Tricky Class 3 Question
Hello,I has looking to getting a class 3 and asked about getting it for personal use...and I need some help.again...LOL... I have my FFL and have a few questions.....1- What do I need to do to transfer class 3 guns...what fourm,fee,tax..ect...2-If I get the propper stuff to do the transfers,and I able to won a class 3 gun without getting all the stuff requried by a citizen to own one ?? I live in Utah,and they are legal here.Sevral shooting ranges have them they rent to people to shot on thier range.....I went to the ATFE page,but as usaul...it reads like stero instructions.....Anyone have a minute to explain it to me in english ? Thanks,Oro
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Hello Oro. There is nothing tricky about this process...I thought you were going to try to really stump me! Since you have your TYPE 01 FFL you have the first step taken care of. Your next step is to obtain an Employer Identification Number from the IRS. If you already have one for your current business then you can ignore these instructions. If you do not have an EID you must apply for one using an original FORM SS-4 from the Internal Revenue Service. This must be an original form, they will not accept a copy of any sort (down loaded or photocopy). Once you have your EIN you need to apply to become a Special Occupational Taxpayer. For FFL TYPE 01 dealer this is a CLASS 3 SOT (hence the name class 3). You need an original ATF FORM 5630.5 and $500 per year. The SOT Taxes are all paid beginning each July 01 and are NOT prorated. Apply now and you get the full year. Wait until next June and you get one month. Are you with me so far?
After you have applied the BATFE has 90 days to approve or deny your application. This is strictly a tax issue and there is no further background investigation-- your FFL has taken care of all of that. Since you live in Utah, a "free state", there should be no problems. Once approved you will have your EIN/SOT number on file with the BATFE and you can use ATF FORM 3, application for tax exempt transfer to an SOT. There is no $200 transfer tax, no finger prints, and no CLEO sign off needed. The approval period on FORM 3 transfers takes around 8 weeks or less instead of 6+ months for FORM 4's. Sounds pretty simple and it really is.
So what is the catch? Well you need to actually be DEALING in these firearms. You are not paying any NFA Tax beacuse you are not supposed to be keeping these firearms for your own use. If you are not selling you are going to be drawing attention to yourself sice BOTH the buyers and SELLERS must list their SOT numbers on approved FORM 3's. Some one at the NFA Branch is going to wonder why your number shows up all the time for purchases but never on sales? Be prepared to do some business or don't bother to apply.
When and if you give up your SOT status those NFA firearms which you did not pay any transfer tax on become subject to tax INSTANTLY! Start getting the idea that you can hold onto 20 machineguns which you bought tax free and I assure you that the BAFTE and the IRS are going to slam you very hard as a tax cheat. Any fierarm you have in iventory and wish to keep must be transfered to you on a ATF FORM 4 just like anyone else. This means $200, finger prints, and an CLEO sign off. Don't fool your self into thinking that no one will pay any attention to you, there are guys sitting in prison right now for skipping out on NFA Taxes that they owed. What else can I tell you?
Mark T. Christian0 -
Thanks Mark. I wouldn't try tp pull a fast one on them....LOL....I am a home occupiance lic. allready,and they have a good time with me...LOL...I really don't think I would get alot of people looking for NFA's to pay the $500 tax,allthough about all I sell are high end and limited edt. guns...hard to compete with Wal-mart and the others with Mod. 700 and 70's...........thanks for the info,I guess I will call my local ATF guy and see what kinda mess it will cause to just buy one for myself,,,,,Thanks again.Oro 0 -
There is really no reason that you can't become an SOT (even home based) and if you can do some business with PD's of other dealers then you may want to invest the $500 and try it for one year. On the other hand, if all you want is one NFA firearm then just go through the regular transfer process using the FORM 4 and paying the $200 NFA Tax. It would only take a couple of sales per year to other SOT's in order to justify your SOT status and I'll bet you could manage that with very little effort.
Mark T. Christian0 -
As a SOT & dealing with LEO's, puts you in a postion to take their trade-in's.
You would be suprised at what some local PD's have in their safes that they no longer use.
Good example: NIB M-16's, that were given to them or they had paid $500 for, but are now worth $8,000 - $12,000 on the open transferrable market.
Another true example on this board was one SOT that picked up some trade-in Thompson machine guns from a PD for $750 that were tranferrable on form4. The guns were worth in the $15,000 range each!
Plus a lot of PD's are dumping the HK MP-5's, due to parts procurement problems. Some are traded-in at the $800-$1,200 levels,
on the market they are bring in over $10,000 on form4's.
If I were in your postion, I'd try the SOT for a year, talk to some PD's, you MIGHT get lucky and be able to justify the hassle & expense of the SOT.
Noticed I said MIGHT!, as others have preceeded you, but you never know.
Walte0 -
Walte makes a good case for you Oro. Keep in mind that with a PD trade in there is often a balck cloud inside the silver lining; a lot of their machineguns and other NFA firearms were registered to the agency on ATF Form 10. This is a very BAD form (good for the PD but bad for anyone else). Form 9 items can NEVER go to anyone (including dealers) other than another PD or the government. M16's or M14's which were provided to departments by the DoD, either free or at bargan prices ($100 to $500) were nearly always transfered on Form 10 and can't be touched.
Many of the old Thompsons were registered on Form 10's at the end of 1968 when PD's suddenly discovered that they were no longer exempt form NFA regulations (they always had been and were now very upset). Form 9's do not require the agency to disclose where the firearm came from or anything otehr than a description and a seial number (as opposed to using a Form 1 which asks many more questions). This is the reason Form 10 was used so often, it was a quick and easy form for PD's to use without having to get out their purchase records and research where the NFA firearms came from originally. Most chiefs and sheriffs know that the old 1921A1 sitting in their gun vault unused is worth huge money, but it can't be sold. A small agency could purchase a new squad car if they could unload that single Thompson but they are stuck with it and usually just display the gun at open houses. I know one sheriff who has five Reisings which his agency received in the early 1960's (for $25 each). They are worth $4000 on the open market but can't be transfered due the use of Form 10 in 1968. The current sheriff can't bad mouth the old sheriff who registered these guns that way 35 years ago too badly-- it was his father!
Oro, I still think that you can make a go of this if you just put forth a little bit of effort. Besides machineguns (far too expensive for the average joe) there are items like short barreled rifles and shotguns, and silencers which have wide appeal...and lower prices. Don't forget pen guns; these are only a $5 transfer and can provide lots of transfers for you. Utah is a "free state" and there is a fair sized retail market out there. You can also do transfers for individuals who locate NFA firearms out of state and need to bring these items in. This means business that you can show the BATFE to justify your SOT status as well as a few bucks in your pocket. Don't worry about the WALMART down the road-- THEY won't be competing with you on CLASS 3 sales any time soon! Give it a try, its only $500 and you might just find Class 3 becomes the major part of your business.
Mark T. Christian0 -
Now another issue for consideration. In May 1986 our federal government put a restriction on further machine guns sold to the public. All machine guns sold have to be PRE 1986 to citizens. Only dealer samples (guns built after 1986 can be sold to PD, government entities). Citizens are not allowed to purchase guns made after 1986. 0 -
I run a contract security company that deals in DoD/ Federal contracts overseas. More and more we are dealing with domestic contracts (i.e Katrina/Rita security support, etc.). I maintain a large cache of weaponry in both the Middle East and Far East, but have several questions regarding weapons procurement, storage, transportation to and from job locations, etc.). I cannot find which governing body be it Local, State or ATF law enforcement that can give me straight answers in regards to these questions. I am currently appling for a FFL and since we use automatic weaponry in some cases, am interested in a CLIII as well. Of course i may not need any of this as my business is incorporated and all the weapons purchasing, storage and usage would be on behalf of the company. Can someone please advise me on what I need to do to be legal here in the US. 0 -
Jason, there is only one place where you can get all the answers to your questions: Federal Firearms Regulations Reference Guide (ATF P5300.4). I suggest that you obtain a paper copy from ATFE & read it cover-to-cover. ATF will answer specific questions that you submit in writing, but will not tell you how to set up your business.
There are special rules for corporation-owned weapons, but you must still follow the same basic procedures as individuals do. As for importing your C3 weapons, I believe that you will find that impossible; you will have to outbid the US collectors for currently registered US guns. (In any case, the potential liability incurred from hiring a security company that armed their guards with C3 weapons will scare off most potential clients, with the possible exception of the US government.)
Running a contract security company is not a reason for which ATF will issue an FFL; you must be the business of selling or repairing firearms. You better get your copy of 5300.4 & start reading.
Neal0 -
Things your have to do first
1) Aquire a state sale tax permit
2) Aquire your Federal Tax ID number for the business
3) Obtain a ffl 01 or above, 02= Mfg of class3 weapons, 03= Dealer in NFA weapons, 07=Mfg of of non class3 weapons, 06=Importer of weapons, all the way up to class 16= Mfg of Nukes
4) Aquire a SOT (Special Occupation Taxpaper Lic)
from the BATFE
5)File with the US Sate Dept, for import & export. NATFR taxes
6)Locate a sutable building with full security systems and a large vault
7) Get yourself a good lawyer that can pratice in the Federal court system and knows the NFA reg's / laws.
8) Find a bonded Customs broker in "Free Trade Zone", to store your incoming stuff. Unitl it clears customs and the BATFE inspectors.
9)Conclude your meeting with the BATFE compliance agent, and get his sign off
Once you have meet all of the above qualifications your in business.
Cost over all, your looking at a good $10,000 in permits & license's.
Then your lawyer will require a good retainer of at least $2,000 - $10,000, cause your going to need one.........
As for a bring in any weapons from offshore, lots of luck!!!!!!
As your going to find your fighting a uphill battle all the way.
Estimated time to complete all of the requirements, your looking at least a full year to get it all together.
And if you think they (BATFE) will let you run this kind of operation from your home, forget about it, its not going to happen...
Walte0 -
Mark..nice to see you back. Haven't seen you post in quite awhile. You're always a great source of information.
NRA Life Member0
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