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The ATF has – yet again – issued a regulation that threatens to criminalize a wide range of conduct based on criteria that are vague at best, and perhaps even incomprehensible. A new final rule signed by Attorney General Merrick Garland purports to amend the regulatory definition of when someone is “Engaged in the Business” as a dealer in firearms and would require a Federal Firearms License. This follows a change to the underlying federal law as a result of the “Bipartisan Safer Communities Act” (BPSCA) of 2022, which among other gun control measures amended the definition codified at 18 U.S.C. § 921(a)(21)(C).
Previously, this section of the federal code read:
The term “engaged in the business” means–as applied to a dealer in firearms, as defined in § 921(a)(11)(A), a person who “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, but such term shall not include a person who 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 personal collection of firearms.”
The 2022 Act amended this by replacing “with the principal objective of livelihood and profit” with the far less precise language “to predominantly earn a profit.” What does it mean to “predominantly earn a profit” from selling firearms? That’s anyone’s guess, especially because the following language still excludes a person who makes “occasional” sales for “personal” or “hobby” purposes. It is unclear where the threshold is crossed from “occasional” to “repetitive,” or when a hobby becomes a regular course of trade, or how much of a profit one must make on sales from a personal collection before it becomes “predominant.” The result of this is to place private collectors and sellers into an increasingly uncertain gray area of the law, in which they have to guess at what point the Federal government will consider them to be in violation and subject to criminal prosecution. The carve-outs for traditional hobbyist and collector activities offer precious little reassurance.
It is precisely this language that the ATF is now inserting into their regulations, adding a new subsection to the Federal Register at 27 C.F.R. § 478 to include a definition of “engaged in the business as a dealer in firearms other than a gunsmith or a pawnbroker” at § 478.13(a) that mirrors the one given in § 921(a)(11)(A). This regulation fails to provide any clarity on the uncertainties introduced by the BPSCA and, alarmingly, directs the inquiry to the “totality of the circumstances,” effectively providing no guidance at all for those at risk of criminal penalties. The definition continues at § 478.13(b), and reads:
“Selling large numbers of firearms or engaging or offering to engage in frequent transactions may be highly indicative of business activity. However, there is no minimum threshold number of firearms purchased or sold that triggers the licensing requirement. Similarly, there is no minimum number of transactions that determines whether a person is ‘‘engaged in the business’’ of dealing in firearms. For example, even a single firearm transaction or offer to engage in a transaction, when combined with other evidence (e.g., where a person represents to others a willingness and ability to purchase more firearms for resale), may require a license; whereas, a single isolated firearm transaction without such evidence would not require a license.”
The ATF says that “other evidence” may make a single transaction without a license into a violation, but does not clarify what that evidence may be, beyond an actual offer to purchase more firearms for resale (i.e. an offer to make an illegal straw purchase).
The regulation also lists a series of “presumptions” concerning when a person is considered to be engaged in the business as a dealer. Besides the aforementioned offer to acquire more firearms for resale, it includes, in relevant part, a person who “repetitively resells or offers for resale” firearms, within 30 days after the person purchased them, or within one year if the firearms are new or like new in their original packaging, or the same make and model of the purchased firearms, or variants thereof.
Finally, the regulations contain yet another list of presumptions concerning when someone is considered to be engaged in the business “predominantly to earn a profit.” These include engaging in marketing (such as by listing firearms for resale online , tagging them with prices, making business cards, or even promotion through informal means), renting space for display of firearms offered for resale (such as a table at a gun show), making business records, establishing security measures to protect firearms assets, establishing a business entity or trade name, or securing a state business license for reselling firearms.
What is the sum total of these regulations? Well, it’s no secret, and many readers will have already noticed that, while intentionally vague, these changes tend to point towards the classic gun-show-table reseller of firearms. The ATF’s stated purposes and responses to various comments on the proposed regulation indicate a desire to increase the number of background checks performed on private gun sales, in effect realizing a longstanding desire by gun-control proponents to “close the gun-show loophole.” Following the rejection of universal background checks by Congress, it appears that the Biden administration and Merrick Garland’s Department of Justice have set out to institute them via the regulatory backdoor, with the willing assistance of those Republican congressmen who voted in favor of the BPSCA.
How exactly the ATF intends to enforce this new regulation when it goes on the books is an open question, and anyone who feels they may be at risk of enforcement should consult with qualified legal counsel before engaging in future private sales. Regular gun show table sellers or those who regularly sell firearms through online auction sites like Gunbroker should be especially wary, and should consider obtaining a Federal Firearms License if they are more than an occasional reseller of firearms. Litigation over the new rule is bound to be hot on the heels of its coming into effect on May 20th, but in the meantime caution is strongly advised.
If you or someone you know has been the victim of an unconstitutional firearm regulation, or would like to discuss your rights or obligations under this new regulation, contact FICG today to discuss your options.
Firearms Industry Consulting Group® (FICG®) is a registered trademark and division of Civil Rights Defense Firm, P.C., with rights and permissions granted to Prince Law Offices, P.C. to use in this article.
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