I need any special type of permit or license to do this? Breaking any state/federal laws is a deal breaker for me. I want to be in full compliance of the law.

My second question is this: Is there any way to shield myself, in the off chance that a firearm is stolen or has been used in the commission of a crime? It's not my intent to accept any stolen property. Like I said, I want to be in full compliance of the law, both on the state and federal level.

Any help is very much appreciated!

Last edited by smgreen; June 5, 2012 at 09:52 PM.
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Old June 5, 2012, 12:57 PM   #2
Spats McGee
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Caveat: I am a lawyer, but I'm not your lawyer. For that matter, I am not licensed in Texas. Accordingly, this post is worth what you paid for it. Were I the one asking your questions, I'd wait a while so that other TFLers can chime in. I'll be the first to tell you that if I've messed up something here, and you act on it, you could wind up in prison.

With that out of the way, smgreen, welcome to TFL!

As far as I know, there's no prohibition on taking firearms in trade in Texas. Federal law is silent as to the issue, and I'd be very surprised in TX had a "no tradin' fer guns" statute. However, there are a couple of provisions of which you need to be aware. Other TFL denizens, please correct me if I'm wrong. I'd hate to steer smgreen wrong on this. Now, you state that you own a business in TX, and I'm operating on the assumption that you reside in TX, as well. If not, that changes the equation.

(1) As a one-time or occasional trade, this is not prohibited by federal law. However, I would be cautious about doing this on a regular basis, espeically if you have an eye towards getting the guns, then selling them for cash. If that's the plan, the BATFE could decide that you are "engaged in the business" of dealing in firearms. If you are "engaged in the business," then you have to have your FFL. The BATFE says, "[t]he term “engaged in the business,” as applicable to a firearms dealer, is defined as a person who devotes time, attention, and labor to dealing in firearms as a regular course of trade or business with the principal objective of livelihood and profit through the repetitive purchase and resale of firearms, but such term shall not include a person who makes occasional sales, exchanges, or purchases of firearms for the enhancement of a personal collection or for a hobby, or who sells all or part of his personal collection of firearms." citing 27 CFR 478.11. Source: http://www.atf.gov/firearms/faq/curi...ess-definition

(2) If anyone who is not a resident of TX wants to make such a trade, you'll need to go through an FFL. If it's a long gun that the person wants to trade you, it can go through an FFL in either your state (TX) or that person's state. If the person wants to trade you a handgun, it must be an FFL in your state (TX).

(3) If it's someone who resides in TX, and you also reside in TX, then TX law governs that. Federal law doesn't require anything special on transfers between private (non-FFL) parties who are residents of the same state.

Hope this was of some help.
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Old June 5, 2012, 01:05 PM   #3
NJgunowner
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I'd also if I was you figure out a way to make sure said firearm isn't stolen.
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Old June 5, 2012, 01:09 PM   #4
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^^^Yeah, NJgunowner's right on that. ^^^
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Old June 5, 2012, 01:37 PM   #5
smgreen
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thank you very much for the time invested in helping me with my concerns; it is greatly appreciated!

I am a Texas resident, and so are these particular customers. This is not something I'd want to do on a regular basis, but I have a few customers in particular who are retired, and they're on a fixed income. Older gentlemen around here seem to accumulate firearms, and I would very much like to be able to help them out and do the work they need without busting their bank. These are reputable members of the community, and I have no question of their status as law abiding citizens. I would definitely not be selling or trading these firearms within the foreseeable future. I am what most people would consider to a collector. If some shady character came out of the blue with a trunk full of firearms and wanted to trade, I would assume they're stolen and I would immediately call the Sheriff's department.

Attaining a copy of a driver's license along with a bill of sale would not be an issue at all. I figure that would be a minimum, but I wanted to make sure there wasn't any other inherent steps to taking a firearm in on trade.
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Old June 5, 2012, 03:01 PM   #6
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Make sure that the guns have a declared value that is reasonable within the marketplace - you will have to declare the value of the guns as income (to the business if you're an LLC or S corp, or to yourself if you're operating as a sole proprietorship or in a partnership) for tax purposes.
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Old June 5, 2012, 03:20 PM   #7
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^ ... Or not!
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Old June 5, 2012, 05:37 PM   #8
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There's really no definitive way to ensure a used gun isn't stolen, even if procured through a dealer, because all stolen guns aren't reported, either because the owner doesn't want to deal with the issue or the owner may not know the gun is no longer in his possession.

I know people who keep a gun or two in vacation cabins that they may not visit for several months; a gun stolen from one of those cabins might not be reported for quite some time.

Most states do not require that a stolen gun report be filed; if the gun hasn't much value, the owner may not want to invest the effort to report the theft. Most states also don't have any form of firearms registration.
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Old June 5, 2012, 06:52 PM   #9
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Spats, I am not a lawyer at all, but I disagree with your analysis. If the OP were a private party and he felt like swapping a handgun for his old canoe or lawn mower, fine. But what he is proposing is accepting firearms as payment for services rendered in the course of his business. I can't help think that's likely to attract the interest of the BATFE. Isn't accepting firearms as payment for business services sort of like "being in the business of buying or selling firearms"?
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Old June 5, 2012, 08:47 PM   #10
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When local PD finds out that your business is the "go to" place to trade in guns the ATF will be the least of your worries.

A Federal Firearms License is required for anyone engaging in the business of dealing in firearms. While the occassional trade is not going to be a problem, if you advertise the fact that you accept payment in guns you will no doubt attract the attention of ATF and law enforcement.

There is no way for a Texas gun dealer to verify that a firearm is not stolen. The Federal NCIC is strictly limited to law enforcement for official business.

Some states may allow access to their own database but NCIC is LE only.

Occassional trades shouldn't be an issue.
Advertising in the local paper "No cash? We take guns!" will get you in trouble real quick.
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Old June 5, 2012, 09:50 PM   #11
smgreen
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Again, all of these comments are greatly appreciated!

This is definitely not something I would advertise; it's more of a special situation I'd allow for a specific few customers. It's been suggested by a few repeat customers I frequently do business with(everyone knows I'm heavily into firearms), but I've politely declined thus far. I think I may continue to do so, after further reading. As much as I'd love to trade a few beads for a 1911, I don't think I want to do so within circumstances that could be misinterpreted by the BATF or any other concerned party.

If it were a simple "yeah, no problem", I might, but it sounds like there's a lot more liability and red tape than what it's worth.

Thanks for the input!
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Old June 6, 2012, 06:12 AM   #12
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AB and DT, thanks for the comments. I suspected that there may be a difference of opinions on this one.

However, I still think that taking a gun as an occasional fee is exempted from the definition of "engaged in the business" so as to require an FFL. The BATFE's own (CFR) definition even points out that "such term shall not include a person who makes occasional sales, exchanges, or purchases of firearms for the enhancement of a personal collection[.]" The fact that he takes the firearm as a fee for work performed in his business, as opposed to a flat trade for a lawn mower, is of no moment. I also think DT's got a good point that advertising "we take guns" in the local paper would probably attract unwanted scrutiny, even if it is later determined not to be engaged in the business.
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Old June 7, 2012, 09:24 AM   #13
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I think Spats is pretty much spot-on. If you're taking an occasional gun in trade for services, this is no different from your buying an occasional gun F2F for your own personal use.

If, OTOH, you're doing it regularly and then selling the guns to generate income, you would quickly fall into the definition of "doing business" in firearms.

I think the points made about not advertising your willingness to take guns in trade is a good one. Advertising would almost certainly be viewed as placing you in the "business."

While you are under no obligation to do so, you could have your local PD run the serial #s of guns you acquire through NCIC to see if they've been reported stolen. If you tell your customers you intend to do this, and they quickly retract their offer to trade, well, that tells you something right there!
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Old June 7, 2012, 01:16 PM   #14
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In regards to trades for services I might be able offer some insight. Now mind you I'm not a lawyer but I do run a side business and have accepted trades as payment...

I train dogs. I either buy puppies, train them then sell them as either started or finished dogs OR I train other people's dogs.

Hunt dog training fees are rather high compared to your run of the mill "I got my dog training degree from the webz" fees. A finished dog can run you anywhere from $3500 to $10000 depending on the quality of the dog and the trainer. Training costs can vary from $1500 on up to $10000 depending on the trainer and what you want the trainer to do with your dog.

My fees typically run around $2000 to $2500 per dog for training from "green" to "finished" depending on how long the dog is in my possession. I understand that today's economy makes it difficult for people to come up with that kind of money. As such I have accepted trades that were offered by people. So far I've taken a car as trade for training services, a boat, 20 cords of firewood and a high end AR-15. I sold the car, boat and wood. I kept the AR. So what am I? Am I in the business of training dogs or am I a car dealer, boat dealer or am I in the firewood business? Better yet am I an arms dealer then because I took an AR in trade for services rendered? I don't believe so. So long as I'm not buying and selling/trading these items for a profit on a regular basis I don't believe that I'm anything but a dog trainer. The majority of my business is still a cash operation but a trade here and there isn't anything to make a fuss about.
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Old June 7, 2012, 06:37 PM   #15
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Quote:
Gary L. Griffiths ....you could have your local PD run the serial #s of guns you acquire through NCIC to see if they've been reported stolen.
While you might find a LEO who would do this- it violates NCIC policy and that officer would have his access to NCIC revoked.
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Old June 7, 2012, 07:28 PM   #16
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It may violate more than NCIC policy. However, there are other databases that LEO may be able to run serial numbers through. I know that our local LE uses something called "Leads Online" to check for stolen goods.
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Old June 7, 2012, 07:38 PM   #17
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I would say for the OP to try to avoid doing this as a common way to obtain payment, unless they also are going to obtain an FFL. I would venture to say if this is a regular way for payment it would be in the business of dealing in firearms because at some point the OP would have to sell them.

Its one thing to do it once every now and again, but totally different (to me at least) to do it as a common and regular thing.

Also, to the comment about the contacting the police to find out if a firearm(s) is listed as stolen...At least here a person needs to take the firearm to the police department and meet with an officer to have a check run on it, and also the firearm(s) are subject to an immediate hold put on them if they do come back listed as stolen. Its not common here, but is done if an officer is available usually. Its not totally that different then a pawnshop which (at least around here) is required to provide records to LE and if an item is reported as stolen matches the description it can be held by LE until it is sorted out.
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Old June 8, 2012, 01:53 PM   #18
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When I had my auto repair shop, I traded four tires for a .30-30, I traded and oil & lube job for some ammo (quite a bit of ammo), a front end job for a riding lawn mower. I have an SKS that was given in lieu of cash payment.

Some people need things done and do not have the money. Others have the money, but also have stuff they no longer want/use. The accountant did tell me I would have to declare the value of the services on my taxes, but I ended up with some pretty neat stuff. Most of it I still have.

So long as your business is not "Work for Guns", an occasional trade for goods and services is acceptable.
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Old June 8, 2012, 04:25 PM   #19
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Occasional trades of guns for services rendered: Good, fine, and legal as can be.

Regular trades of guns for services rendered: Bad, and most likely illegal.

Report the values on your taxes if required by your business type, and only accept gun trades from people you know well and have a good business relationship with.

As long as you're only doing this once every few months, you have nothing to worry about.

And don't sell the guns. Only accept guns you want for your personal collection, don't take a gun you don't want and will have to turn around and sell.
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Old June 9, 2012, 11:32 AM   #20
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If I'm understanding you correctly, what you are talking about is NOT dealing in firearms, but barter. Accepting payment for services in something other than cash.

It just happens that you are willing to accept (some) guns as payment. You could accept eggs, or some other service from the chicken ranch...

I think the only thing you should have to worry about (provided this is not the main way you run your business) is ensuring the tax man(at all levels) gets their share of the "value". If its on the books, taxes must be paid, and regardless of what you accept, they only accept cash.

Lots of people do lots of things for friends, off the books, and barter happens all the time. But, if you are accepting barter as a business practice, that's "on the books" and values must be assigned, records kept, and taxes paid.

Don't think you need to worry about an FFL license, small number, for your personal use seldom falls into the "engaged in the business" category. There is a difference between accepting property (even guns) as payment for a debt, and dealing in firearms. You can even sell the guns you accept, at some point, just as you can any other in your personal collection.

But, obtaining guns, and then selling them, as a means of earning income, IS engaging in the business, and needs a license to be legal.

I'm not a lawyer, this is just my common sense advice, and worth what you paid for it. You should check with a lawyer familiar with your state and local business laws, as well as firearms laws. You may be fine on one side, and have hoops to jump through, or even be prohibited, on the other. I don't know. Find out, so you don't get into trouble.

Good Luck!
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