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NFA dealer requirements for law enforcement\military sales

Discussion in 'General Gun Discussions' started by brighamr, Aug 3, 2007.

  1. brighamr

    brighamr Well-Known Member

    I've already written the BATFE, and Montana DOJ, but who knows when they will respond. As some of you know, I'm an entrepreneurial guy. I'm looking at starting firearm businesses in general, not necessarily for the money but for the enjoyment of myself and to help sustain the industry (goal is to break even with enough operating margin to continue operations). Here's my question:

    What licenses\permits\taxes need to be paid\obtained to legally deal in current manufactured NFA firearms for law enforcement\military sales nationwide? I am also researching the licenses\permits\taxes needing to be paid\obtained to legally manufacture and sell ammunitions nation-wide. My businesses will be located in Montana, so any state license\permit\tax information would be appreciated as well.

    Part of my question is do both of these businesses utilize the same licenses\permits\taxes? Or would I need to get licensed for each business separately? If the permits\licenses would work for both, I may just create a blanket LLC to provide the overhead thus negating the need for two separate start-ups...

    Any information would be appreciated. Please respond to my questions and not ask what specific ammo or make\model firearm I plan on selling. I'm not at that point yet...
  2. Byron Quick

    Byron Quick Moderator In Memoriam

    You need to get to that point. It has direct bearing on what licensure is required.
  3. brighamr

    brighamr Well-Known Member


    What I meant was: I plan on buying\selling fully automatic weapons for the NFA business, and civilian ammo for the ammunition business.

    I don't want a ton of replies asking for specific guns\ammo. That's where I'm not quite decided...

    The licensure I need is for current-production machine guns, and for "civilian ammunitions" (meaning no tracers, et al)
  4. PvtPyle

    PvtPyle Well-Known Member

    Military sales are pretty much a no-go. Those guys are deeply entrenched with their polical bribes and contracts. But for that you would need a GSA number, cage code and your products will need an NSN.

    For Law Enforcement sales, again you are fighting an uphill battle. You can bet that there is either a dealer already in your area or the agency buys direct. The agency is able to buy FET out direct, which is something you can not do. Unless you are the manufacturer you can not get a FET exemption from ATF. So the manufacturer has you beat right off the bat by 10%. Those dealers that are in business have found the way around the system, legally by estabilishing a long term relationship with the manufacturer, they sell to the agency and the manufacturer ships direct to them doing away with the FET. But that incurs a significant amount of work on the manufacturers part so they need a real reason to help you out instead of dealing direct.

    But again, it really depends on what you are wanting to sell. Once you determine that, we can help you find which license you need from ATF and State Dept. Yes, if you sell military style weapons, they get a chunk of you too. Right now it sounds like you need a basic FFL and SOT. Then you need to check with the local.

    And there is no license required to sell tracers, only things that fall into the DD catagory. In that one you are going to have a HUGE issue with licensing and zoning.
  5. GRIZ22

    GRIZ22 Well-Known Member

    not necessarily for the money but for the enjoyment of myself and to help sustain the industry (goal is to break even with enough operating margin to continue operations).

    You don't sound like this is a business but more of a hobby. If you are an entreperneur you know that going into any business without the intent to make money destines it for failure.
  6. PvtPyle

    PvtPyle Well-Known Member

    And the ATF does not like those kind of businesses. You show a significant amount of sales, that means being actively engaged in the business and not just selling one here or there and buying up a bunch of posties so you can play rockstar or they will shut you down. And when they do, they do so HARD.
  7. MisterPX

    MisterPX Well-Known Member

    You'll need to go FFl's 02 and 07 for teh NFA/Manufacturing. You'll need an 06 for ammo. Be prpepared to shell out teh $$ though, you're looking at about $3600 per year in fed. fees and taxes. That's a lot of movement to cover expenses. What's your business plan? What potential client base is available? LOt's of general business questions to answer first.

    MDW GUNS Well-Known Member

    brighamr, if you think you will be able to get this way your hands on some post 86 guns like G36 or 416, you have to see one point: Beside the FFL/SOT, in order to get those guns you need a PD Chief give you a letter stating that he wants to see one of these guns!
    Then you have to find the gun on the private market or at a PD, because HK or one of the ohter big manufacturer will not sell you a gun, even if you have the letter and the all licenses!
    Heck, Bushmaster will not even sell you a SBR!!

    Then to make ammo, you need one thing which you properly did not even think of yet: Insurance!
    So if you think you can load a few thousand rounds and break even, think in ten thousands of rounds sold before you break even!
  9. AntiqueCollector

    AntiqueCollector Well-Known Member

    The police/military market for MG's is a tough one, but don't forget all the other Class III stuff that us commoners can still own in many states...all the different DD's (including the fun exploding ones:D), AOW's, suppressors, short barreled guns...my point is, try to get into a business that can make some money, and that will also put more of these items in the hands of people like us...Class III dealers selling this stuff to non-leo's are getting few and far between...

    And, selling ammo is from what I know not too much trouble, just be sure to follow the laws to a T to protect yourself. Manufacturing ammo, OTOH, is expensive because of the insurance for liability reasons, etc. And oh yeah, incendiary ammo including tracer ammo is still very much legal, in most states anyways. Dragon's breath type shotgun rounds, tracers, etc., are all still being made and sold. A lot of people, though, don't know that this stuff is still legal...
  10. brighamr

    brighamr Well-Known Member


    Thank you for your responses. I didn't realize the Police Dept requirement...
    I did some more research, and i think AntiqueCollecter has the right idea. So here's my new question:

    for a new NFA dealer, what do you think would improve sales? Currently, there are several NFA's online, but the websites aren't exactly impressive. In addition, the prices for NFAs are unbelievably high. If I were to get into this business, other than jacking the prices up even higher, how could profit be made? (My point is here, if I have to buy a 1919A4 for $30k as a dealer, who on earth will buy it for $32k as a consumer?)

    Are there other ways to obtain NFA items as a dealer? (Such as police confiscations?)

    I'm very interested in the idea, just trying to get some details on how the business would work. The last thing I would want to do is have to up the prices for NFA items more than they are now, that is just plain detrimental.
  11. striker3

    striker3 Well-Known Member

    Supply and demand

    There is a very finite amount of full auto and select fire weapons that can be transfered to the general public. With the current laws, that number will never be able to increase, so as collectors and investors acquire more of that finite amount, the prices will continue to rise.

    Other NFA items such as suppressors, destructive devices and such are another matter altogether.
  12. PvtPyle

    PvtPyle Well-Known Member

    They are going to go up anyway. It is supply and demand. There is a fixed supply and and ever increasing demand. There is no way around it and if you dont do it we will.

    If they are confiscated and not returned they are contraban. So no.

    I recommend you spend a lot of time on the other boards where the guys in the business go, and read as much as you can. Then get the machinegun dealers bible and download the new giudelines from the ATF website. But there is a LOT for you to learn.

    Do you even have a business plan yet?
  13. MisterPX

    MisterPX Well-Known Member

    Place a lot of WTB ads. See Ruben Mendiola as an example. WHen people are crunched for cash, they often sell for below the market's asking prices.
  14. swingset

    swingset Well-Known Member

    To read this thread, it sounds like getting into this area of sales is next to impossible, a losing venture, and utterly ill-conceived as a business venture.

    And, maybe it is...but I sure know a bunch of guys doing it. Either it's worth the hassle, or all the SOT's I know have a screw loose and like losing money.

  15. MDW GUNS

    MDW GUNS Well-Known Member

    Well, here in Maine 3 years ago we had 4 FFL/SOT.
    Then for some reason 5 FFL thought they would make some money with it and so last year we had 9 FFL/SOT.
    The SOT has to be paid by the last day of June and I checked who is still a FFL/SOT and we are back down to four.
    I break most years just about even, last year I made some money.
    But the NFA items bring more customers in who want to see a machine gun and end up buying something else.
  16. Prince Yamato

    Prince Yamato Well-Known Member

    You'd be surprised at the people who have money to burn. Think of the number of people that buy $30,000+ cars in a year. Now picture said person thinking to themselves, "you know, what I really want instead of an H2, is a _(insert machinegun here)_" That's who'll pay. $32K isn't chump change, but there are people who'll pay it for whatever they want.

    Another option would be to open a regular dealership and specialize in standard Assault Weapons (ie, no hunting stuff). It'd be a good marketing move as well. Most younger people are into the AWs anyway. That way, you could still be politically incorrect, and turn a profit.
  17. Trebor

    Trebor Well-Known Member

    Personally, I wouldn't try to start a business as a SOT unless I already had an active firearms business going first. There's a lot to learn and know about selling firearms and why "jump into the deep end" with the most complex set of regs and laws, and the smallest market, first?

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