Class or Study Course for FFL?

[Vodoun da Vinci]

I'm starting to buy pistols with the idea of fixing them up and selling them. My local FFL who has been handling the shipping and transfers for me (only purchases so far) has told me that if I buy a pistol specifically to flip it/sell it that I should have an FFL and do things "the right way". I agree as I never cheat and wouldn't want to stretch or break the law.

Is there a class or course of instruction for potential or aspiring FFL holders? What are your thoughts on this idea? I have a Corporation that my Wife and I formed some time ago to deal with the business aspects of selling custom made cutlery....should I expand this Corporation into my hobby gun flipping business?

Thanks in advance for any advice you can offer!

VooDoo

 

[dogtown tom]

Vodoun da Vinci ....Is there a class or course of instruction for potential or aspiring FFL holders?

There are a couple of "How to be an FFL" kits out there. The best known is FFL123.

If you choose to use those kits understand that ALL the information you are paying for is available for free at ATF.gov

I've never read the FFL123 material and never will.....it seems that those who rely on that as their research and training tend to ask the dumbest questions on the dealer forums.

If you want a short, easy to read, easily understood guide to holding an FFL........there isn't one. To be the best educated licensee in the room you'll need to spend some time reading:
CFR 478 "Commerce in Firearms"
ATF FFL Newsletters
ATF Rulings
ATF Best Practices
ATF Open Letters
and oddly enough, the instructions on the Form 4473.

And that's just the beginning.

......should I expand this Corporation into my hobby gun flipping business?

That's a decision you, your spouse and tax attorney need to discuss.

 

[Vodoun da Vinci]

Thanks for your information and opinion, Tom.

After reading the application form and the instructions I'm pretty much ready to give it up. Clear as mud....I'm wondering now if my local FFL guy was trying to discourage me from my present course/concept by telling me I need to get an FFL to proceed. Maybe a call/discussion with the fine folks at the ATF will better clarify my objective and how to legally proceed.

Maybe I'll talk to another local FFL holder and see if I can do this the way I originally intended or if I should just give it up as too much work and investment for little/no return. Clearly more reading and planning are in order.

Thanks again!

VooDoo

 

[mgkdrgn]

1) there is no "course", because there is no "test"

2) you have to be able to legally conduct a business in your physical location. That means getting a business license and getting set up to collect/pay sales taxes. Depending on how you are "zoned", you might not be able to do that.

3) IF you have a home owners association where you live, it has to be cleared by them as well.

4) ONLY AFTER you dealt with 2 & 3 above to you contact the ATF to get your FFL. During the initial inspection the first thing they will want to see is documentation that 2 & 3 above have been dealt with.

5) Paperwork .... 4473 & log books. learn to love them, 'cause you have to keep them for 20 years.

Really, it ain't all =that= hard, but it does require some significant attention to detail.

 

[Vodoun da Vinci]

Thank you.

Yes, I'm seeing that this is not a viable option (getting an FFL) for my "home based gun flipping business" as I can't operate this out of my home and I'll never do enough volume/generate enough profit to justify renting a "store front" or property. That and the requirements incumbent on an FFL holder make the water deeper than I'm comfortable swimming in for a part time/fun endeavor.

Originally I had intended to buy orphans and neglected pieces with the intent on fixing them up/saving them and moving them along to interested individuals but as soon as I purchase with the intent of reselling (which I have not yet done....) the ATF decides I'm in the "gun business" and I need an FFL and the incumbent responsibilities.

The original idea was to do this using the local FFL/LGS to handle all the transfers and paperwork in a concise and legal manner and maybe even sell them on consignment there cause a bunch of folks who buy guns there have expressed serious interest in buying some of my "projects"... and casual discussions with potential interested parties gave me the idea that finding these guns and expediting the necessary repairs and improvements might yield an interesting and semi profitable hobby.

Not gonna happen. Kind of a bummer...so, I'll buy 'em where I find 'em, fix 'em up/shoot 'em and when I die someone can liquidate the collection and use the money to whatever end behooves them.

VooDoo

 

[oneounceload]

Why can't you do this at your home? Is it illegal in your area? There are a whole lot of folks who have FFL's and operate out of their homes

 

[Vodoun da Vinci]

Not legal to operate a business out of my present home. Even if I could move or work out of an alternative place I have access to zoned commercial the FFL is just too much added expense and "hoop jumping" from what I'm reading.

Kinda lost my zest for it at this point. I'll let it stew for a few more months and see what my options are....the first upgraded gun should be back in my hands shortly. I'll see how it feels and continue to look at what the possibilities are.

I'm not sure where the line is at between buying guns to enhance my collection and selling them off to get better examples as they come available and "retailing pistols". I believe it is "intent" and I'm not sure how that's calculated or at which point it becomes retailing instead of collecting. Lots of folks collect specific types of guns like Colt revolvers or 1911's and will sell some to finance purchasing others that are higher on the food chain or more collectible. At what point does buying new guns for a collection by selling less worthy examples become "retailing" and thus require an FFL and business front?

VooDoo

 

[jrmiddleton425]

At what point does buying new guns for a collection by selling less worthy examples become "retailing" and thus require an FFL and business front?

There is no magic number below which you're collecting, and above it you're selling.

Buying and selling to enhance your own collection does not require an FFL. Collecting isn't a business. If you buy with the intent of selling for profit, it's a business. It really is that cut and dried.

 

[MICHAEL T]

Move out of IL to a free state like KY. People here buy sell trade all time no paper work needed in face to face UNLESS YOUR A FFL.

IL is far from gun or ammo friendly.

 

[Vodoun da Vinci]

Move out of IL to a free state like KY.....
IL is far from gun or ammo friendly.

Thanks for the update - I have lived in Illinois my entire life and, aside from politics, I like living here. I own a home and property and have operated business(s) in Illinois and still have an Illinois based Corporation. I'm not moving because Illinois makes gun owning "difficult" and throwing the baby out with the bath water but I can appreciate your perspective/opinions.

I guess my dilemma with the collecting/improving/flipping concept is how I or an antagonist might prove "intent" to retail at a profit. The original intent was and is to find specific pistols in a specific condition and buy them and "save" them by stabilizing neglected guns and moving them into a different category of "collectible" guns. This is maybe confusing...I know it's hard to explain.

I have a thing for Colt 1903 Pocket Hammerless pistols....I love to have 'em and find 'em and shoot 'em and I'm developing a bigger and bigger collection of these pistols. Lately I am buying guns that are compromised....bad finishes due to neglect, cracked grips, missing original magazines, perhaps missing parts, etc. and these guns are inexpensive and not really very high on the Food Chain for collectible 1903 Pocket Hammerless guns. I find 'em, buy 'em, and fix 'em up...in one case sending it out for expert gun smithing and refinishing including an action job and hard chrome. I recently purchased another "orphan" in similar condition and intend to give it the same treatment.

My original intention is to enhance my personal collection with these orphans and put them all into top end custom gunsmithed and refinished condition and shoot them....I reload for them and have accumulated quite a box of extra parts to keep them running. Folks at the range and members of our local handgun support group are loving the dickens out of my little Colts and I loan them feely and folks are now asking if I wanna sell one or two.

Which I *do* in order to buy other orphans and save them....there are a lot of these laying in sock drawers and ending up in estates in various states of disrepair and neglect and they aren't really collectible until I have my way with them and then they are worth quite a bit more than I paid for them and have invested in gunsmithing. That would be profit. I don't think I have the desire to find and outfit hundreds of these nor would I wanna go "whole hog" and open a business specializing in this with an FFL, a store front/internet front, and start retailing rebuilt, customized Colt 1903 Pocket Hammerless pistols but local interest is *very* high.

I'm on the verge of paying my Corporate attorney to research this and advise me but I kind of already know the answer. If I buy 'em to keep 'em in my collection after customizing them no problemo - If I start selling some them and using the proceeds to find better examples and do more extensive restoration and customization and keep the coolest/best and sell the rest, I'm "retailing" firearms for profit and need an FFL and all that. I'm stuck.

This is a lot of fun and I get to have and hold some really classic guns that will never again be produced and shoot 'em and find further upgrades and custom projects *but* the final product of taking an orphan, neglected Colt 1903 and fixing the broken springs and adding new night sights and then refinishing in hard chrome or whatever ends up making a desirable pistol worth a bit more than the original investment in terms of pistols and services....they appreciate in value beyond the investment when made viable again. That's profit but not in the original intent nor in the concept.

Sorry for the long windedness and verbiage. I'm not sure how to legally proceed with a profitable hobby/collecting Jones and had hoped maybe someone at THR could advise or has been in a similar predicament.

VooDoo

 

[jrmiddleton425]

You are over-thinking this...WAY TOO MUCH. You are a collector making a sale to enhance your collection. You do not need an FFL, to sell anything personally owned by you.

 

[JRH6856]

It looks to me as if you are buying these guns because you enjoy fixing/restoring firearms and you buy them to have something to work on. Once they are repaired/restored, you kn longer have something to work on so after enjoying shooting them for a while, you sell them and buy something else to work on. ATF might see it differently but I don't see any "purchase with the intent to resell."

Volume might make a difference. How many of these would you do in a year?

 

[Frank Ettin]

...Move out of IL to a free state like KY. People here buy sell trade all time no paper work needed in face to face...

State law is probably not the real issue. The real issue will be federal law and whether or not a license will be needed under federal law.

See the thread, What is "Dealing in Firearms Without a License?".

...You are a collector making a sale to enhance your collection. You do not need an FFL, to sell anything personally owned by you. ...

Any you're grossly oversimplifying things -- which is a good way to get someone into a lot of trouble.

See the thread, What is "Dealing in Firearms Without a License?", for an extended discussion.

...ATF might see it differently but I don't see any "purchase with the intent to resell."...

How you see it doesn't mean squat. It's how the ATF will see it that matters. You don't have clue about that how the ATF is likely to see, do you?

See the thread, What is "Dealing in Firearms Without a License?".

 

[JRH6856]

How you see it doesn't mean squat. It's how the ATF will see it that matters. You don't have clue about that how the ATF is likely to see, do you?

No, which is why I daid they may see it differently. Fact is, unless and until an ATF agent responds on this thread, no one here knows how ATF will see it. Have to ask them directly. But if I were to call them ask, I wouldn't say, "I'm buying guns with the intent of fixing them and reselling them. Do I need and FFL?" I would not include any mention of an initial intent to resell. When I buy a gun, I don't intend to resell it, even though I do expect that at some point in time, I may sell it in order to buy something else.

 

[Frank Ettin]

How you see it doesn't mean squat. It's how the ATF will see it that matters. You don't have clue about that how the ATF is likely to see, do you?

No, which is why I daid they may see it differently. Fact is, unless and until an ATF agent responds on this thread, no one here knows how ATF will see it. Have to ask them directly. But if I were to call them ask, I wouldn't say, "I'm buying guns with the intent of fixing them and reselling them. Do I need and FFL?" I would not include any mention of an initial intent to resell. When I buy a gun, I don't intend to resell it, even though I do expect that at some point in time, I may sell it in order to buy something else.

If you were to pose that question over the telephone as you suggest, the answer would be absolutely worthless. ATF would not be bound by any answer because, among other things: (1) a representative on the telephone would not be authorized to provide a binding opinion on a legal questions; and (2) you would have misrepresented your intentions to ATF.

I have been involved in securing on behalf of clients binding advisory opinions from a number of regulatory agencies. In order for such opinions to mean anything they (1) must be requested in accordance with formal agency procedures; (2) must be in writing; and (3) must fully and accurately describe the act, activity, or transaction about which the opinion is sought.

On an issue such as this, a call to ATF, especially asking misleading questions omitting material information, would be useless.

 

[dogtown tom]

JRH6856 ....But if I were to call them ask, I wouldn't say, "I'm buying guns with the intent of fixing them and reselling them. Do I need and FFL?". I would not include any mention of an initial intent to resell.....

In any event, if you acquire firearms with the intent to repair and resell....you darn well better have an FFL.
It matters not one bit whether you actually make a profit, but whether you are "engaging in the business of dealing in firearms". As there is no minimum number, you could be charged/indicted for doing it ONCE.

Verbal advice or interpretations from ATF do not carry the weight of law. A knowledgeable ATF agent or IOI would simply recite verbatim or refer you to the appropriate regulation in the CFR. While they may try to be helpful can you see how the following may result in a violation of Federal law?

Caller: "Am I allowed to sell my own guns without getting an FFL?"
ATF: "Of course you can"

Days later, the caller begins to buy numerous firearms from dealers, craigslist, garage sales, gun shows and begins to repair and resell them.....after all they are his "own" guns.

His ads on Gunbroker, Craigslist, and multiple gun forums peaks the interest of a bored ATF enforcement agent. He responds to one of the ads and purchases one of the repaired firearms. Further investigation leads him to believe that the seller is engaged in the repetitive buying and selling of firearms. He presents his evidence to the US Attorney who indicts the seller for violation of Federal law....the unlicensed selling of firearms.


By the time the seller gets to say "But, but, but......ATF said it was fine to sell my own guns without an FFL!".....it's lawyer time.

 

[JRH6856]

Frank, and dogtown tom. I agree absolutely that if you have an intent to buy and sell firearms, then under federal law, you definitely need to have an FFL. And dogtown tom, I agree that the scenario you describe could easily play out that way. I don't think anything I said contradicts this. Nor do I see how the action I described (or what OP described in post # 10) corresponds to dttom's scenario.

What I take from your comments is that is is possible that anyone who buys a gun, and subsequently resells it can be accused of illegally dealing in firearms if ATF wants to charge them.

The possibility is always there. What one has to assess is the probability.

The problem with many of our laws and particulary, regulatory laws, is that their interpretation and enforcement often depends on the whim (some say considered opinion) of a regulator. If, as has been suggested, all that is required under the law is that a gun be bought with the intent to resell, anyone who buys a gun and subsequently sells the gun is susceptible to a charge of illegally trading in firearms. Intent has to be prooved and the burdeon of proof is on the ATF. The burden of defense is your own. And the way these regulations work is is create an incentive to refrain from doing anything you can't afford to defend in court.

 

[Frank Ettin]

...What I take from your comments is that is is possible that anyone who buys a gun, and subsequently resells it can be accused of illegally dealing in firearms if ATF wants to charge them.

The possibility is always there. What one has to assess is the probability...

1. One must also understand that the federal government has successfully prosecuted people for dealing in firearms without being properly licensed.
   
   
   • In this post I cited a few court of appeal decisions upholding convictions for dealing in firearms without a license.
     
     • The Third Circuit, in upholding a conviction of dealing in firearms without a license noted (U.S. v. Tyson, 653 F.3d 192 (3rd Cir., 2011), at 200-201, emphasis added):
       

       ...By the statute's terms, then, a defendant engages in the business of dealing in firearms when his principal motivation is economic (i.e., “obtaining livelihood” and “profit”) and he pursues this objective through the repetitive purchase and resale of firearms. Palmieri, 21 F.3d at 1268 (stating that “economic interests” are the “principal purpose,” and “repetitiveness” is “the modus operandi ”). Although the quantity and frequency of sales are obviously a central concern, so also are (1) the location of the sales, (2) the conditions under which the sales occurred, (3) the defendant's behavior before, during, and after the sales, (4) the price charged for the weapons and the characteristics of the firearms sold, and (5) the intent of the seller at the time of the sales. Id. (explaining that “the finder of fact must examine the intent of the actor and all circumstances surrounding the acts alleged to constitute engaging in business”). As is often the case in such analyses, the importance of any one of these considerations is subject to the idiosyncratic nature of the fact pattern presented...

       
       
     • And the Fifth Circuit noted (United States v. Brenner (5th. Cir., 2012, No. 11-50432, slip opinion), at 5-6, emphasis added):
       

       ...the jury must examine all circumstances surrounding the transaction, without the aid of a "bright-line rule". United States v. Palmieri, 21 F.3d 1265, 1269 (3d Cir.), vacated on other grounds, 513 U.S. 957 (1994). Relevant circumstances include: "the quantity and frequency of sales"; the "location of the sales"; "conditions under which the sales occurred"; "defendant's behavior before, during, and after the sales"; "the price charged"; "the characteristics of the firearms sold"; and, "the intent of the seller at the time of the sales". Tyson, 653 F.3d at 201.

       
       
     • The Sixth Circuit noted (United States v. Gray (6th Cir., 2012, No. 11-1305, slip opinion), at 8):
       

       ...However, "a defendant need not deal in firearms as his primary business for conviction." United States v. Manthey, 92 F. App'x 291, 297 (6th Cir. 2004)....

       
       
     • And in upholding Gray's conviction the Sixth Circuit also noted (Gray, at 8-9):
       

       ...We have previously held that evidence was sufficient to support a conviction under § 922(a)(1)(A) where it showed (1) that the defendant frequented flea markets and gun shows where he displayed and sold guns; (2) that the defendant offered to sell guns to confidential informants on multiple occasions and actually sold them three different guns on two different occasions; (3) and...that the defendant bought and sold guns for profit. See United States v. Orum, 106 F. App'x 972, 974 (6th Cir. 2004)...

       
       
     • In affirming a conviction of dealing in firearms without a license, the Ninth Circuit stated (U.S. v. Breier, 813 F.2d 212 (C.A.9 (Cal.), 1987), at 213-214):
       

       ...Courts have fashioned their own definitions of the term. For example, we have previously stated "that where transactions of sale, purchase or exchange of firearms are regularly entered into in expectation of profit, the conduct amounts to engaging in business." United States v. Van Buren, 593 F.2d 125, 126 (9th Cir.1979) (per curiam). In United States v. Wilmoth, 636 F.2d 123 (5th Cir. Unit A 1981), the Fifth Circuit stated that to prove the status of the accused as one engaged in the business of dealing in firearms, "the Government must show a greater degree of activity than the occasional sale of a hobbyist." Id. at 125. "It is enough to prove that the accused has guns on hand or is ready and able to procure them for the purpose of selling them from time to time to such persons as might be accepted as customers." Id.; accord United States v. Carter, 801 F.2d 78, 82 (2d Cir.), cert. denied, --- U.S. ----, 107 S.Ct. 657, 93 L.Ed.2d 712 (1986); United States v. Burgos, 720 F.2d 1520, 1527 n. 8 (11th Cir.1983)....

     
     
   • Note that there is no safe harbor or "bright line" test for being engaged in the business of being a dealer compared with just being a hobbyist making an occasional sale. So the bottom line is that if a federal prosecutor, looking at the totality of the circumstances and all the factors discussed in the various cases, decides that he can first convince a grand jury that there's probable cause to believe you're buying and selling guns as a trade or business, and then convince a trial jury beyond a reasonable doubt that you're buying and selling guns as a trade or business, he very well might prosecute you.
   
   
2. The OP said that he wanted to:
   

   ...I'm starting to buy pistols with the idea of fixing them up and selling them....

   Under current precedent it's not clear when doing that sort of thing morphs from a hobby to a business. And a plan to buy pistols for the purpose of fixing them up and selling them sounds a lot like a plan for a side business.
   
   
3. Violations are punishable by up to five years in federal prison and would include a lifetime loss of gun rights.

 

[JRH6856]

The OP said that he wanted to:

Quote:
...I'm starting to buy pistols with the idea of fixing them up and selling them....

Under current precedent it's not clear when doing that sort of thing morphs from a hobby to a business. And a plan to buy pistols for the purpose of fixing them up and selling them sounds a lot like a plan for a side business.

Thank you, Frank, for the detailed analysis. I agree that the OPs statement does sound like a plan for a business, and it seems that was OPs concern as well. But he also said in Post #10:

My original intention is to enhance my personal collection with these orphans and put them all into top end custom gunsmithed and refinished condition and shoot them....I reload for them and have accumulated quite a box of extra parts to keep them running. Folks at the range and members of our local handgun support group are loving the dickens out of my little Colts and I loan them feely and folks are now asking if I wanna sell one or two.

Which I *do* in order to buy other orphans and save them

Which sounds more like a hobby without business intent which is what I was trying to say. So understanding the lack of a "bright line" haven is important.

 

[Vodoun da Vinci]

Tons of great information here, you guys, and I thank you for it. It's really stimulating to think very hard and plan about how/if I'm going to proceed from here. Excellent links, Frank!

For now I'm gonna buy up the likely candidates and get them conditioned and shoot them - right now? I'm thinking maybe 6 guns a year tops...closer to 4 in reality. I'm not in a hurry so there's not gonna be any sales at this time - folks will just have to be content to handle the ones I rebuild and shoot them as loaners or when I'm at the range. I'll call the ATF and depending on how they respond verbally, I'll seek written confirmation and make a decision based on that to either go or stay.

I'd suspect, after following the logic and reading a bit more, that the ATF is gonna want this to be licensed (FFL) and all hands on the table and that my best interest will be served by getting an FFL and playing the game. I have not yet decided if I wanna proceed with that added expense, documentation, and hoop jumping. I may just buy 'em, upgrade 'em, and shoot 'em until the answer comes to me.

I sincerely appreciate all the dialog and opinions and, to be fair, I accept it as opinion and would never hold anyone responsible for the outcome of this...that's on me. I appreciate the suggestions and opinions qualified or not.

VooDoo

 

[HRnightmare]

You are over-thinking this...WAY TOO MUCH. You are a collector making a sale to enhance your collection. You do not need an FFL, to sell anything personally owned by you.

I think you are not thinking it through enough. If he is buying them knowing absolute well that he is going to NOT keep it and sell it as soon as he repairs it He is not selling pieces of his personal collection.

He specifically said that he is buying firearms with the intent to clean them up and resell them. He is already on the wrong side of the law...although he is not selling volumes or operating as a business so I doubt he would have any issues, maybe a strong warning from the ATF if they found out, but I would not want to get on their bad side.

I am not trying to be the internet police BUT I would highly advise you to reconsider what you openly advertise that you are doing and also reconsider your actual actions. My interpretation of the law is that what you are doing is illegal.

 

[Midwest]

For now I'm gonna buy up the likely candidates and get them conditioned and shoot them - right now? I'm thinking maybe 6 guns a year tops...closer to 4 in reality. I'm not in a hurry so there's not gonna be any sales at this time - folks will just have to be content to handle the ones I rebuild and shoot them as loaners or when I'm at the range. I'll call the ATF and depending on how they respond verbally, I'll seek written confirmation and make a decision based on that to either go or stay.

I'd suspect, after following the logic and reading a bit more, that the ATF is gonna want this to be licensed (FFL) and all hands on the table and that my best interest will be served by getting an FFL and playing the game.

I have not yet decided if I wanna proceed with that added expense, documentation, and hoop jumping. I may just buy 'em, upgrade 'em, and shoot 'em until the answer comes to me.

It is one thing to sell off a few guns in your collection which you held on to for while.

But to buy firearms and then turn around and sell those same firearms within a year. It would seem to cross the line with the ATF's definition of dealing.

If I were going to do what you suggested, I would get the FFL. I'd rather deal with the ATF's hoops and paperwork than the Fed's accommodations behind bars.
.

 

[Sunray]

Legalities aside, you'll very likely find a "home based gun flipping business" isn't viable either. No real business means no tax write offs, no wholesale prices for anything and no factory parts.

 

[Vodoun da Vinci]

I am not trying to be the internet police BUT I would highly advise you to reconsider what you openly advertise that you are doing and also reconsider your actual actions. My interpretation of the law is that what you are doing is illegal.

I appreciate your perspective and the warning - until/unless I sell one, there is no issue....I do agree with you that doing what I have stated I wanted to do, which is buy them with the intention of reselling without an FFL/business to do that would likely be illegal.

I have only sold one gun in my lifetime (not counting guns I pawned 30 years ago...) and at this point it will likely be my last.

VooDoo

 

[Vodoun da Vinci]

If I were going to do what you suggested, I would get the FFL. I'd rather deal with the ATF's hoops and paperwork than the Fed's accommodations behind bars.
.

This is exactly the decision I have come to for now. I'll either go the whole route and get an FFL and a storefront to go with it or I'll be content buying the guns I want and enjoying them as additions to my collection of shooting antiques.

As already said, I'll likely never sell another gun now.

I still appreciate the comments and input.

VooDoo