Legalities with buying a gun with the intent to sell online?

[hso]

Most folks that like the idea of doing this should realize that once they factor in all the costs they're probably a little in the hole when it's all said and done. If you consider that the cost of of the fun of trading and you can afford it there's not anything illegal as long as you follow the ATF and state rules.

If it gets to be more than just an occasional thing, look into whether your state requires some sort of licensing (matter of fact, make sure of what level of hobby business your state tolerates before getting into it) and or permitting. It may simply be a small fee permit or it may be a real license.

OTOH, if you actually find that you're good enough that you're actually making money above expenses you have to follow the income tax rules as well (Fed and/or state). If you think you're ahead on the money side look at all the expenses you've incurred doing this instead of sitting surfing the net engaging in "fantasy gun trading" and report your actual profits on your taxes (remember that Capone was busted on tax evasion instead of his other "business" activities).

 

[newfalguy101]

That's OK, newfalguy101 cite the applicable FFL in post #21

An 03 FFL is a C&R

For the express purpose of purchasing firearms classified by ATF as Curio and Relics, for COLLECTING.

From ATF's FAQ section:


Is there a specific license that permits a collector to acquire firearms in interstate commerce?

Yes. The person may obtain a collector’s license; however, this license applies only to transactions in curio or relic firearms. The principal advantage of a collector’s license is that a licensed collector can acquire curios or relics in interstate commerce.

[27 CFR 478.41(c), (d), 478.50(b) and 478.93]

and:

Does a license as a collector of curio or relic firearms authorize the collector to engage in the business of dealing in curios or relics?

No. A collector’s license only enables the collector to transport, ship, receive, and acquire curios and relics in interstate or foreign commerce, and to make disposition of curios and relics in interstate or foreign commerce, to any other licensee, for the period stated on the license. A collector’s license does not authorize the collector to engage in a business required to be licensed under the Act. Therefore, if the acquisitions and dispositions of curios and relics by a collector brings the collector within the definition of a manufacturer, importer, or dealer, he shall qualify as such. A dealer’s license must be obtained to engage in the business of dealing in any firearms, including curios or relics.

[18 U.S.C. 922(a) and 923(a)(1), 27 CFR 478.41(c)(d)]

Any more questions??

 

[Cosmoline]

Never mind--misread

 

[SASS50566]

Would you cite the section or code you are basing that statement on

If you read the BATFE license application it clearly states that if you are trying to get licensed to buy for personal use to not submit the application.

 

[mgkdrgn]

The relevant section has been copied. There is no law saying you can't sell your guns for profit, and there is also no law saying you can't buy a gun for the express reason of selling it. Who's to say you're not buying it in order to sell for a profit so you can "enhance your personal collection". I happen to have a hobby of buying, trading and selling firearms but because it's not for the purpose of a livelihood (or for paying bills or for anything other than my own enjoyment of the firearms) I'm within the law. Sometimes I sell them for a profit, and sometimes I take a loss.

Ya, the former cheif of police in some NC town (who's name I can't remember) used pretty much the same logic ...

... he is now on an extended vacation at Club Fed.

 

[Good&Fruity]

Interesting thread. I know in my state, with vehicles, if you sell more than 6 per year you need a dealers license. It's much easier to set such a limiting number on cars though than guns.

 

[newfalguy101]

Ya, the former cheif of police in some NC town (who's name I can't remember) used pretty much the same logic ...

... he is now on an extended vacation at Club Fed.

I am curious, did they get him for dealing without a license, or did they get him for buying using his badge in place of a license??

ATF readily admits its very difficult to convict for dealing without a license as the definition is vague, and PROVING intent is incredibly difficult

 

[rajb123]

This does not sound like a good idea to me.

The ATF and other feds are now conducting a massive effort to charge people for buying and then selling guns to criminals who take them to Mexico and commit crimes. Even though private sales are largely exempt from reporting/registration, the feds will find a way to bring these folks to justice.

If you think you can make a profit buying and re-selling, become an FFL, first.

 

[Bubbles]

ATF readily admits its very difficult to convict for dealing without a license as the definition is vague, and PROVING intent is incredibly difficult

I'd have to go back and find the article from last year, but IIRC the ATF did charge a guy for dealing without a license based on his buying/selling pattern over several years. When I ran the numbers, he'd averaged 2-3 sales per month. That said, he popped up on the authorities' radar as he didn't really care whether he was selling to prohibited persons or not...

 

[WillDe83]

I'd have to go back and find the article from last year, but IIRC the ATF did charge a guy for dealing without a license based on his buying/selling pattern over several years. When I ran the numbers, he'd averaged 2-3 sales per month. That said, he popped up on the authorities' radar as he didn't really care whether he was selling to prohibited persons or not...

the guy in austin?

i believe he bragged to an undercover ATF agent about selling guns to anyone he wanted and how many he sold and then sold a gun to a prohibited individual, while the undercover agents witnessed.

 

[jax1911]

I think the issue is "intent", if the intent is to buy and resell for the sole purpose of making a profit (as stated in the original post) you are in violation of the BATF rules.
The method of transfer has no bearing on the intent.

Probably not worth the risk.

 

[ants]

Some research among Federal codes and documents

I like offering conservative advice on legal matters: "Just to be safe, better not do it."
This is especially important since none of us really know the answer.
If we really don't know the answer, better not flirt with trouble.

But it's also important to try to do some research, as extensively as one is able.
Only then do you find more realistic answers, rather than conservative guesswork.


The relevant Federal law is United States Code Title 18, Section 921 Firearms, which begins with definitions:

(11) The term “dealer” means
(A) any person engaged in the business of selling firearms at wholesale or retail,
(B) any person engaged in the business of repairing firearms or of making or fitting special barrels, stocks, or trigger mechanisms to firearms, or
(C) any person who is a pawnbroker. The term “licensed dealer” means any dealer who is licensed under the provisions of this chapter.

OK, fine. But what does "engaged in the business" actually mean?
A better description is found in the Bureau's published rulings.
The Bureau examined the term "engaged in the business"
and published the result in ATF Ruling 75-31.
Note: They published the ruling when examining dealers in explosives.
Since U.S.C. 18 Explosives uses the same definitions as U.S.C. 921 Firearms,
the ruling applies equally to the business of firearms, since
identical definitions and terms are used in Section 841 for explosives
and Section 921 for Firearms.

So here it is:

ATF Ruling 75-31

Although the term “engaged in the business” is not susceptible to a rigid definition within 18 U.S.C. Sections 841 through 848, it is interpreted to imply an element of continuity or habitual practice; an element clearly present in the operations of companies described herein.

Clearly, if you buy a gun at a gun shop and immediately resell it for profit ( Woo Hoo !!! ) you would not exhibit an "element of continuity of habitual practice." If you did that twice, or three times, you still would not exhibit continuity or habitual practice. I bet you can do it a dozen times per year when the opportunity arrises, and still not be habitual. You gotta use your own good judgment. Clearly they are on the lookout for one who behaves like an ongoing business, not just to behave like a guy who makes a good buy and resells it for extra cash.

So, exactly how many times can you resell a gun and NOT be habitually "engaged in the business"?
Unfortunately, as the ruling notes, there is no rigid definition in U.S.C. 18.
So use your own good judgment, and don't be afraid to let conservative advice kick in.
If in doubt, don't do it.
If you do it once or twice, no big deal.
Maybe more.
If you wanna REALLY do it habitually, you're on your own.

 

[mr_goodbomb]

Yes, who's going to be looking into your accounts and saying "he's sold TOO MANY guns, legally?"

I probably own "too many guns," too, and if wanna sell em, legally, I will. If there's a law against selling my personal property in whatever quantity I'd like, through legal methods, I'd like to hear it, and I'd say that, once I pay for something, go through the paperwork to make it legal and valid, and get it home, it is my property.

Private sale is legal in my state. A friend at a gun shop had an old H&R revolver he was offering me for cheap, and throwing in a non-functional H&R for free if I bought it. I saw a guy looking for one in the local buyer's guide, so I bought it, sold it to him for a very small profit, and then sold the "free" one to a pawn shop because I didn't need it.

 

[ants]

Some of my own personal observations, while doing the research.

I noticed that many of the things we discuss in a thread like this seem to be irrelevant. It doesn't seem to matter how long you hold on to the gun before reselling it. It doesn't seem to matter if you bought the gun because you liked it, then lost interest and sold it. It doesn't seem to matter if you bought the gun with intent to sell to some jerk at a higher price. It doesn't seem to matter if you make a small profit, or a big one.

Only the quantity seems to matter, to the point that it looks "habitual".

When you do it often enough that you start to look like a guy in business, formally or informally, you are likely to appear on radar screens. Especially if you start to break the law in other ways. Like sales to prohibited persons. Or regulated NFA items. Or illegal modifications. And other things that Blip the radar.

So I wouldn't be afraid to buy something at a bargain, knowing that it can be sold it for more. Like a car or a piece of property, or anything else that takes a license "to be in business".

Just don't do it so often you look like a business doing it.

 

[vaherder]

Having to hire an ambulance chasing, overeducated shyster for your court case or to get you out of tax trouble negates any profits you may have made selling the firearms for a higher price then you paid for them.

A good friend of my bros was doing great with 10 rental properties. They all had tenants who paid on time. Then the economy went down hill. Problem was he never sought advice of legal counsel. All the properties are now in or have gone through foreclosure. The current real estate market resulted in the properties being sold for less then mortgage balance. As a result his NGA
consulting and contracting jobs were lost when they revoked his clearance and access. Spending a couple grand would have meant a S corp and a Chap 7 and mitigation for clearance issues since it was a failed business.

I hate lawyers but sometimes their advice saves your money and heartache in the long term.

Do you want pay some money up front or pay you shyster to defend you and then pay with services in kind in prison?

Your choice and you maybe setting yourself up to made an example of with your gun selling ideas.

 

[ants]

My friend Bubbles: About the guy who got busted...

I was looking for that example you had in mind, and I found identical incidents over and over and over.

It happens dozens and dozens of times each year. Perhaps several hundred times since the year 2000. In every case I Googled up, the person bought and sold LOTS of guns, and increased the price when selling to Felons. Often they brag about it, and sometimes put an ad in the newspaper! One guy in Plattsburgh NY even put a sign on his front lawn: Gun Show Here.

So the authorities go about to bust those guys. No surprise there.

 

[iibao]

Read the 4473 form.

I certify that the above answers are true and correct. I understand that answering “yes” to question 12a when I am not the actual buyer
of the firearm is a crime punishable as a felony. I understand that a person who answers “yes” to any of the questions 12b through 12k is
prohibited from purchasing or receiving a firearm. I understand that a person who answers “yes” to question 12l is prohibited from
purchasing or receiving a firearm, unless the person also answers “yes” to question 13. I also understand that making any false oral or
written statement, or exhibiting any false or misrepresented identification with respect to this transaction, is a crime punishable as a
felony. I further understand that the repetitive purchase of firearms for the purpose of resale for livelihood and profit without a Federal
firearms license is a violation of law. (See Important Notice 8.)

8. Under 18 U.S.C. §§ 922 and 923, it is unlawful for a person to engage in the
business of dealing in firearms without a license. A person is engaged in the
business of dealing in firearms if he or she devotes time, attention, and labor to
dealing in firearms as a regular course of trade or business with the principal
objective of livelihood and profit through the repetitive purchase and resale of
firearms. A license is not required of a person who only makes occasional sales,
exchanges, or purchases of firearms for the enhancement of a personal collection
or for a hobby, or who sells all or part of his or her personal collection of firearms.

 

[newfalguy101]

How about a couple of real world examples:

A guy rents tables at gunshows weekend after weekend buying and selling firearms, he has no FFL, he is in clear violation and selling without a license. ( I personally know two or three guys who fall into this category )

A guy rents a table at one show every year buying and selling guns, this seller is NOT in violation as he is not "engaged in business" as he is a hobbyist selling his personal guns and using the proceeds to buy different guns.....no different that selling a gun online to "fund another project"

The first guy is earning a living by the repetitave buying and selling of firearms, the second is NOT earning a living and would fall into the "occasional sale" category

 

[newfalguy101]

I'd have to go back and find the article from last year, but IIRC the ATF did charge a guy for dealing without a license based on his buying/selling pattern over several years. When I ran the numbers, he'd averaged 2-3 sales per month. That said, he popped up on the authorities' radar as he didn't really care whether he was selling to prohibited persons or not...

I didnt say they dont charge and convict people, just that they readily admit its very difficult.

 

[baylorattorney]

My experience tells me it is ok to buy a couple of guns as investments with the intent to sell them subsequent thereto. However, the posters are correct in their warnings too. As long as you don't make it a business you will not be prosecuted. This is in no way intended to be legal advice you can hang your hat on. This has simply been my observation.

 

[azmjs]

Its one of those things where relying on common sense goes a very long way.

If you're "flipping" a couple guns here and there because you got lucky and got a good deal, you'll be OK.

If you're running a business buying and selling guns, you need a license.

You can always rely on a plausible narrative, such as "i saw a good deal and figured i'd get the gun and see if I liked it, and it turned out I didn't so I sold it" or "i saw a good deal on a gun and figured if I didn't like it I could trade or sell it and get one I did," assuming you're the unluckiest guy in the world and anyone actually bothers asking.