[freakshow10mm]

1.What forms do I need to have approved? What are the related taxes for these forms? I have talked to my local Sheriff and he agreed to sign whatever is required for the LEO. I have also passed several FBI checks lately for insurance and security licenses.

A type 07 FFL is required and you need to pay a SOT tax of $1000 per year to be able to manufacture NFA weapons like machine guns and suppressors. You also need to register with the State Department for ITAR. That fee is $1750 per year and it doesn't matter if you don't import/export, the law clearly says you need to register no matter what. There is R&D exceptions, but you have to submit a letter to the State Department and get it approved. I have my 07 FFL pending right now. I plan on becoming a class II manufacturer to make NFA weapons.

2.I would not intend on making it in 9X19 Parabellum due to the increasing price of this cartridge. Someone indicated I would have to be careful to use a pistol cartridge as limitations on machine guns were much tighter than for SMGs. Is this true? I find it hard to believe I would have more trouble making what was technically a machine gun in .22LR, as opposed to say, a sub-machine gun in .357 magnum.

Doesn't matter what caliber it is. If the machine gun was manufactured after May 19, 1986 a mere civilian can't possess it or make it. Only LE and government agencies can possess them, as well as the special dealers that pay the SOT tax to deal in all NFA weapons.

3.Does it matter where I do the machining? I am beginning to build a machine shop, but have access to several relatively advanced facilities through clients. Is there a problem if I do work at their facilities?

If you are properly licensed, you can only perform the manufacturing, including making parts or finishing parts, on the premises that is listed on the license. If you perform work at more than just that location, a separate FFL and SOT tax needs to be paid. If you subcontract any work out, even for a simple part, that subcontractor must have a type 07 FFL, pay the class II SOT, and register with ITAR. The laws are very specific and there is no leeway.

If you are not going to be selling to LE or government agencies or even if you are merely doing R&D, don't get the license. If you are not engaged in a legitimate firearms business, the ATF will shut you down and hang you.

Anyone know if a security contractor for State Department can buy? Maybe I can make it then sell it to a friend immediately.

No. The weapon may be transfered to the State Department and they can issue it to anyone, but your friend cannot own it or buy it.