It is LEGAL to purchase an NFA item from a Federal Firearms License (FFL) dealer with a Class 2/3 Special Occupational Taxpayers (SOT license as long as it is in compliance with the Gun Control Act (GCA), all state and federal laws.
• The buyer must be at least 21 years old
• The buyer can be 18 years old if purchasing an NFA item through a private party transaction. Private party transactions of NFA items MUST be completed by a Federal Firearms License (FFL) dealer with a Class 2/3 SOT.
It is ILLEGAL to purchase or sell an NFA item through a private party transaction without the transaction being completed by a Federal Firearms License (FFL) dealer with a Class 2/3 SOT.
National Firearm Act (NFA) Firearm
The National Firearms Act of 1968 (NFA) defines a number of categories of regulated firearms. These weapons are collectively known as NFA firearms and include the following:
• A firearm with combinations smooth bore and rifle barrels 12 inches or more but less than 18 inches in length from which only a single shot can be made from either barrel.
• Machine guns - Any firearm which can fire more than one round per trigger pull. Firearms with a 3-round burst feature are considered machine gun features. The weapon's receiver is by itself considered to be a regulated firearm.
• Short Barreled Rifles (SBR) - Any firearm with a buttstock and either a rifled barrel under 16 inches long or an overall length under 26 inches. The overall length is measured with any folding or collapsing stocks in the extended position. Including firearms which came from the factory with a butt stock that was later removed by a third party.
• Short Barreled Shotguns (SBS) - Any shotgun with a barrel under 18 inches long or an overall length under 26 inches. The barrel must be smooth bore.
• Silencers (suppressors) - Any portable device designed to muffle or disguise the report of a portable firearm.
• Destructive Devices - There are two broad classes of destructive devices:
1. Devices such as grenades, bombs, explosive missiles, poison gas weapons, etc.
2. Any firearm with a bore over 0.50 except for shotguns or shotgun shells which have been found to be generally recognized as particularly suitable for sporting purposes. (Many firearms with bores over 0.50", such as 12-gauge shotguns, are exempted from the law because they have been determined to have a "legitimate sporting use".)
• Any Other Weapons (AOWs)—this is a broad "catch-all" category used to regulate any number of firearms which the ATF under the NFA enforces registration and taxation. Examples include, among others:
1. Smooth-bore pistols.
2. Pen guns and cane guns
3. A firearm with combinations smooth bore and rifle barrels 12 inches or more but less than 18 inches in length from which only a single shot can be made from either barrel.
4. Disguised Firearms - Firearms that can be fired from within a wallet holster or a briefcase.
5. Firearms that can be fired from within a wallet holster or a briefcase.
6. A short-barreled shotgun which came from the factory with a pistol grip is categorized as an AOW rather than a Short Barrel Shotgun (SBS), because the Gun Control Act describes a shotgun as “Designed or redesigned to be fired from the shoulder”.
7. Handguns with a forward vertical grip.
A Federal Firearms License (FFL) is required as a prerequisite to becoming a Special Occupation Taxpayer (SOT):
• Class 1 - Importer
• Class 2 - Manufacturer & Dealer
• Class 3 - Dealer
NFA Transfer Tax (Stamp Tax)
The tax for privately manufacturing any NFA firearm (other than machineguns, which are generally illegal to manufacture) is $200. Transferring requires a $200 tax for all NFA firearms except AOW's, for which the transfer tax is $5 (although the manufacturing tax remains $200).
Dealers who pay a special yearly occupational tax are exempt from these taxes for transfers to or from other special occupational taxpayers (SOT's). Only a Class 2 manufacturer can “make and register” a machine gun, and that gun becomes a Post May-19th, 1986 Gun, salable only to police, State, local, Federal-Government, and the military. Low volume Class 2 manufacturers (those with sales under $500,000.00) pay the $500.00 per year SOT tax, while high sales volume Class 2’s pay the full $1,000.00 SOT “ticket” price.
Transferable machine guns made or registered before May-19th 1986 are worth far more than their original, pre-1986 value. And items like registered “auto-sears,” “lightning-links,” trigger-packs, trunnions, and other “combination of parts” registered as machineguns before the aforementioned date are often worth nearly as much as a full registered machine gun. For instance, as of September 2008, a transferable M16 rifle costs approximately $11,000 to $18,000, while a transferable "lightning-link" for the AR-15 can sell for $8,000 to $10,000. New manufacture M-16s sell to law enforcement and the military for around $600 to $1000.
The registration or transfer process (to an individual or corporation) takes approximately 7 months to complete as of September 2018. Additionally, the firearm can never be handled or transported by any other private individual unless the firearm's registered owner is present. Corporations which own NFA firearms can loan them to any employee of the corporation with a letter of permission on the corporate letterhead. NFA items owned by trusts may be legally possessed by any trustee (i.e., if a husband and wife are both trustees, either of them may use and transport the firearm without the other present).
Upon the request of any ATF agent or investigator, or the Attorney General, the registered owner must provide proof of registration of the firearm.
In a number of situations, an NFA item may be transferred without a transfer tax. These include sales to government agencies, temporary transfers of an NFA firearm to a gunsmith for repairs, and transfer of an NFA firearm to a lawful heir after the death of its owner.
A permanent transfer, even if tax-free, must be approved by the ATF. The proper form should be submitted to ATF before the transfer occurs. For example, lawful heirs must submit a Form 5 and wait for approval before taking possession of any NFA item willed to them.
approval since they are not legally considered transfers. The ATF does, however, recommend filing tax-free transfer paperwork on all such temporary transfers, to confer an extra layer of legal protection on both the owner and the gunsmith.
Example of a US National Firearms Act Stamp, affixed to transfer forms to indicate tax paid
Ownership Of An NFA Firearm
It is a common misconception that an individual must have a "Class 3 SOT License" in order to own an NFA firearm or suppressor. The sale and purchase of an NFA firearm a suppressor are, however, taxed and regulated. Legal possession of an NFA firearm requires that an individual, trust or legal entity must be registered with the Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF) including a transfer of registration within the NFA registry.
To possess an NFA firearm or suppressor, an individual must purchase the NFA firearm and have it sent to a Class 3 FFL Dealer.
Then to take the firearm home you must;
1. Complete THREE (3) copies of the ATF Form 4 which is provided by the FFL Dealer. One (1) copy is for the ATF, one (1) copy is for the registrant (you, a trust or legal entity) and one (1) for the Chief Law Enforcement Officer (CLEO).
2. Attach TWO (2) recent passport-quality photographs in the space provided.
3. A CLEO who is the county sheriff or city or town chief of police must sign all three copies of the Form 4. The CLEO will most likely conduct a background check on you before signing the form.
4. Provide a Credit card number or include a Check, Cashier’s Check or Money Order with the form to pay the required "stamp tax".
5. Include TWO (2) completed fingerprint cards.
When the paperwork to request transfer of an NFA firearm or suppressor is initiated by an officer of a corporation, a signature from the CLEO is not required, fingerprint cards and photographs do not need to be submitted. Therefore, an individual who lives in a location where the chief law enforcement officer will not sign a transfer form can still own an NFA item if he or she owns a corporation. This method has downsides since it is the corporation (and not the principal) that owns the firearm. Thus, if the corporation ever dissolves, it must transfer its NFA firearm or suppressor to the owners. This event would be considered a new transfer and would be subject to a new "stamp tax".
Many times law enforcement officers will not sign the Form 4. There have been several unfavorable lawsuits where plaintiffs have been denied NFA approval for a transfer. These lawsuits include; Lomont v. O'Neill 2002 9th circuit, Westfall v. Miller 1996 5th circuit, and Steele v. National Firearms Branch 1985 11th circuit. In response, Tennessee and Alaska have passed state laws which require the CLEO to execute the NFA documents.
Form 4 Process
When the ATF receives the Form 4 they will;
1. Charge the card listed on the form or cash the Check, Cashier’s Check or Money Order
2. Conduct an extensive background check on the individual, trust or legal entity. This takes a very long time.
3. ATF approves or disapproves the transfer.
4. If approved, AFT issues the "stamp" and affixes it to the Form 4.
This process usually takes approximately SEVEN (7) MONTHS. See current real-time user data provided by NFA Tracker.
The Act makes certain conduct a criminal offense, in relation to engaging in business as a manufacturer, importer, or dealer with respect to NFA firearms without having registered or paid a Special Occupational Tax (SOT);
1. Receiving or possessing a firearm transferred to oneself in violation of the NFA.
2. Receiving or possessing a firearm made in violation of the NFA.
3. Receiving or possessing a firearm not registered to oneself in the National Firearms Registration and Transfer Record.
4. Transferring or making a firearm in violation of the NFA, or
5. Obliterating, removing, changing, or altering the serial number of the firearm.
Violations of the Act are punishable by up to 10 years in federal prison and forfeiture of all devices or firearms in violation, and the individual's right to own or possess firearms in the future. The Act provides for a penalty of $10,000 for certain violations. A willful attempt to evade or defeat a tax imposed by the Act is a felony punishable by up to five years in prison and a $100,000 fine ($500,000 in the case of a corporation or trust), under the general tax evasion statute. For an individual, the felony fine of $100,000 for tax evasion could be increased to $250,000.