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U.S.
Bureau of Alcohol, Tobacco,
Office of the Director |
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Washington,
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18 U.S.C. 921(a): DEFINITIONS
18 U.S.C. 922(a)(1)(A): LICENSES REQUIRED
18 U.S.C. 923(a): LICENSES REQUIRED
18 U.S.C. 923(i): Identification of Firearms
27 CFR 478.11: DEFINITIONS
27 CFR 478.41(a): LICENSES REQUIRED
27 CFR 478.92: Identification of Firearms
Any person licensed as a dealer-gunsmith who
repairs, modifies, embellishes, refurbishes, or installs parts in or on
firearms (frames, receivers, or otherwise) for, or on behalf of a licensed
importer or licensed manufacturer, is not required to be licensed as a
manufacturer under the Gun Control Act, provided the firearms for which such
services are rendered are: (1) not owned, in whole or in part, by the
dealer-gunsmith; (2) returned by the dealer-gunsmith to the importer or
manufacturer upon completion of the manufacturing processes, and not sold or
distributed to any person outside the manufacturing process; and (3) already
properly identified/marked by the importer or manufacturer in accordance with
Federal law and regulations.
ATF Rul. 2010-10
The Bureau of Alcohol, Tobacco, Firearms and Explosives
(ATF) has received inquiries from firearms industry members asking whether
licensed dealer-gunsmiths who would be engaged in the business of repairing,
modifying, embellishing, refurbishing, or installing parts in or on firearms
for, or on behalf of a licensed importer or manufacturer are required to be licensed
as manufacturers and abide by the requirements imposed on manufacturers.
In recent years, licensed firearms importers and
manufacturers have contracted certain firearms manufacturing activities on
their behalf to specialized licensed firearms manufacturers. Such activities
include applying special coatings and treatments to firearms (e.g.,
bluing, anodizing, powder-coating, plating, polishing, heat/chemical
treating). This has caused confusion over which importers and manufacturers
are required to identify/
mark firearms and maintain permanent records of importation
or manufacture. For this reason, licensed importers and manufacturers have
asked whether licensed dealer-gunsmiths, who are not required to mark firearms
and keep production records, may engage in such manufacturing activities on
their behalf.
The Gun Control Act of 1968 (GCA), Title 18, United States
Code (U.S.C.), section 923(a), provides, in part, that no person shall engage
in the business of importing, manufacturing, or dealing in firearms until he
has filed an application with and received a license to do so from the Attorney
General. A “firearm” is defined by 18 U.S.C. 921(a)(3) to include any weapon
(including a starter gun) which will or is designed to or may readily be converted
to expel a projectile by the action of an explosive, and the frame or receiver
of any such weapon. The term “manufacturer” is defined by 18 U.S.C. 921(a)(10)
as any person engaged in the business of manufacturing firearms or ammunition for
purposes of sale or distribution. As applied to a manufacturer of firearms,
the term “engaged in the business” is defined by 18 U.S.C. 921(a)(21)(A) and 27
CFR 478.11, as a “person who devotes time, attention, and labor to
manufacturing firearms as a regular course of trade or business with the
principal objective of livelihood and profit through the sale or distribution
of the firearms manufactured.” The term “dealer” is defined by 18 U.S.C.
921(a)(11)(B) and 27 CFR 478.11 to include “any person engaged in the business
of repairing firearms or of making or fitting special barrels, stocks, or
trigger mechanisms to firearms …” (i.e., a gunsmith). As applied to a
gunsmith, the term “engaged in the business” is defined by 18 U.S.C.
921(a)(21)(D) and 27 CFR 478.11 as a “person who devotes time, attention, and
labor to engaging in such activity as a regular course of trade or business
with the principal objective of livelihood and profit …”
In Revenue Ruling 55-342 (C.B. 1955-1, 562), ATF’s
predecessor agency interpreted the meaning of the terms “manufacturer” and
“dealer” for the purpose of firearms licensing under the Federal Firearms Act,
the precursor statute to the GCA. It was determined that a licensed dealer
could assemble firearms from component parts on an individual basis, but could
not engage in the business of assembling firearms from component parts in
quantity lots for purposes of sale or distribution without a manufacturer’s
license. Since then, ATF has similarly and consistently interpreted the term
“manufacturer” under the GCA to mean any person who engages in the business of
making firearms, by casting, assembly, alteration, or otherwise, for the
purpose of sale or distribution. Such persons must have a manufacturer’s
license under the GCA, maintain permanent records of manufacture, and submit
annual manufacturing reports. The Revenue Ruling did not address whether
dealer-gunsmiths who engage in the business of repairing, modifying, embellishing,
refurbishing, or installing parts in or on firearms for, or on behalf of an
importer or manufacturer are engaged in the business of manufacturing firearms
requiring a manufacturer’s license.
Manufacturing
ATF’s long-standing position is that any activities that
result in the making of firearms for sale or distribution, to include
installing parts in or on firearm frames and receivers, and processes that
primarily enhance a firearm’s durability, constitute firearms manufacturing
that may require a manufacturer’s license. In contrast, some activities are
not firearms manufacturing processes, and do not require a manufacturer’s
license. For example, ATF Ruling 2009-1 (approved January 12, 2009) explained
that performing a cosmetic process or activity, such as camouflaging or
engraving, that primarily adds to or changes the appearance or decoration of a
firearm is not manufacturing. Likewise, ATF Ruling 2009-2 (approved January
12, 2009) stated that installing “drop-in” replacement parts in or on existing,
fully assembled firearms does not result in any alteration to the original
firearms. Persons engaged in the business of these activities that do not
constitute firearms manufacturing need only obtain a dealer’s license.
Although installing parts in
or on firearms, and applying special coatings and treatments to firearms are
manufacturing activities, the definition of “manufacturer” in 18 U.S.C.
921(a)(10) and 27 CFR 478.11 also requires that a person be “engaged in the
business” before the manufacturer’s license requirement of section 923(a)
applies. Thus, a person who manufactures a firearm will require a
manufacturer’s license if he/she devotes time, attention, and labor to such
manufacture as a regular course of trade or business with the principal
objective of livelihood and profit through the sale or distribution of the
firearms manufactured. If the person is performing such services only for
a customer on firearms provided by that customer, and is not selling or
distributing the firearms manufactured, the person would be a “dealer” as
defined by 18 U.S.C. 921(a)(11)(B) and 27 CFR 478.11, requiring a dealer’s
license, assuming the person is “engaged in the business” as defined in 18
U.S.C. 921(a)(21)(D) and 27 CFR 478.11 (i.e., “gunsmithing”).
Gunsmithing
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. As with an
individual customer, a licensed dealer-gunsmith may receive firearms (properly identified
with a serial number and other information required by 27 CFR 478.92) and
conduct gunsmithing services for a customer who is a licensed importer or
manufacturer. A dealer-gunsmith is not “engaged in the business” of
manufacturing firearms because the firearms being produced are not owned by the
dealer-gunsmith, and he/she does not sell or distribute the firearms
manufactured. Once the work is completed, the dealer-gunsmith returns the
firearms to the importer or manufacturer upon completion of the manufacturing
processes, and does not sell or distribute them to any person outside the
manufacturing process. Under these circumstances, the licensed dealer-gunsmith
is not “engaged in the business” of manufacturing firearms requiring a
manufacturer’s license.
In contrast, a dealer-gunsmith may make or acquire his/her
own firearms, and repair, modify, embellish, refurbish, or install parts in or
on those firearms. If the dealer-gunsmith then sells or distributes those
firearms for livelihood and profit, the dealer-gunsmith is engaged in his/her own
business of manufacturing firearms. A person engaged in the business of
manufacturing firearms for sale or distribution is required to be licensed as a
manufacturer, identify/mark all firearms manufactured, maintain permanent
records of manufacture, submit annual manufacturing reports, and pay any taxes
imposed on firearm manufacturers. A licensed dealer-gunsmith who becomes
licensed as a manufacturer must also segregate all firearms manufactured for
that business separately from firearms for which gunsmithing services are being
performed.
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.
Identification of Firearms
The GCA at 18 U.S.C. 923(i) provides, in part, that licensed
manufacturers and importers must “identify” each firearm manufactured or
imported by a serial number in the manner prescribed by regulation. Federal
regulations at 27 CFR 478.92(a)(1) further require importers and manufacturers
to identify each firearm by engraving, casting, stamping (impressing), or
otherwise conspicuously placing the individual serial number and certain
additional information - the model (if designated), caliber/gauge,
manufacturer’s name, and place of origin on the frame, receiver, or barrel - at
a minimum depth. Section 478.92(a)(2) specifies that a “firearm frame or
receiver that is not a component part of a complete weapon at the time it is
sold, shipped, or otherwise disposed of … must be identified as required by
this section.”
Because dealer-gunsmiths are not required to identify
firearms manufactured, it is incumbent upon the importer or manufacturer, prior
to shipping firearms to a dealer-gunsmith for gunsmithing services, to mark
them with a serial number and other required information. With regard to
frames and receivers shipped separately, section 478.92(a)(2) provides, in
part, that the manufacturer or importer must mark all frames and receivers
prior to shipment with all information required by section 478.92 (i.e.,
serial number, model (if designated), caliber/gauge, manufacturer’s name, and
place of origin). This will ensure that the frames and receivers can be traced
by ATF in the event they are lost or stolen during the manufacturing process.
Held, any person licensed as a
dealer-gunsmith who repairs, modifies, embellishes, refurbishes, or installs
parts in or on firearms (frames, receivers, or otherwise) for, or on behalf of
a licensed importer or licensed manufacturer, is not required to be licensed as
a manufacturer under the Gun Control Act, provided the firearms for
which such services are rendered are: (1) not owned, in whole or in part, by
the dealer-gunsmith; (2) returned by the dealer-gunsmith to the importer or
manufacturer upon completion of the manufacturing processes, and not sold or
distributed to any person outside the manufacturing process; and (3) already
properly identified/marked by the importer or manufacturer in accordance with
Federal law and regulations.
This ruling is limited to an interpretation of the
requirements imposed upon importers, manufacturers, and dealer-gunsmiths under
the Gun Control Act of 1968, and does not apply to persons making or
manufacturing firearms subject to the National Firearms Act, 26 U.S.C. 5801 et.
seq.
Revenue Ruling 55-342, C.B. 1955-1, 562, is hereby
clarified. To the extent this ruling may be inconsistent with any prior letter
rulings, they are hereby superseded.
Date approved: December 27, 2010
Kenneth E. Melson
Acting Director