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Old August 14, 2012, 07:16 PM   #1
BarryLee
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Do You Agree With the LGS Guy??

I was in a LGS discussing buying an AR. He suggested I build one and ran the numbers showing how he could provide the components saving several hundred dollars.

Anyway, during the discussion a legal issue came up and I was curious if the general consensus here would match the shop owners.

He told me that because he did not have a license to manufacture firearms he could not assemble the gun. However, he could walk me through the installation of the trigger assembly in the lower and then he could legally complete the build. Basically he said the lower was the firearm, so if I assembled it he could legally do the rest. I’m not sure I am going to pursue this, but does his interpretation sound appropriate?
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Old August 14, 2012, 09:13 PM   #2
Tom Servo
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Quote:
He told me that because he did not have a license to manufacture firearms he could not assemble the gun.
Untrue. The only time it would be an issue would be if it were being built into a short-barreled rifle, in which case he'd need to be registered Title 7.

Otherwise, the receiver is the firearm, and he's just attaching parts to it.
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Old August 14, 2012, 10:53 PM   #3
BarryLee
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Quote:
Otherwise, the receiver is the firearm, and he's just attaching parts to it.
Yes, that's what he said, but for some reason he thought the customer would need to install the trigger assembly. Either way it sounds like it would be legal for him to assit assembling the rifle.
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Old August 15, 2012, 08:37 AM   #4
Bartholomew Roberts
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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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Old August 15, 2012, 09:48 AM   #5
drcook
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With AR type rifles, the LOWER reciever is the serial numbered part. You can buy any and all parts of an AR including the upper reciever without going through an FFL. The upper is just a collection of parts. I have bought 2 myself for building up, including the bolt, new gas tube etc etc., for assembly onto my existing lowers.

If the lower reciever is NOT present, then the upper and anything else is a non-gun. I can ship my uppers from my personal rifles to anyone directly.

He could help you screw the barrel onto that upper reciever and he really isn't working on a "gun" until he touches the lower reciever.


In fact, there used to be (and maybe still is) a company that sold 50 BMG's uppers that attached to AR lowers. you could walk into a store, put your money down and walk out without any forms what so ever.
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Old August 15, 2012, 10:39 AM   #6
Fishing_Cabin
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First to start off with, here are 2 links, and facts that discuss this.

http://www.atf.gov/firearms/faq/manu...er-gunsmithing

Quote:
Originally Posted by ATF, link above
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.


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.
http://www.ttb.gov/firearms/manufacturers.shtml

Quote:
Originally Posted by TTB
1. Am I a manufacturer?

You are a manufacturer if you manufacture or produce a taxable article from scrap, salvage, junk material, new material, or raw material by:
•processing, manipulating, or changing the form of an article; or
•combining or assembling two or more articles.

[Refer to 27 CFR 53.11 (definition of manufacturer)]

2. If I manufacture an article and sell it in knockdown condition, am I liable for FAET?

Yes. If you manufacture an article and sell it in knockdown condition (unassembled but complete as to all component parts), you are liable for FAET.

[Refer to 27 CFR 53.11 (definition of manufacturer)]

3. If I purchase an article in knockdown condition and assemble it, am I liable for FAET?

If you purchase an article in knockdown condition and assemble it, your liability for FAET will depend on the following factors:
•the amount of labor, material, and overhead required to assemble the article; and

•whether you assemble the article for business or personal use.

[Refer to 27 CFR 53.11 (definition of manufacturer)]
The line between Gunsmith and Manufacturer can be a bit of a blur at times.

First, as you can see from the ATF faq above, section 6, mentions building and selling 1 (one) firearm, does not mean they are a manufacturer, but how do you know how many the FFL has built? Just going from memory here, there is no exact number of firearms that is the dividing line between gunsmith and manufacturer.

Second, going by the TTB above in bold, a FFL buying a firearm in knockdown condition, that they intend to sell to a customer, and then build said firearm for the customer to avoid the Manufacturing aspect may still be in hot water, because the feds want their money.

There is a 50 firearm exemption to the TTB now, but there again the question is how many firearms has your FFL assembled already? Link to the exemption is http://www.ttb.gov/pdf/50gun_exemption.pdf

Also, which is important to note is ATF Rul. 2010-10
http://www.atf.gov/regulations-rulin...ng-2010-10.htm

Quote:
Originally Posted by ATF Ruling 2010-10
A dealer is “engaged in the business” of gunsmithing, as defined in 18 U.S.C. 921(a)(21)(D) and 27 CFR 478.11, when he/she receives firearms (frames, receivers, or otherwise) provided by a customer for the purpose of repairing, modifying, embellishing, refurbishing, or installing parts in or on those firearms. Once the work is completed, the gunsmith returns the firearms, and charges the customer for labor and parts......
Notice the bold part above, where it mentions "provided by customer" which means, from my understanding from speaking with ATF inspectors is that the FFL/Gunsmith does not supply all of the parts for the build.


What has been recommended locally, and what I feel is the safe way around this for both your FFL and yourself, is to buy part of the AR-15 kit from your FFL, and then buy the other part from another business. That way since your FFL isnt selling you the complete kit, and assembling it for you, there is no tax required either, and he can assemble it for you legally as well.

How the ATF determines if the FFL/Gunsmith is actually a Gunsmith or a Manufacturer, is also spelled out in ATF Ruling 2010-10.

Quote:
To facilitate inspection and ensure that ATF can determine that a licensed dealer-gunsmith is not engaged in the business of manufacturing firearms for his own sale or distribution without a manufacturer’s license, licensees may take the following steps:


(1) maintain a copy of the current, active license of all contracted licensees;

(2) maintain a copy of the contract and all instructions for gunsmithing services rendered;

(3) maintain a copy of the invoices for gunsmithing services;

(4) timely and accurately reflect all firearms acquisitions and dispositions consistent with the contract for gunsmithing services rendered; and

(5) in the case of a licensed dealer-gunsmith, maintain required bound acquisition and disposition records for all gunsmithing activities separate from other dealer’s records.

Unless licensees take these steps, ATF may presume that a particular dealer-gunsmith is engaged in his own business of manufacturing firearms for sale or distribution without a manufacturer’s license, and take corrective administrative or other enforcement action.
The record keeping requirement is where the ATF will look and find out what is going on because if the Inspector comes in and notices the FFL/Gunsmith assembling alot of rifles the same or next day of a lower transfer, and also note from the gunsmithing invoice and instructions for services rendered show that on the same day the FFL/Gunsmith sold you all of the other parts along with the lower, they may argue that the FFL/Gunsmith is a manufacturing firearms without a license.

The concern with the above beyond the FFL/Gunsmith vs Manufacturer, is that the FFL/Gunsmith may sell you the complete firearm kit, unassembled, and say, "hey, if I transfer this to you before I build it, I dont have to collect FAET, that saves you money, and after the paperwork is done I will build your firearm."

I know Bartholomew Roberts mentioned that a change in the law has affected this, but I am unfamilier with it, the above is the best I can offer for advice at this time.

Last edited by Fishing_Cabin; August 15, 2012 at 01:31 PM.
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Old August 15, 2012, 04:59 PM   #7
Bartholomew Roberts
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Quote:
I know Bartholomew Roberts mentioned that a change in the law has affected this, but I am unfamilier with it, the above is the best I can offer for advice at this time.
Again, I am just going from memory, which is fallible, but I believe any changes in the law happened prior to 2009, so the 2010 rulings should reflect current law (heck, they may even be the clarification I kind of half remembered). Thanks for the detailed reply!
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Old August 15, 2012, 07:40 PM   #8
ltc444
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For years I have been looking at building an AR. Since I wanted a basic rifle and not an ultra high performance tack driver with all of the bells and whistles the economic issues were a wash. in other words the cost of building vs buying an off the rack rifle were about the same for a basic AR in 223.

If I find a "need" for an ar in a larger caliber, Then I will probably build one in a 25 caliber. If the action cannot be adapted to the 257 Roberts, I will probably build a rifle based on a 243/25 wildcat cartridge which I saw about thirty years ago.
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Old August 15, 2012, 09:30 PM   #9
Eghad
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As said above there a certain issues with a SBR. The only thing I had to do was a transfer for the lower through an FFL because it has the serial number.
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