On December 17, 2013, the ATF issued Ruling 2013-5 to respond to inquiries from FFLs about maintaining acquisition and disposition records in electronic form, as opposed to paper form. It also put out a 2-page Q&A sheet about this ruling on January 13, 2014, including specific details for records variance holders. FFLs have been required to maintain records of the acquisition and disposition of firearms since passage of the Gun Control Act of 1968 (“GCA”). Mandatory records include importation, production, shipment, receipt, sale, or other disposition of firearms. Associated with the GCA statute are “implementing regulations” found in the Code of Federal Register which set out the details of transactions that must be memorialized, deadlines for recording the information, and on-going record storage requirements. The ATF supported its ruling with the following findings:

• electronic records save time and money in bookkeeping and auditing expenses;
• most businesses computerize inventory, sales, customer lists, and other business records;
• automated inventories allow use of such technology tools as bar codes and radio frequency identification chips;
• computer technology can improve accountability of inventory and reduce potential errors;
• computerized records facilitate tracing and tracking, speeding up ATF inventory inspections and ATF trace requests

The heart of ATF Ruling 2013-5 is the 11-point list on page 4-5, which itemizes what the ATF will consider an acceptable approach to the computerization of records of acquisition and disposition of firearms. The list includes some details worth noting. First, the computer system must retain any correct of errors as an entirely new entry without effecting the original entry. Second, the computer system cannot use a reference back to a paper record for required information. In other words, all required transactional details must be present in the computer entry, such that any and all paper records become supporting documentation. The other important aspect of ATF Ruling 2013-5 has to do with the integrity of the computer and computer records. The ATF Ruling requires the electronic records to be stored on a computer owned and operated by the FFL, be on site in the United States or associated territories, and be accessible during regular business hours. The computer system must have a daily back-up. Although the ATF Ruling 2013-5 supports use and maintenance of electronic records, it requires a fair amount of printouts. All records from the computer system must be printed at least semiannually, within 24-hours of request by an ATF officer, and prior to discontinuance of the database or the FFL’s business. All printouts must be retained until the next printout is prepared. (Likewise, all downloads must similarly be retained until the next download.) ATF Ruling 2013-5 is of sufficient importance to any FFL using electronic records that it is highly recommended each FFL read through the entire Ruling. Most of the details of the Ruling fall under “best business practices,” even if the steps had not become required for those using electronic acquisition and disposition records. But there is a sufficient level of detail to the Ruling that FFLs would be wise to spring board the Ruling into a standard operating procedure to regularly guide operations. Orchid Advisors provides electronic newsletter (“Advisory and Alert”) and blogs for general informational purposes only. It should not be considered a formal or informal interpretation of law. It is not intended as professional counsel, should not be considered legal advice and should not be used as such.