I cant believe this isnt here

[Sentryau2]

http://www.ar15.com/forums/t_1_5/16...m_1_APPROVED_Pg18_ATF_call_audio.html&page=29

Did the ATF seriously just mess up? Thoughts on how this could go? Please contribute

 

[Sentryau2]

http://blog.princelaw.com/2014/05/1...or-manufacture-of-new-machineguns-for-trusts/

 

[Frank Ettin]

Well this topic has been discussed here, specifically in this thread.

The argument that an NFA Trust can somehow be outside the Hughes Amendment turns on the certain definitions in the Internal Revenue Code (Title 26 of the USC), specifically 26 USC 7701. However --

1. A trust is not, in fact or in law, a legal entity.
   
   
2. Under the Internal Revenue Code (Title 26 of the United States Code), the word "person" is defined to include, among other things, a trust, a partnership, an association and an estate (26 USC 7701(a)(1)).
   
   
3. However, just as in fact and in law a trust is not a legal entity (or person), nor are a partnership, an association (if unincorporated) or an estate.
   
   
4. Furthermore, the preface to the IRC definitions says:

   ...where not otherwise distinctly expressed or manifestly incompatible with the intent thereof—

   
   
5. So even in the IRC when the word "person" is used it doesn't necessarily include a trust, a partnership, an association, an estate, or a company. It all depends on the intent and context.
   
   
6. So Congress apparently decided that there might be times when, for the purposes of the effective administration of the tax laws, it might be convenient to lump various non-entities under the term "person", that does not necessarily change the fundamental legal reality that a trust, partnership, association, or estate is not a legal entity.
   
   
7. In other words, defining "person" to include a trust, a partnership, an association, a company and an estate is merely for the purposes of stylistic convenience. There may be times when, and situations in which, for the purposes of tax law the word "person" may be read to include a trust, a partnership, an association, a company or an estate. For example, certain rules relating to the deductibility of some business expenses, or the accounting for some business income, might apply whether the business is conducted by a natural person (i. e., a sole proprietorship), an artificial person (i. e., a corporation), a partnership, a trustee managing business property held by him pursuant to a trust, etc.
   
   
8. But lumping a trust, a partnership, an association, a company and an estate under the heading "person" doesn't change the legal nature or character of a trust, a partnership, an association, a company and an estate.
   
   
9. In a partnership, for example, the partners (or general partners) are personally liable for the debts of the business. A partnership might do business under a properly filed fictitious name giving the appearance of being a single entity, but the property, liabilities and debts trace back personally to the individual general partners.
   
   
10. Let's consider the nature of a trust:
    
    
    • A trust is a special structure for holding title to property.
      
      
    • In a trust, there is one of more trustees who hold title to certain property. Trustees can be natural persons or artificial persons (corporations). But the property is owned by the trustee(s). If the trustee is a natural person, he personally owns the property which is held in trust.
      
      
    • But in a trust, while the property is owned by the trustee he is not free to do with it as he wishes. He is not free to use it for his own purposes. He owns the property as a fiduciary to use for the benefit of one or more third parties called the beneficiaries.
      
      
    • The rights and obligations of the trustee with regard to the property he owns in trust (sometimes called the "trust res") are set out in writing in a document called a trust, or trust document, or trust indenture. That document describes what the trustee must do, may do and may not do with the property he owns in trust. That document also sets out the rights and obligations of the beneficiary.
      
      
    • The trust is started, assuming a trustee agrees to act, by a person, called the trustor or settlor, transferring property to the trustee. The trustee accepts the property subject to the trust document and agrees to be bound by the trust document.
      
      
    • So there is no entity called a trust. Business related to the property held in trust is conducted by the trustee as trustee, as a person (natural or artificial, as the case may be).
      
      
    • The foregoing is the basic structure of any trust arrangement. Trusts are used in many contexts for many purposes and to hold title to all kinds of property. Trusts are not unique to the NFA world, and an NFA trust is still a trust and operates essentially as described above.
    
    
11. Now let's look at the Hughes Amendment, i e., 18 USC 922(o):

    (o)
    
    

    (1) Except as provided in paragraph (2), it shall be unlawful for any person to transfer or possess a machinegun.
    
    (2) This subsection does not apply with respect to—
    
    

    (A) a transfer to or by, or possession by or under the authority of, the United States or any department or agency thereof or a State, or a department, agency, or political subdivision thereof; or
    
    (B) any lawful transfer or lawful possession of a machinegun that was lawfully possessed before the date this subsection takes effect.​

    
    
    • Some folks have made a big deal out of the fact that the definition of person under the GCA (specifically 18 USC 921(a)(1)) doesn't include a trust, while the IRC definition does (except "where not otherwise distinctly expressed or manifestly incompatible with the intent thereof"). So, the reasoning goes, since a trust isn't a person, a trust can own a machinegun even if the gun wasn't lawfully possessed prior to the effective date of 18 USC 922(o).
      
      
    • However, that "logic" doesn't consider some material data and information.
      
      
      • It doesn't involve a thorough analysis of the the IRC definition of "person" as I outlined above. And as I've outlined, the IRC definition doesn't change the fundamental legal nature of a trust.
        
        
      • It ignores the fundamental legal reality of the nature of a trust. A trust doesn't own anything. A trust doesn't buy or sell anything. In connection with a trust a person (natural or artificial), the trustee, has legal title to the property held in trust. The person might acquire more property to hold in trust. That person might divest property held in trust (subject to his obligations under the trust). But it's always done by a GCA person.
    
    
12. This would ultimately be an issue for the courts to decide, but I think it highly unlikely that a court will find the Hughes Amendment doesn't apply to an NFA trust.

 

[IOwnTheWorld1994]

Only problem is that the FOPA of May 19, 1986 never passed. So technically the ATF is illegally arrested and convicted people for a law that never passed. 124 people voted yes, 298 said no and 12 didn't vote. It's on an old archive thread on this forum. Plus I've seen this for myself and I didn't even bother to read it. It's so confusing and the wording makes absolutely no sense whatsoever. I guess there's no such thing as idiot proof. On behalf the BATFE that is.

 

[Frank Ettin]

Only problem is that the FOPA of May 19, 1986 never passed....

Hogwash and urban myth. The reality is that Congressional procedure is complex. Many related versions of a bill may be considered. There may be a number of votes on different versions, votes on amendments and votes on procedural matters. However, at the end of the day, the FOPA passed Congress in its then known form including the Hughes Amendment.

Dave Kopel, well known lawyer, legal scholar and Second Amendment advocate tells the story here in The Volokh Conspiracy. Kopel also discusses the myth in this article originally published in National Review Online.

 

[barnbwt]

From what I understand, we have a situation of the ATF trying to have cake and eat it too, at the behest of executive pressure. The "solution" they seek is a special interpretation of trusts as they pertain to guns/NFA. Now, the ATF has wide ranging authority of determination, but am I really to believe they can claim to set the difference between trust and person? Doesn't that have implications reaching far beyond their mandate, at least if we expect our laws to remain coherent. Or are we entering a new phase of law where the terms carry different meaning depending on interpretation of the individual statute?

TCB

 

[Frank Ettin]

From what I understand, we have a situation of the ATF trying to have cake and eat it too, at the behest of executive pressure. The "solution" they seek is a special interpretation of trusts as they pertain to guns/NFA....

And exactly what interpretation is that? How is it special?

Congress, in writing and enacting the Internal Revenue Code had decided that it would be convenient to write it so that when the word "person" is use that reference to a person includes partnerships, associations, trusts and estates, "..where not otherwise distinctly expressed or manifestly incompatible with the intent thereof—". That applies to all of the IRC, not just the NFA; and is a definition used generally in connection with tax laws in the IRC generally. If anything is "special" that, as applied to the tax laws generally, is; because legally not a partnership, association, trust, nor estate are a "person."

...am I really to believe they can claim to set the difference between trust and person?...

That's only because you don't understand what a trust is and how it works. The reality is that a trust is not a legal entity, is not a "person." See post 3.

I've describe the underlying legal nature and structure of trusts, whatever their purpose and however they are used.

...Or are we entering a new phase of law where the terms carry different meaning depending on interpretation of the individual statute?...

Nothing new about that. That's long been the case. Often complex statutory or regulatory schemes will use common words in special ways and include special definitions. And generally long lists of definitions particular to a statutory or regulatory scheme will be prefaced with the caveat, "unless the context otherwise requires", or something similar.

Sure it can create an additional level of complexity and confusion. But there's nothing new about it.