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In this issue:
– Article: The Role of the FFL in Private Gun Sales

– Alert: U.S. Munitions List Update

The Role of the FFL in Private Gun Sales

Facilitating private transfers might be new to your business as a Federal Firearms Licensee, but it’s not new at the state level and – as it turns out – it’s also not new for the Bureau of Alcohol Tobacco Firearms and Explosives.  With all the changes that took place in 2013, we thought we’d share this morning’s coffee over a discussion of the topic.  Even if you think it’s not applicable in the state of your FFL, read on – the ATF issued a “Procedure” in 2013 and it’s applicable nationwide.

The oldest laws regulating private gun sales were enacted in California in 1991.  A number of states regulate private gun sales between individuals, including California, Colorado, Connecticut, Hawaii, Illinois, Iowa, Maryland, Massachusetts, Michigan, Missouri, Nebraska, New Jersey, New York, North Carolina, Pennsylvania, and, Rhode Island.  Some states provide for law enforcement officers to perform a background check on the putative purchaser.

It’s at the ATF level where one finds a range of materials, from a “Best Practices” brochure on private firearms transfers to an “Open Letter” to a “Procedure.”  All of the materials tie back to the Presidential Action Items, issued in January 2013, and none of the items received much press.

The same month as the 23 Presidential Action Items were released in January 2013, the ATF issued an “Open Letter to All Federal Firearms Licensees.”  The letter launched on a theme of the “ability [of FFLs] to enhance public safety and assist law enforcement by encouraging and facilitating transfers of firearms between private individuals through their businesses.”  

However, the brief bullet points within the letter turned out to be a bit of an understatement.  Two months later, the ATF issued a detailed, four-page “Procedure” titled “Recordkeeping and background check procedures for facilitation of private party firearms transfers.”

Perhaps the most important item to take out of ATF Procedure 2013-1 is that it requires a special notation on the ATF Form 4473, specifically “Private Party Transfer,” along with a corresponding entry in the Acquisitions & Dispositions record.  The ATF quite literally emphasizes this point about the ATF Form 4473 notation, writing “the FFL must record the words “Private Party Transfer” on the ATF Form 4473, Item 30c.”

The ATF Procedure 2013-1 should be considered mandatory reading for any FFL that engages in a private transfer.  The procedure details the various scenarios of a transfer and provides specific directions on to handle each scenario.  As outlined by the ATF, the scenarios are:
immediate proceed transactions;
denied or cancelled transactions;
delayed transaction without a subsequent denial; and,
delayed transaction with subsequent denial.
In the best case scenario, the seller and the buyer remain on premises with the FFL while the background check is run and NICS immediately returns with “proceed.”  In that best case, the gun goes into and out of inventory and A&D Book in a smooth series of transactions.

In the worst case scenario, the seller brings in the gun, leaves it with the FFL (who puts it into their A&D Book), and the NICS is a delayed denial.  The next step for the FFL is then to run a background check on the seller, which could also come back as denied.  You may wish to note that although the Procedure paints this scenario, it does not then cover how to handle what will surely be the negative reaction of the owner, who will now neither sell his gun, nor have it returned.

The private seller does not have access to or permission to use the National Instant Criminal Background Check, or, NICS.  Only FFLs have that access, and it is for the legal purpose of screening a prospective customer who wants to buy a gun.  If an FFL does not want to be involved in private sales, it is not required to do so.  Correspondingly, if the private seller cannot locate a willing FFL in a state that regulates private sales of firearms, the seller may not be able to lawfully sell the firearm.

The ATF has also started separately reporting private sales facilitated by FFLs in its “Total NICS Firearm Background Checks” monthly reports.  For the report ending February 28, 2014, states with private sales greater than one were reported for Maryland and New York, including statistics for “return to seller,” reflecting uncompleted private sales.

Other topics covered in the Procedure are handgun storage or safety devices, reporting of multiple sale or dispositions of pistols and revolvers or certain rifles, NFA firearms, and out-of-state transactions.

There are several practical aspects of FFL-facilitate private gun sales, including the limits by states upon the fee that can be charged by an FFL for performing the service.  The range of fee limits appears to be from $10 per firearm to $35 per firearm – limits which have prompted some FFLs to adopt policies against facilitating private transfers.  FFL opposition includes the loss of employee time, recordkeeping requirements (which are the same as for firearms upon which the FFL makes a profit), and liability.

The real difficulty for FFLs wanting to offer this service to their customers is the need for on-going attention to both federal and state laws regulating private sales.  None of the state laws or websites reviewed was designed to reflect federal requirements like the procedure for taking the firearm into inventory under the ATF 2013-1 Procedure.

Although federal and state databases have been connecting with increased regularity for NICS since 1986, an FFL may experience disparate directions between federal and state viewpoints on FFL involvement in private sales.  This would lead us into questions of “jurisdiction” and “superseding laws,” but that is going to have to be another conversation for another cup of coffee, probably with a lawyer in the room.

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.