How do you become an FA manufacturer?


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bigalexe
March 24, 2010, 12:32 AM
How would one become a manufacturer of FA firearms in the United States? I am talking legally and theoretically, not really concerned about how to get customers or finance the operation right here.

Just a curious legal question, being that it's "illegal" to possess a post-86 gun it seems like you must have to just know a politician to be in the business and avoid prosecution.

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Zak Smith
March 24, 2010, 01:57 AM
It's not mysterious. You obtain a Type 7 FFL and a Class 2 SOT.

Before the ATF will approve the FFL, you need to demonstrate the business conforms to all state and local business licensing and/or zoning requirements.

GRIZ22
March 24, 2010, 09:13 AM
Just a curious legal question, being that it's "illegal" to possess a post-86 gun it seems like you must have to just know a politician to be in the business and avoid prosecution.
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It is not illegal for a manufacturer or dealer to possess a post 86 gun but it can only be transferred to another dealer, the military, law enfoprcement, or exported with teh appropriate licenses.

If you are thinking of becoming a manufacturer to make a few for your own use ATFE will catch up to you and at the very least seize your NFA weapons and put you out of business.

Bubbles
March 24, 2010, 11:37 AM
BTDT out of the house with the hubby. Getting the license varies from absurdly easy to ding-nigh impossible depending on your location. I wrote this up based on our experience.

Steps to getting a Federal Firearms License (FFL):

1) Check your local zoning ordinances and HOA CCR's, if any. If either document prohibits you from obtaining a business license at your residence, go no further. The ATF will not issue you an FFL.

2) Check with your homeowner's insurance to see how much it will go up if you run a firearm business out of your home. Hopefully you have a local agent who you've personally known and worked with for many years, as the flunkie on the toll-free call center phone will probably freak at your questions. You may find the increase in premium alone makes getting an FFL unviable.

3) Another question for yourself - are you comfortable filing federal and state tax returns every quarter, and monthly sales tax returns? If not, add CPA services to your list of expenses.

4) If you've gotten to this point, find an attorney to help you form a S Corp, C Corp, or LLC (most folks go with an LLC). This is not the time to go with a DIY document off the internet, especially if you plan on dealing in NFA toys. Besides, being in the firearms biz, you're going to need an attorney sooner or later anyway; might as well get to know one now.

5) Once your LLC is formed, obtain any necessary state and local business licenses to run a business. If you don't have these, the ATF will not issue an FFL. See #1 (and yes, they go to your county or city courthouse and check).

6) Call the ATF Distribution Center and ask for an FFL application packet. It will include several copies of the application (no carbons unfortunately), fingerprint cards, and instructions.

Note that all manufacturers (Type 06, 07, and 10 FFL's) must register with the Department of State and pay ITAR annually. This registration fee is $2250.00.

Zak Smith
March 24, 2010, 12:11 PM
You forgot step:

7) Wait for 6-12 months for the FFL and SOT to be issued.

TexasRifleman
March 24, 2010, 12:39 PM
And you forgot "Find some agency that will actually give you a demo letter" if you plan on buying any.

Bubbles
March 24, 2010, 02:13 PM
7) Wait for 6-12 months for the FFL and SOT to be issued.

We mailed the application for the license in the last week of January, and it was issued May first. So, figure on 90 days.

The SOT isn't an application form, you just pay the tax. IIRC we got it back in two weeks.

Zak Smith
March 24, 2010, 02:22 PM
You're lucky. It took us 6 months to get the 7 FFL and another 3 to get the SOT issued.

Jim K
March 24, 2010, 09:28 PM
As the law now stands, manufacture of full automatic weapons for sale to the public is prohibited. However, a manufacturer's license and Class 2 SOT is needed to make suppressors, short barrel rifles, short barrel shotguns, and some other firearms/devices. So there is business, and many Class 2 manufacturers are also licensed as Class 3 dealers so they can buy and sell transferable automatic weapons to the public as well.

Jim

Zak Smith
March 24, 2010, 09:39 PM
A class 2 SOT can manufacture machineguns - they just can't be transferred to the public (ie, they can be transferred to other SOTs with the appropriate demo letter and certain government entities).

A class 2 SOT does not need a separate class 3 SOT to transfer NFA items to non-licensees who are residents of its state ("sell to the public").

bigalexe
March 24, 2010, 11:56 PM
Ok I just had this image of a circle in my head of the following process.

You ask for certification to manufacture FA Firearms --> The ATF says "show that you can sell them and don't want to just build one for yourself." --> You say "Well if you let me build them, customers will come" --> ATF says "You have no customers, then no permit for you!" ---> You revert to previous argument, and the process repeats itself.

I just can't help thinking how hard it would be for an American Entrepreneur to get into the FA Business without first building non-FA weapons and then building conversions for LEO order which could probably immediately illegalize their products in some states (CA, NY) because the states would then consider the originals to be derivatives of FA Weapons. Also God help them get a good reputation since the government has cut off sales to civilians and I doubt any LEO Agencies are going to take a chance on unproven designs.

Zak Smith
March 25, 2010, 01:14 AM
You're overthinking this. As a class 2 SOT you can make SBRs, SBSs, MGs, silencers, etc, and do repairs on those items. There are quite a few class 2 SOTs who do primarily R&D and not really a lot of volume sales.

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