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Class III in PA...Informational Thread for First Timers
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Last Updated :: 10/22/2008 9:02:58 PM |
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archive.ar15.com/forums/topic.html?b=8&f=14&t=236029 LastDefender [Team Member] 6/23/2006 9:37:03 PM EDT First off I am pleased to report you can own a Transferable Machine Gun, SBR, SBS, or Suppressor here is PA. We often get the question what must I do to own one of these items. Below please find some basic information on how to obtain these items. First some words to the wise.... 1. Only do business with reputable dealers. They will hold thousands of your dollars for many months so you need to do business with honorable people. Check the various Class III boards for references. 2. You must be patient. My quickest transfer was 8 weeks, my slowest was 6 months. If you do not have the paitence to wait, do not get in the game. 3. Do your homework as to value of your potential Class III item. Do not be impulsive! BASIC OWNERSHIP INFORMATION: Okay on with how to do it. There are three common ways to own NFA items: 1. Individual Transfer: You take title to the weapon in your name. This will require photographs, finger print cards, and the all important CLEO signoff. A CLEO is most commonly your police chief, county sherrif, district attorney, common pleas judge, state police barracks commander. Others may qualify but best to check with ATF before proceeding if you deviate from the above list. Typically your cousin the local magistrate won't cut it with ATF. The CLEO signoff is the sticking point with many prospective Class III owners. Many CLEO's will not sign for a variety of reasons. Sadly, they can not be compelled to sign either. Before you pursue a Class III purchase where the item will be titled in your name, meet with your CLEO and verify that they will sign your Form 4 application. If you exhuast all the available CLEO signature options, you may need to retain an attorney if you simply must have the item titled in your name. But fear not, there are other options! Corporate Ownership: A corporation can own Class III items. As a corporation is a thing and not a person the CLEO requirement is wavied. Acceptable corporations are LLC, C and Sub-Chapter S. The item is an asset of the corporation and is not personally owned. Officers of the company are eligible to possess the item as well as those members of the company so designated by a corporate officer. Now before you all run out and set up a zillion corporations, understand that your company must comply with all PA State corporate regulations. That means there is a right way and a wrong way to set up a company. Also, you may have additional tax liablity and filing costs come tax time. Seek guideance before setting up any company for the sole purpose of NFA ownership. The principal advantage of corporate ownership is the removal of the CLEO requirement. The major disadvantage is that if the company is shut down or folds, you must transfer all NFA items title to the corporation. Trust Ownership: A trust opperates similarly to a corporation with several principal differences. One you can only have two trustees that can have access to the item and the item is held in trust for a benificiary. You can sell the item but technically all proceeds of the sale must go to the benificiary. Trusts like companies must be set up properly in order to be valid. The major advantage to the Trust route is no ongoing tax liability. The major disadvantage is the item is held for the benifit of another and only two trustees can have posession of the weapon. Note this doesn't me your Uncle Joe can't bust a clip through your new MP5. It just means he can't take it home with him to show Aunt Marge. Trusts also effectively tie up the NFA item or it's fair market value forever. TRUSTS AND CORPORATIONS ARE LEGAL DOCUMENTS! GET GOOD LEGAL AND OR ACCOUTING ADVICE BEFORE YOU SET UP A TRUST OR A CORPORATION! Remember, you do not get a "license" to own NFA items. Instead you get a tax stamp allowing the item to transfer to your ownership. This tax stamp costs you $200.00 per NFA item. For most items you will get your stamp plastered to a Form 4. If you are creating a SBR you will get a Form 1. Confused yet? Your dealer should be able to walk you through the process. I hope this helps with the basics. The Armory Forum is replete with threads discussing the many finer point so Class III ownership. Spend the upfront time investigating your selection and your dealer. Proper work up front will make sure you don't get burned on the tail end. BASIC FORM INFORMATION: Like most Federal agencies ATF has a form for everything. The most common Forms that you will come into contact with are Forms 1,3, & 4. A Form 1 is used when an NFA item is manufactured thus if you decide you want a SBR AR and take an existing lower receiver currently in your possession and go through the Class III process, the weapon will be transfered to you utilizing a Form 1. A Form 3 is used for dealer to dealer transfer. The great thing about Form 3 transfers between FFL/SOT dealers is there is no additional $200.00 tax due the Government. Their SOT (Special Occupation Tax) fee covers all Form 3 transfers. A Form 4 is commonly used for the following transfers: Individual to Individual (Form 4 to Form 4) Corporation to Individual (Form 4 to Form 4) Individual to Corporation (Form 4 to Form 4) FFL/SOT to Individual or Corporation (Form 3 to Form 4) An Individual/Corporation to an FFL/SOT (Form 4 to Form 3 Transfer) Each time a Form 4 transfer occurs, a $200.00 tax is paid to the goverment. Here in PA, NFA items can transfer between individuals if the buyer and seller reside in PA. This type of transaction will avoid any dealer mark-up BUT BEWARE... It is common practice for most sellers and dealers for that matter to demand a 50% to 100% downpayment on the NFA item. That means the sellor/dealer is holding both your money and the weapon until an approved Form 4 is returned by ATF. This can take 3-9 months. So you can see what can happen..... " Transfereable M16A1 Force to sell due to medical emergency first $10,000 get it." You can only imagine how much a crooked individual could get from multiple parties. If you are buying privately (a sale not involving an FFL/SOT) I would only suggest doing business with someone you know. Most of the NFA horror stories involving private transfers are caused by buyers trying to save a few bucks. Assuming you know the person and you agree on a price, you would complete a Form 4. Upon completeing the Form 4 you return it to either the seller (thire choice) or ATF. When ATF approves your Form 4, it will be sent to the Seller and not you. The seller will then contact you and you may take posession of your NFA item. Now what if that perfect SW-76 trnasferable sub-gun is located in Texas? If you are buying an out of state NFA item, it must transfer thru an FFL/SOT in PA. This rule is not unlike an out of state firearm purchase. Realize that if you choose to purchace an out of state item, there will be additional costs to consider: SW-76 on Form 4 in Texas $7000.00 Payment of $7000 to the seller Transfer from owner to your FFL/SOT on Form 3 Tax due $200.00 Transfere from your FFL/SOT to you on Form 4 Tax due $200.00 Fee to your FFL/SOT estimated $150-$300 There may also be PA State Sales tax due...I'm gray on that issue. SW-76 on Form 4 in PA $7200.00 Transfer from seller or in-state FFL/SOT to in-state buyer on Form 4 Tax due $200.00 Most dealers don't charge additional fees if you buy from their inventory. Again, PA State sales tax most likely would be due if you purchace through an in-state dealer. Here is a great link with access to all the relevent ATF Forms for your use and review... ATF NFA Forms Page BASIC MACHINE GUN INFORMATION As was mentioned before, the Commonwealth of PA allows private citizens, trust and corportations to possess Machine Guns under certain circumstances. Here is the basics on Full Auto's. Machine Guns come in three basic flavors: 1. Transferable 2. Pre-1986 Dealer Samples 3. Post 1986 Dealer Samples Sadly in a last minute additon to of all things, the Firearm Owner's Protection Act, President Regan effectively banned the sale of newly created machine guns to individual effective May 19th 1986. The law did permit the transfer of all registered machine guns hence the term "Transfereable Machine Gun" was born. Transferable: A transfereable machine gun is defined as a machine gun produced prior to May 19th 1986 and currently registered on a Form which permits transfer to the general public most commonly Form 3 or 4. Thus all of the weapons that are currently transferable are a mininum of 20 years old. Many are much older than that. Supply and demand drives machine gun pricing. In early 1986, drop-in auto sears were going for the outrageously high price of $50.00 + $200.00 transfer tax. Currently a transfereable drop-in auto sear can fetch over $12,000 dollars. Simple supply and demand....they just ain't making any more! Every year the supply of machine guns typically drops as weapons become inopperable or irrepairable and are taken out of the transfer pool. The inflationary tendency in machine guns is linked to our general economic condition. That said, if you do you your homework and buy smart, I have not yet met an individual who has lost money on a transferable machine gun. Pre-1986 Dealer Samples Like any business, a Class III dealer needs samples to show prospective buyers. Those samples that were in FFL/SOT inventory prior to May 19th 1986 are now called Pre-1986 Dealer Samples. They can be freely transfered between FFL/SOTs but NOT between non- FFL/SOTs. You will notice they are priced lower than fully transferable machine guns. This is because the pool of prospective buyer is much smaller. Post-1986 Dealer Samples: Typically for an FFL/SOT to possess a post 1986 dealer sample, they need a demo request letter usually from a local police department. These post dealer samples have limited value as each time they are transfered it must be as a result of a demo letter and then oly dealer to dealer or dealer to Approved Law Enforcement Agency. Pricing on these guns most accurately reflects what list price costs would be if for some stroke of luck the Gun Owners Protection Act were to be repealed. BASIC SHORT BARRELED RIFLE (SBR) INFORMATION Again, most people make their own SBR from an existing AR lower currently in their possession. Alternately you could buy and existing SBR on the open market. There is no savings regarding the $200.00 tax stamp as both Form 1 and Form 4 tax stamp costs are the same. Here is link to everything you need to know about how to make your own SBR... Quarterbone's SBR Info Page Now a word to the wise about making your own SBR. Do not have an upper with a barrel of less than 16" in your possession prior to receiving your approved Form 1 or 4. This is a felony. Even if the weapon is not assembled. The legal term is "constructive possession." Meaning you have the constituent parts of a SBR all in your possession. The law does not care if the upper is mated to the lower. Oh Gary...but who would ever know? Hmmmm...let's see? Angry spouse? Upset child? a friend who turns you in to get himself/herself out of a minor beef Yes all of these things can and do happen. Best to be above board and wait til you have your approved Forms. Regards, Gary slidestop [Moderator] 6/24/2006 5:05:08 PM EDT Gary Thanks for taking some time out of your day to do this . I'm sure this will help out all those looking to take the jump . Thanks again Jerry You can find more information along with web sites and forms at this link >> www.ar15.com/forums/topic.html?b=6&f=17&t=199928 For those of you in Philadelphia that would like to obtain class lll goodie's your route would be the second option, Corpoerate Ownership. I would like to keep this as an Informational Thread only , please start another thread if you want to chit chat about this subject. If you have "information" to add please do so hrt4me [Member] 9/26/2006 1:41:59 AM EDT Originally Posted By LastDefender: A Form 4 is commonly used for the following transfers: Individual to Individual (Form 4 to Form 4) Corporation to Individual (Form 4 to Form 4) Individual to Corporation (Form 4 to Form 4) FFL/SOT to Individual or Corporation (Form 3 to Form 4) An Individual/Corporation to an FFL/SOT (Form 4 to Form 3 Transfer) Not quite sure what you're trying to explain with the FFL/SOT to Individual or Corporation transfers, and vice versa. Why do you write "Form 3 to Form 4" and "Form 4 to Form 3 Transfer", respectively? Adding Form 3 to the mix confuses the issue. Originally Posted By LastDefender: Each time a Form 4 transfer occurs, a $200.00 tax is paid to the goverment. Yes, but there are exceptions, e.g. the $5 transfer tax for Any Other Weapons (AOWs). Originally Posted By LastDefender: SW-76 on Form 4 in Texas $7000.00 Payment of $7000 to the seller Transfer from owner to your FFL/SOT on Form 3 Tax due $200.00 Transfere from your FFL/SOT to you on Form 4 Tax due $200.00 Fee to your FFL/SOT estimated $150-$300 There may also be PA State Sales tax due...I'm gray on that issue. There is never a tax on a Form 3, that is only for tax-exempt transfers between FFL/SOT's. A transfer from an out-of-state owner to your FFL/SOT in your state requires a Form 4 with $200 transfer tax (or $5 for AOW's). Originally Posted By LastDefender: Pre-1986 Dealer Samples Like any business, a Class III dealer needs samples to show prospective buyers. Those samples that were in FFL/SOT inventory prior to May 19th 1986 are now called Pre-1986 Dealer Samples. They can be freely transfered between FFL/SOTs but NOT between non- FFL/SOTs. You will notice they are priced lower than fully transferable machine guns. This is because the pool of prospective buyer is much smaller. Also note that an FFL/SOT can legally keep any pre-86 dealer sample as a personal gun if (s)he gives up the FFL/SOT status. Not the same for post-86 DS guns. Do you have any information on whether NFA items in general, or any specific items such as machine guns, must be reported/registered with any Pennsylvania authorities if someone moves to the state already owning those NFA items? LastDefender [Team Member] 9/26/2006 11:05:36 AM EDT This was a general post on common Class III ownership issues. The examples are for illustrative purposes. To keep the thread focused on the most common questions asked here. AOW's are not common and as such were not addressed. The most common questions relate to MG's, SBR's and Suppressors. As to out of state transfers on the common Class III items, there is always an additonal $200 tax due for non-FFL/SOT's making doing business in-state preferable. Again, this is an introductory thread for the first time buyer. It was intended to provide basic information. It was never intended to deal with every aspect of Class III purchases nor was it intended to address FFL/SOT holders. To answer your last question, I am aware of no specific Pennsylvania regulation regarding registration of Class III items over an above what ATF requires when you move an NFA items across state lines. I will do more research on this an update the tread later. Regards, Gary |
