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

[MTT TL]

Also, given that he didn't pay for the guns, the entire purchase price (less expenses related to the sale) is profit. Profit is defined as sale price - purchase price - expenses. Since the purchase price is zero, profit in his case would be sale price - 0 - expenses.

It isn't profit. It is an inheritance and therefore not a profit at all. If you inherit a car and then later sell it you don't pay taxes on selling the car under Federal law.

The only primary exceptions to the above would be if you sold them for more than they were worth at fair market value or waited several years and they appreciated during that time. If that happened then you would owe capital gains taxes on the increase in value of the items from the date that you inherited.

 

[MTT TL]

The rule is saying that if you buy a gun show table to sell guns, you will be presumed to be in business. It doesn't say if you buy a gun show table to sell guns AND make a profit...

For some reason, with the title "Predominately Making a Profit" I made the mistake of assuming that they were actually talking about that.

 

[44 AMP]

Never assume that the title of a law or regulation has any more to do with its content than the name of a cartridge accurately describing the bullet it uses. There will be some degree of relationship, but only that.

 

[Tom Servo]

Wasn't it during the Clinton administration when they went after low volume FFL holders for selling too few firearms?

Yes, and as Bill mentioned, they also cracked down on having an FFL if you weren't zoned for business.

And the guy responsible? Josh Sugarmann of the Violence Policy Center. He pressured them to enforce a strict and literal interpretation of "engaged in business" that ended up shutting down the vast majority of private FFL's.

Fun fact: he is one of only 3 FFL holders in Washington DC, despite not being zoned for business and not being involved in buying and/or selling firearms. If you want to bug the ATF about it, his FFL number is 1-54-000-01-8C-00725. Not that they care.

When I found out and contacted the ATF, they gave me the runaround for almost SIX YEARS. Apparently, FOIA requests have a habit of getting misplaced. It turns out he enjoys some special, vague exemption that isn't extended to anyone else.

 

[Aguila Blanca]

Also, given that he didn't pay for the guns, the entire purchase price (less expenses related to the sale) is profit. Profit is defined as sale price - purchase price - expenses. Since the purchase price is zero, profit in his case would be sale price - 0 - expenses.

It isn't profit. It is an inheritance and therefore not a profit at all. If you inherit a car and then later sell it you don't pay taxes on selling the car under Federal law.

The [accounting] base value of anything that's inherited is the item's appraised value at the time of the inheritance. If you inherit a firearm that's worth $500 as of the date of the death, and a year later you sell it for $1,000 ... you are liable for taxes on a $500 profit.

 

[JohnKSa]

For some reason, with the title "Predominately Making a Profit" I made the mistake of assuming that they were actually talking about that.

That particular list is a list of 8 activities, each of which will, all by itself, independent of any of the other items on the list or any other consideration, result in the presumption that a person is engaged in business.

Therefore buying a table at a gun show to sell guns will result in the presumption of being engaged in the business of dealing firearms. Whether or not a profit is made. Independent of any other factor. So will purchasing a business insurance policy to cover firearms inventory. So will making or maintaining records to track profit/loss. So will setting up to accept credit cards as payment.

 

[LeverGunFan]

If for example someone is maintaining records to track profit/loss and is presumed to be engaged in the business, will the ATF issue them a FFL based on that alone? Even if they are living in a residential area not zoned for business, and have only occasionally sold a firearm?

 

[gc70]

For some reason, with the title "Predominately Making a Profit" I made the mistake of assuming that they were actually talking about that.

The definition in the proposed rule shows the source of misunderstanding.

Predominantly earn a profit. (a) The intent underlying the sale or disposition of firearms is predominantly one of obtaining pecuniary gain, as opposed to other intents, such as improving or liquidating a personal firearms collection: ...

For purposes of this definition, a person may have the intent to profit even if the person does not actually obtain pecuniary gain from the sale or disposition of firearms.

Intent to profit does not require the result of profit.

 

[Aguila Blanca]

If for example someone is maintaining records to track profit/loss and is presumed to be engaged in the business, will the ATF issue them a FFL based on that alone? Even if they are living in a residential area not zoned for business, and have only occasionally sold a firearm?

Who knows?

As Bill DeShivs posted in this thread, under a previous administration the BATFE stopped renewing existing "kitchen table" FFLs. It would be (IMHO) prudent to expect this administration to follow suit, but we can't (and shouldn't try to) predict what they'll do.

It has always been a rule that home-based FFLs have to comply with local zoning regulations. I can't see that changing -- which means that I can never hope to obtain a home-based FFL. My town doesn't allow ANY firearms-based businesses, even in the business zones within the town.

 

[dogtown tom]

44 AMP
....What the Clinton administration did was try to put the small dealers out of business by raising the cost of the FFL from $30 to $300 per year.

Oh good grief no thank goodness.
The FFL fees have never been anywhere close to that. Currently:


License type..........Application fee..........Renewal fee
Manufacturer.........$150 for 3 year..........$150 every 3 years
Importer...............$150 for 3 years........$150 every 3 years
Pawnbroker...........$200 for 3 years........$90 every 3 years
Dealer..................$200 for 3 years........$90 every 3 years
Collector...............$30 for 3 years..........$30 every 3 years

Any bonafide dealer that couldn't swing $90 for a three year renewal, wasn't much of a dealer to begin with.

And they did a good job of it, as the number of FFLs dropped dramatically, if I remember correctly.

The number of FFL's declined for other reasons. ATF began enforcing their regulations that had been ignored by ATF and FFLs for two decades. Primarily, with the licensee operating lawfully according to his state and local laws, including zoning, business permits, sales tax permits, etc. Many didn't want to get compliant.

Very few FFL's were actually revoked, most choosing to surrender or fail to renew.

 

[dogtown tom]

Bill DeShivs The Clinton administration also stopped issuing FFLs to homes that were not in an area zoned "commercial."

Yet here I sit in my house zoned "residential".....not commercial. The Clinton Administration did not do what you claim.

Where do ya'll get this stuff?
Certainly not from ATF regulations, because those regulations have NEVER required "commercial" zoning. And home based dealers outnumber those with retail brick and mortar stores....always have.

And they "forgot" to send renewals, and then declared you had to do a new FFL application, go through the screening process/ATF inspection, etc.-even when you tried to renew during the stated grace period.
I was one of them.

I've never waited for ATF to mail me my renewal form.

 

[zukiphile]

It is poor rulemaking to permit executive discretion in interpreting the standard it can apply. There's an underlying issue about the character of law in this proposed rule and the rule about pistol braces and SBRs.

Ideally a law is a clear enough that an ordinary person can tell whether he has violated it. Drive on the right unless passing and don't murder seem easy to grasp and let people know when they've exposed themselves to prosecution.

A multipart, alternative description of agency discretion lacks that character. Some of those parts are described as presumptions, but the only enforcement mechanism for those presumptions arises in the course of one's criminal defense. A test that allows a sale of any firearm to bring one within regulation as a dealer can be used to make private sales predominantly illicit and create as a safe harbor use of an existing licensee for an otherwise valid sale. The effect of that sort of safe harbor is a general and federally enforceable background check.

Where a prosecutor can allege that your hobby is a business because you've tracked expenditures and sales in your checkbook register, who would like to let his future freedom rest on the language of that exception?

Where rules become complex or vague, they are more apt to reflect executive discretion. Where peoples' interaction with a law and agency, like being able to operate a kitchen table FFL in the 90s to not being able to operate the same one now because of zoning, or losing an FFL over a typographical error, that shift in executive discretion is a material change as experienced by the people against whom it is enforced.