The ATF is accepting comments on the proposed NFA changes regarding trusts.
Wally guest-penned the following about this very issue. I'm presenting it for your review. In any case, hit the above link and respectfully voice your opinion...
Obama is trying to push forward action that makes NFA firearm ownership significantly more difficult, and as par for the course, the action is all show and no go. It does nothing to have any impact on NFA crime (already immeasurably low) but it does add some nonsensical hurdles to ownership.
TL/DR: click *here*, hit the “Comment Now” button in the top right and voice your opposition of the new requirement for CLEO approval on trust & corporate NFA transfers.
NFA firearms are the group of firearms regulated tightly since 1934. These are short barreled rifles, short barreled shotguns, silencers, machine guns, destructive devices and another category defined as ‘Any Other Weapon’. These are legal on a federal level assuming the items are registered with the ATF/NFA.
Most states allow most of these categories as well.
Last year ATF approved 40,000 NFA transfers to trusts and corporations, and this is somehow being called a loophole that needs to be filled. It’s a legally valid option, and has been in common use for years- but now there’s a call to “do something”. Keep in mind that NONE of these 40,000 transfers has resulted in any criminal charges – there’s no nefarious nature here, but that is immaterial when the demand is just to “do something”!
The NFA ownership process as it stands is somewhat awkward and incredibly slow. In order to buy one of these items, in most cases it is a $200 tax on the transfer, photos, fingerprints and ATF does a full background check on the purchaser and a pedigree check on the item. Once it is approved to you, it is yours and yours alone – you can’t loan it out of your possession (that’s an illegal transfer). If the purchaser is disqualified (a felon, for example) or the pedigree isn’t perfect (unregistered transfer in the past, for example) the transfer is denied. Aside from the tax, the other big turn off is the process time – this approval is currently running about 10 months, best case – as in you want to buy a silencer or SBR that your dealer has in his store. And even after ATF approves the transfer of a specific item (by make and serial number) to you (or your corporation, or your trust) when you pick it up from the dealer you still have to fill out the 4473 transfer form _and_ the dealer performs a NICS check on you when you pick it up. Keep in mind that the NICS check is required, and is always performed on the person receiving the transfer.
If you apply to transfer in a NFA item, ATF requires your application be signed by your local Chief Law Enforcement Official. The signature basically states that you receiving the item will not be in violation of local laws. Now even if that is the case, as it is in most states, many CLEOs will not sign in an attempt to block the transfer. If a CLEO doesn’t think you should own it, they can simply withhold a signature and your application is dead in the water.
Interestingly enough, NFA transfers to corporations and trusts do not require such a signature (ok, approval) from the CLEO. Last year, ATF processed some 40,000 NFA applications to corporations and trusts as opposed to 29,000 NFA applications to individuals. This sure seems to me to demonstrate that there are a lot of folks preferring the trust route. While it does (currently) eliminate the CLEO signature, trusts are also good legal vehicles for estate planning and controlling legal access to items.
Their intent is now to enforce CLEO signature for all “Responsible parties” of applying parties. So a corporate transfer would require CLEO approval for all members of the board. For a trust transfer, trustees and possibly even beneficiaries would need CLEO approval.
This poses an interesting question, as there are a lot of trusts that have beneficiaries that may be minors. This is a perfectly valid estate planning option (ie: if I get hit by a bus, the Trustee of my trust can sell the assets (NFA guns included) and give the proceeds to my beneficiary whom is a minor). But as this proposed ATF rule change is interpreted, I’d need to get a CLEO approval of my 14 year old niece. This is an interesting turn because at 14, NFA ownership is illegal, and thus the CLEO *CANNOT* sign saying that ownership wouldn’t violate any laws. So a trust could be legally valid for estate planning, but not able to be approved under the CLEO clause of the ATF transfer form. Not a good situation, and certainly not consistent with the thousands of trusts that may be in the same condition.
Let’s look at this in the real world. For example, you’d like to get an automatic M16 machine gun. Your options would be: Spend $15,000 to 25,000 on a NFA registered M16, wait 10-16 months for the transfer to be approved (while ATF/FBI investigates your past, your corporation, or your trust, and ATF/NFA investigates the history of the gun) , and then after the transfer is approved by ATF, you still have to fill out and sign a 4473 firearm transfer form and pass a NICS background check when you take possession of the item from the FFL dealer.
To repeat that, even if you are a disqualified person and set up a sham corporation or trust, you are still forced to undergo a NICS background check and sign the 4473 form under penalty of perjury. This system is set to block disqualified folks from taking ownership. If you are a disqualified person, there is no way that you can legally complete this transfer.
Folks willing to do this the right way lay out thousands of dollars and wait many many months to have legal transfers approved. Nobody is going to those lengths to try to beat the system. If this wasn’t visible in the logic above, it should be visible in the crime stats of those 40,000 transfers. ZERO. Zero is a pretty darned clear indicator that there isn’t a problem with the system.
The system now is slow and burdensome enough. As a federally licensed NFA manufacturer, if I wanted to build a custom SBR for you, John Q HappyCustomer in another state, the NFA approval process would be roughly as follows, based on today’s wait times.
Today: place an order
Two weeks: we build your custom short barrel rifle and notify ATF/NFA of the construction.
90 days later (~day 114): ATF checks our license and verifies the build, and acknowledges existence of the short barrel rifle.
3 days later (~day 117): I file for transfer of the short barrel rifle to a FFL/SOT in your state.
100 days later (~day 217): ATF reviews our license, your dealer’s license, the pedigree of the SBR, and approves the transfer to your local dealer.
7 days later (~day 224): the SBR arrives at the dealer, now you can start your transfer paperwork
7 days later (~day 231) assuming if you are in a friendly town/county: file with ATF for the transfer. Don’t forget to include copies of your trust, corporation, citizenship, photos, prints, and the CLEO signature if you can get one.
10 months later (~ day 541): ATF approves the transfer after checking your prints, trust or corporate docs, citizenship, your dealer’s license, and pedigree of the firearm.
One week later, (~day 548): notice of approval arrives at your local FFL dealer.
One day later (~day 549): you run down to the dealer and STILL have to fill out the 4473, certify that you are not disqualified, and the dealer will work with the FBI to conduct a NICS check at the time of transfer.
So, assuming you get a quick signature from the CLEO and all of your paperwork is perfect (by ATF standards), it would be a touch over 18 months, start to finish, for you to legally take possession. The NFA transfer system is quite thorough, and they do check everything at every step of the operation. To allege that is inadequate is nonsense. Again, the 40,000 trust/corporate transfers have resulted in zero criminal violations. Even since the inception of NFA in 1934 there have been a total of two NFA registered (that’s the only way they are legal, folks) machine guns used in crimes and one of those was even by a law enforcement officer.
I could try rational logic, but the point is that the action proposed isn’t rational. It’s another big sweeping gesture that will only slow down the legitimate NFA collectors.
So, folks, if you like your NFA toys (as we sure do!) please follow *this link* and hit the ‘comment now’ button and please respectfully provide some feedback about the changes to requiring CLEO signature.
At the very least, let them know that we're keeping tabs on this...
That is all.