On Monday, ATF announced Ruling 2022-1, signed August 17, 2022, authorizing FFLs to retain an electronic version of each ATF Form 4473, provided the method of digital storage and conditions of the ruling are met. Retail FFLs seeking to eliminate paper and take advantage of the new ruling must comply with ATF Ruling 2016-2 and subsequent rulings.
ATF has provided required procedures for the digital scanning and electronic retention of paper Forms 4473 more than three years old, clarifying that FFLs who use an e4473, instead of the paper format, may retain the form electronically.
Having received numerous inquiries from FFLs wanting to electronically retain completed Forms 4473 rather than printing the electronically completed forms and retaining them in paper form, as required by the Gun Control Act and other regulations, the new ruling superseding all previously approved alternate methods or procedures (i.e. variances) covering the use of electronic storage of electronic ATF Forms 4473.
Digital Storage Benefits
Cited by ATF in the ruling, the digital storage of Forms 4473 has many benefits for both licensees and the agency itself, including saving space, time, and money in recordkeeping and auditing expenses. Electronic retention also improves firearms tracing efforts, promotes efficient ATF compliance inspections, and provides more secure storage in case of environmental damage, loss or destruction. Further, digital storage is not contrary to any provision of law, should not increase ATF costs, nor and should hinder the effective administration of the regulations.
For these reasons, ATF found there was good cause to authorize an alternate method or procedure from the federal firearm requirements relating to the retention of Forms 4473.
ATF Ruling 2022-1 Requirements
However, ATF Ruling 2022-1 only permits FFLs to retain electronically completed Forms 4473 in an electronic format if all 15 requirements below are met:
- Licensees must provide written notification to their local ATF Industry Operations Area Office 60 days prior to implementing an electronic Form 4473 retention system.
- Transactions must first be completed using an electronic Form 4473 in accordance with ATF Ruling 2016-2 (or subsequent ruling) and all forms must be retained in an electronic format.
- Forms 4473 must be saved in an unalterable format. Original electronic Forms 4473 must be retained and may not be deleted, amended, replaced or otherwise altered. Consistent with the Notices, Instructions, and Definitions on the Form 4473, if errors are found on a Form 4473, corrections may be made to a copy (electronic or paper) of the original Form 4473 and the corrected copy should be electronically attached to the original electronic form and retained as part of the FFLs permeant records.
- All supplemental ATF forms or documents from a transaction (multiple sale forms or documentation showing the exception to the nonimmigrant alien prohibition) must be electronically attached at the end of Forms 4473.
- ATF must be provided uninterrupted access to the database in which electronic Forms 4473 are stored to facilitate a compliance inspection, complete a trace request or conduct a criminal investigation of a person other than the licensee. ATF access to Forms 4473 must be in a “read only” capacity.
- ATF must be provided access to the database in which electronic Forms 4473 are stored with a minimum of one (1) electronic access point or computer terminal for every 500 Forms 4473 executed over the previous 12-month period. An FFL who offers computer terminal access is not required to provide more than five (5) terminals regardless of the number of Forms 4473 executed during the 12-month period.
- The retention system must allow Forms 4473 to be printed and the FFL must print any Form 4473 upon request from ATF.
- The retention system must retain Forms 4473 in alphabetical, chronological or numerical order. The retention system must allow for searches or queries to be made by transferee/buyer name, transfer date, transaction number (if any), firearm type, model, manufacturer/importer, caliber, size, or gauge, and serial number.
- The retention system must backup Forms 4473 upon the completion of a transaction or when a transaction is stopped, and Forms 4473 must be retained in the system.
- The retention system must allow access to Forms 4473 and the acquisition and disposition (A&D) record simultaneously.
- The retention system must have the ability to flag or set aside Forms 4473 to save for further review during inspections.
- The retention system must allow or provide sorting of Forms 4473 during ATF compliance inspections.
- Whenever a transaction is stopped, put into a pending status, or completed, the Form 4473 must immediately be downloaded and saved to a computer hard drive, server, USB Flash Drive, or other similar electronic storage device located at the licensed premises. If the licensee utilizes a contract host facility, such as a remote server or cloud storage provider, all Forms 4473 must also be electronically saved to an onsite electronic storage device that is updated on the day of any change to, or addition of, database record(s) to protect the data from accidental deletion or system failure. In all cases, electronically retained Forms 4473 must be downloaded in a format that is unencrypted with the required information readily apparent and retained on a device that is located at the licensed premises for the length of time prescribed.
- ATF recognizes there may be circumstances where a licensee’s electronic system may fail, be unavailable, or otherwise not utilized, and paper Forms 4473 may be completed. Licensees must retain any original paper Forms 4473, unless digitally scanned per the conditions of this ruling, for the period specified. Upon absolute discontinuance of business, all retained paper forms must be delivered to ATF. When a licensed business is discontinued and succeeded by a new licensee, all retained paper forms shall be delivered to the successor or ATF.
- Upon absolute discontinuance of business or when a licensed business is discontinued and succeeded by a new licensee, any Forms 4473 retained in electronic format in accordance with this ruling must be delivered in electronic format to the ATF National Tracing Center’s (NTC) Out of Business Records Center in a format suitable for imaging, such as a TIFF, JPEG, or PDF. If the forms will be submitted in a PDF or TIFF format, the licensee must ensure that Optical Character Recognition and Intelligent Character Recognition are turned off/disabled, and images are flattened and not electronically searchable. The forms, retained alphabetically by name of purchaser, chronologically by disposition date, or numerically by transaction number, must be delivered on a media device such as a USB drive, CD, DVD, etc.
ATF Ruling 2022-1 also authorizes FFLs to digitally scan paper Forms 4473 and retain in an electronic format provided all previous and following three requirements are met:
- FFLs who have paper Forms 4473 completed prior to, or after this ruling, may elect to digitally scan Forms 4473 older than three (3) years from the date the firearm transfer occurred, the date the transaction was denied or cancelled, or the last date of entry where no sale or delivery of the firearm occurs, including supplemental ATF forms or documents from a transaction. Forms 4473 must be scanned in an expeditious manner and retained in the same manner as required in conditions 3-5, 7-8, 13, and 15 above.
- An FFL electing to digitally scan and electronically retain paper Forms 4473 older than three (3) years must ensure all electronic documents are an exact image of the paper form, include all pages of the paper Form 4473 and any supplemental ATF forms or documents from a transaction, is incapable of being altered without tracking of the alterations, and is saved to an onsite electronic storage device. Only after a paper Form 4473 is converted, saved in an electronic format in accordance with the requirements of this ruling, and verified to be complete and correct, may the paper Form 4473 be destroyed.
- When submitting files to the NTC’s Out of Business Records Center, the file names for digitally scanned and electronically retained paper Forms 4473 must not contain personally identifiable information, including transferee/buyer name, address, date of birth, social security number, etc.
If an FFL fails to abide by the conditions of this ruling, uses any procedure that hinders the effective administration of federal firearms laws or regulations, or any legal or administrative difficulties arise due to complications from electronic retention, the licensee is no longer authorized to utilize electronic retention of ATF Forms 4473 under this ruling and must revert to the retention of paper forms.
Orchid & 4473 Cloud Integration
At Orchid, we know just how beneficial the digital storage of ATF Forms 4473 can be for firearm dealers. After all, Orchid obtained the first ever digital storage variance for an FFL back in 2018. Since then, Orchid POS™ and eBound have become leading retail technology solutions processing nearly 40,000 e4473s every month. Plus, our software seamlessly integrates with 4473 Cloud for ATF-approved, compliant Forms 4473 digital storage.
Contact us today to learn about our leading retail FFL solutions, how to alleviate the burden of paper 4473s with Orchid POS, eBound and 4473 Cloud, and how to stay compliant while navigating ATF Ruling 2022-1 with in-house professional legal services.