ATF's Proposed Revision of “Engaged in the Business” as a Dealer in Firearms

[gc70]

ATF has issued its proposed rule that revises the definition of “Engaged in the Business” as a Dealer in Firearms.

https://www.atf.gov/firearms/definition-engaged-business-dealer-firearms

 

[ballardw]

At 108 pages going to take a while to read.

 

[Bill DeShivs]

They are saying, basically, that anyone who sells a firearm is a dealer, and must be licensed and run a background check. I'm sure you could sell through an existing dealer.
It makes private transfers of firearms illegal-because you are not a licensed "dealer."

 

[JohnKSa]

Here's a link to the rule. A lot of it is explanatory material, the actual rule starts on page


https://www.atf.gov/rules-and-regul...prm-engaged-business-dealer-firearms/download

I have not read through it all, but my very quick and dirty overview doesn't reveal any big changes, only clarifications.

Here's one excerpt explaining what it means to be engaged in the business of dealing firearms.

"(c) Dealer in firearms other than a gunsmith or a pawnbroker. (1) A person who
devotes time, attention, and labor to dealing in firearms as a regular course of trade or
business to predominantly earn a 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 the person’s personal collection of firearms. "​

This looks very similar to the old interpretation.

 

[44 AMP]

Admitting to not having gone through it line by line, looks like 100+ pages of drivel "explaining" what we already knew and not making any significant changes, though it is possible I missed something....

Our tax dollars a work, yet again, I guess....

 

[gc70]

The change in definitions appears intended to capture people trading guns as a part-time activity. Below are excerpts from the discussion in the proposed rule.

• The Gun Control Act of 1968 required anyone "engaged in the business" of dealing in firearms to obtain an FFL.
• The Firearms Owners’ Protection Act of 1986 defined "engaged in the business" of dealing in firearms as "a regular course of trade or business with the principal objective of livelihood and profit."
• The Bipartisan Safer Communities Act of 2022 defines "engaged in the business" of dealing in firearms as "a regular course of trade or business to predominantly earn a profit."

According to the BSCA’s sponsors, the BSCA’s change to the definition was driven by "confusion about the GCA’s definition of 'engaged in the business,' as it pertained to individuals who bought and resold firearms repetitively for profit, but possibly not as the principal source of their livelihood."

The legislative history also reveals that Congress did not intend to limit the license requirement to only persons for whom selling or disposing of firearms is a principal source of income or a principal business activity. The Committee Report stated, "[t]hus, this provision would not remove the necessity for licensing from part-time businesses or individuals whose principal income comes from sources other than firearms, but whose main objective with regard to firearm transfers is profit, rather than hobby."

 

[Aguila Blanca]

While admitting that, like the NRA, the NSSF needs to appear active to justify its existence, they haven't (IMHO) engaged in any of the blatant rabble-rousing and scare tactics employed in recent years by the NRA. With that said, here's what the NSSF had to say in a recent e-mail blast:

The Biden administration’s Department of Justice (DOJ) announced a proposed rule that would expand the definition of individuals “engaged in the business” of selling firearms and require a federal firearms license in order to complete FBI National Instant Criminal Background Check System (NICS) verifications. The Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) estimates the proposed rule would affect anywhere from 24,500 to 328,000. NSSF told media that on initial examination, the proposed rule presents significant concerns and goes beyond what the law provided for and would “sweep in ordinary citizens and require them to obtain a federal firearms license.” The Reload reported that U.S. Sen. John Cornyn’s (R-Texas) office, who co-authored the Bipartisan Safer Communities Act (BSCA) that redefined what it means to be “engaged in the business,” said the legislation was narrowly tailored and “the Biden admin should expect for this rule to be struck down because it is unconstitutional.” Officials with Sen. Joni Ernst (R-Iowa) said, “President Biden is twisting the law to fit his liberal gun-grabbing agenda,” adding, “His administration’s latest attack on lawful gun owners clearly oversteps both the intent and the text of the law, at the expense of the average gun seller.”

 

[MTT TL]

The meat of it appears to be:

Rather than establishing a minimum threshold number of firearms purchased or
sold, this rule proposes to clarify that, absent reliable evidence to the contrary, a person
will be presumed to be engaged in the business of dealing in firearms when the person:
(1) sells or offers for sale firearms, and also represents to potential buyers or
otherwise demonstrates a willingness and ability to purchase and sell additional
firearms;
(2) spends more money or its equivalent on purchases of firearms for the purpose
of resale than the person’s reported taxable gross income during the applicable period of
time;
(3) repetitively purchases for the purpose of resale, or sells or offers for sale
firearms-
(A) through straw or sham businesses, or individual straw purchasers or
sellers; or
(B) that cannot lawfully be purchased or possessed, including:
(i) stolen firearms (18 U.S.C. 922(j));
(ii) firearms with the licensee’s serial number removed, obliterated, or
altered (18 U.S.C. 922(k); 26 U.S.C. 5861(i));
-30-
(iii) firearms imported in violation of law (18 U.S.C. 922(l), 22 U.S.C.
2778, or 26 U.S.C. 5844, 5861(k)); or
(iv) machineguns or other weapons defined as firearms under 26
U.S.C. 5845(a) that were not properly registered in the National Firearms
Registration and Transfer Record (18 U.S.C. 922(o); 26 U.S.C.
5861(d));
(4) repetitively sells or offers for sale firearms—
(A) within 30 days after they were purchased;
(B) that are new, or like new in their original packaging; or
(C) that are of the same or similar kind (i.e., make/manufacturer, model,
caliber/gauge, and action) and type (i.e., the classification of a firearm as a rifle,shotgun, revolver, pistol, frame, receiver, machinegun, silencer, destructive
device, or other firearm);
(5) who, as a former licensee (or responsible person acting on behalf of the former
licensee) sells or offers for sale firearms that were in the business inventory of such
licensee at the time the license was terminated (i.e., license revocation, denial of license
renewal, license expiration, or surrender of license), and were not transferred to a
personal collection in accordance with 18 U.S.C. 923(c) and 27 CFR 478.125a; or
(6) who, as a former licensee (or responsible person acting on behalf of a former
licensee) sells or offers for sale firearms that were transferred to a personal collection of
such former licensee or responsible person prior to the time the license was terminated,
unless: (A) the firearms were received and transferred without any intent to willfully
evade the restrictions placed on licensees by chapter 44, title 18, of the United States
Code; and (B) one year has passed from the date of transfer to the personal collection.
Any one or a combination of the circumstances above gives rise to a presumption
in civil and administrative proceedings that the person is engaged in the business of
dealing in firearms and must be licensed under the GCA. The activities set forth in these
rebuttable presumptions are not exhaustive of the conduct that may show that, or be
considered in determining whether, a person is engaged in the business of dealing in
firearms. Further, as noted above, while the criteria may be useful to courts in criminal cases when instructing juries regarding permissible inferences, the presumptions outlined
above shall not apply to criminal cases.
At the same time, the Department recognizes that certain transactions are not
likely to be sufficient to support a presumption that a person is engaging in the business
of dealing in firearms. For this reason, the proposed rule also includes examples of when
a person is not presumed to be engaged in the business of dealing in firearms.
Specifically, under this proposed rule, a person would not be presumed to be engaged in
the business requiring a license as a dealer when the person transfers firearms only as
bona fide gifts, or occasionally sells firearms only to obtain more valuable, desirable,
or useful firearms for their personal collection or hobby, unless their conduct also
demonstrates a predominant intent to earn a profit.

It's quite a crack down from the past. However private party sales are still allowed.

 

[44 AMP]

However private party sales are still allowed.

But possibly not for a profit???

(4) repetitively sells or offers for sale firearms—

I wonder, can this section stand alone and be used against individuals who on more than one occasion in their lives, bought a gun, didn't like it and turned around and sold it?? Without waiting 30 days, or a year, or some other arbitrary length of time??

Could they use this to try and hang you if, say you bought a gun at a show (or a shop?) and on your way out the door someone offers you $100 more than you paid, and you accept the offer??

Sure, you could probably beat that in court, but you'll be in court, costing money and time to beat the charges...

I smell a rat, or at least the possibility of of a trap, but then, I smell funny anyway

 

[MTT TL]

But possibly not for a profit???

If you are buying a gun for the purpose of reselling it to make money then that would be considered dealing, regardless of the number of firearms in trade.

 

[gc70]

Some of the indicators of an "intent to predominantly earn a profit" are a bit disturbing.

§ 478.11 Meaning of terms. - Predominantly earn a profit.

(b) The intent to predominantly earn a profit is a fact-specific inquiry. A person shall be presumed to have the intent to predominantly earn a profit from the sale or disposition of firearms in civil and administrative proceedings, absent reliable evidence to the contrary, when the person—

(3) Makes or maintains records, in any form, to document, track, or calculate profits and losses from firearms purchases and sales;
​

This creates a rebuttable presumption of a profit intent based on simply keeping records to calculate profits and losses. Many people keep bills of sale that show prices for guns they have bought and sold ... and would allow calculation of whether they made a profit or loss.

 

[JohnKSa]

But possibly not for a profit???

Profit is fine as long as profit isn't why you bought the gun in the first place.

If you buy a gun, then decide you don't like it and sell it, there is NO problem with selling it at at a profit if you can--as long as you aren't keeping records that make it look like you are buying and selling with profit as the intent. But if you bought the gun with the intent to resell it at a profit, you're violating the intent of the law and, if you do that often enough, there's the potential that it will catch up with you eventually.

 

[Aguila Blanca]

The meat of it appears to be:

A quick scan suggests that it must be based on Napoleonic law (in which an accused is guilty unless he can prove his innocence).

In other words ... business as usual for the BATFE.

§ 478.11 Meaning of terms. - Predominantly earn a profit.

(b) The intent to predominantly earn a profit is a fact-specific inquiry. A person shall be presumed to have the intent to predominantly earn a profit from the sale or disposition of firearms in civil and administrative proceedings, absent reliable evidence to the contrary, when the person—

(3) Makes or maintains records, in any form, to document, track, or calculate profits and losses from firearms purchases and sales;

I guess I'm "in the business." I can't afford to buy many firearms, and I rarely sell one once I've bought it. But it does happen. Years ago I created a spreadsheet to keep track of guns and their purchase prices, for insurance purposes. If I do sell one, I also have fields for who I sold it to (usually an FFL, because if I sell I do so through an FFL on consignment) and what I get for the gun if it sells. I've sold ten firearms over the past 20 or so years. For most of them, I received more than the face value I paid for them but, factoring in inflation, I mostly broke even.

By this definition, though, I'm a dealer ... because I keep records.

 

[JohnKSa]

We won't know how it works for certain, but the rule specifically talks about documenting/tracking/calculating profit or loss, not about keeping track of purchase prices or estimated values.

A person could keep track of values and/or purchase prices without breaking that threshold.

Playing the devil's advocate, I can see that a reasonable question to ask would be: "If you aren't in business, what does it matter what you sold a firearm for? You didn't want it, now you don't own it, why keep track of whether you made money on the sale or not?"

Just to be clear, I do think that threshold is overly restrictive because people do care what they sell their property for even if they aren't in business, but I don't think it will be hard to comply with that particular requirement of the rule.

 

[Aguila Blanca]

I keep track of the sales price as well as the cost so I'll know if I've lost money on a firearm. I don't buy them as investments, and I certainly don't look at it as a business (not even a sideline), but I still don't like to lose money if I sell one. But I do keep track of the numbers, even though the price I sold a gun for ten years ago obviously has nothing to do with the insurance value of the firearms I still own.

What can I say? I'm a numbers wonk. That shouldn't allow the BATFE boys to classify me as a dealer.

 

[JohnKSa]

I keep track of the sales price as well as the cost so I'll know if I've lost money on a firearm.

Which is really only an issue if you're in business. If you're doing it for fun, then your profit/loss is not an issue.

That shouldn't allow the BATFE boys to classify me as a dealer.

I agree 100%. Just saying that it could be hard to justify why you need to track profit/loss--which is likely why the BATF figured it could get away with adding that as a criterion in their new rule.

 

[gc70]

Here is another potentially problematic presumption of an "intent to predominantly earn a profit."

§ 478.11 Meaning of terms. - Predominantly earn a profit.

(b) The intent to predominantly earn a profit is a fact-specific inquiry. A person shall be presumed to have the intent to predominantly earn a profit from the sale or disposition of firearms in civil and administrative proceedings, absent reliable evidence to the contrary, when the person—

(2) Purchases, rents, or otherwise secures or sets aside permanent or temporary physical space to display or store firearms they offer for sale, including part or all of a business premises, table or space at a gun show, or display case;​

This creates a rebuttable presumption of a profit intent for anyone who gets a table at a gun show. Some folks use gun shows to display and reduce or upgrade their collections, but the government will be able to presume a profit intent requiring licensing and the people will bear the burden of providing evidence to the contrary.

 

[JohnKSa]

Yeah, that's really screwed up. I'm sure there are unlicensed dealers out there selling at gunshows, but the idea that anyone who rents a table at a gun show must be an FFL holder or is automatically presumed guilty of dealing without a license is pretty messed up.

I have a friend whose father died and left him a collection of about 400 firearms. One of the things I suggested was that he could get a table at a local gun show and sell them off there.

It is worthwhile to note that these provisions are meant (according to the rule) to apply to civil and administrative proceedings ONLY and not to criminal cases although they can be used as part of jury instructions in criminal cases.

 

[Aguila Blanca]

http://4.bp.blogspot.com/_Wru2zjJZ8...Anc/SAJ1FykW-IY/s1600/can-of-worms-764812.jpg

 

[gc70]

It is worthwhile to note that these provisions are meant (according to the rule) to apply to civil and administrative proceedings ONLY and not to criminal cases although they can be used as part of jury instructions in criminal cases.

Discussion on pages #24-25 of the proposed rule PDF indicates Presumptions that a Person is “Engaged in the Business” would apply to civil and administrative actions under 18 U.S.C. 924(d) to seize and forfeit firearms intended to be sold by persons engaged in the business without a license.