An older fellow who is an acquaintance/friend of mine has just bought parts for a lower.  He wants me to put it together for him and he wants to pay me.  I will not take his money and will do it for free because its fun and he is a nice man.

I am curious however if it is legal to receive payment for putting together something like that without any kind of licence?

The going rate for me is a cup of coffee and a handshake.  I helped a younger friend build his lower, basically I just helped while he used my tools and followed the AR15.COM assembly guide.

Basically what he said.  My tools, expertise and a laptop with ARFCOM's building instructions.
The last time I assisted in helping a friend build an entire AR I drive for a couple hours so he bought me lunch.

I work for beer or food.

You should "help" him build his lower rather than build it for him.

Some will say doing so constitutes "manufacturing" whereas others will say a one-time issue is no problem.  I know if you make a habit out of it, it would certainly constitute "manufacturing" and thus you WOULD need a license for "engaging in the business".

Any time you assemble a receiver into a functioning firearm, you are "manufacturing" said firearm, at least that is what the local (Orlando, FL) ATF office told me some years ago in reference to me building AR15's for LE duty use.

In short, if you're curious about perhaps doing it as a side job for extra income, yes, you will need a license.  This is just my understanding of it and I could very well be incorrect.

and bring beer

You have got to be kidding me

I built a lower for a friend of mine one time. He paid for all the parts and bought me lunch. I do not charge anybody for any AR work I do for them. All they have to do is pay for the parts. I look at it as a way to help others by using my skills that God gave me the ability to learn.

This.  Have him do everything with you helping

You aren't manufacturing anything. You are assembling parts. The Lower Receiver is serialized and already transferred AS a rifle (or pistol as applicable). The manufacturing portion was already done before you got the parts.

The legality of doing it a lot and getting paid for it would involve you making repeating income for a service, and Uncle Sam demands his income tax.

Actually, it's transferred as an other on the form or at least it is supposed to be.

Yup. It's so stupidly easy to build that even a first timer with a little guidance should have no problem.

 

Obviously the law treats a receiver like it is an assembled firearm at point of purchase yet it is hypocritical when it comes to assembling what is considered an assembled firearm.You can assemble the upper and you should help your friend assemble the lower and let him attach the upper to the lower. On the other hand should something not go as planned and an accident happens rest assured friends and their relatives and the law will be pointing fingers at you. It is after all a firearm and it is not to be confused with shooting hoops in a friend's driveway.

That's because they would almost certainly be "engaged in the business" of doing so, which requires a license.  Doing the same might or might not apply to an individual. Actually, wouldn't necessarily apply to an 01 FFL if he did the occasional one as a favor or free workshop or whatever either though I'm sure most would stay well clear of that just in case.  I also don't know if just doing a lower for someone for profit might be considered gunsmithing? If so, that's covered by 01 FFL.

At any rate the acid test for individuals to do it, whether it's manufacturing or gunsmithing, is same, requires a license only if "engaged in the business" of doing it.

From USC 18:

"The term “engaged in the business” means—
... as applied to a manufacturer of firearms, a person who devotes time, attention, and labor to manufacturing firearms as a regular course of trade or business with the principal objective of livelihood and profit through the sale or distribution of the firearms manufactured"

(there is similar paragraph to cover gunsmithing too)

"The term “with the principal objective of livelihood and profit” means that the intent underlying the sale or disposition of firearms is predominantly one of obtaining livelihood and pecuniary gain, as opposed to other intents, such as improving or liquidating a personal firearms collection: "

Same  for selling firearms and loading/reloading ammo too, btw.

- OS

 

Thanks for the correction. I just checked out some of my older documents. "Other" is correct.

Is the interpretation of assembling being considered manufacturing a Federal interpretation or a state law? I'll check on BATFEs website in the mean time.

How do any of the tens of thousands of people every year legally assemble their lowers with parts and top it with an upper without an "07"

Thanks in advance for the info

Here we go.

The term “manufacturer” is defined by 18 U.S.C. 921(a)(10) as any person engaged in the business of manufacturing firearms or ammunition for purposes of sale or distribution.  As applied to a manufacturer of firearms, the term “engaged in the business” is defined by 18 U.S.C. 921(a)(21)(A) and 27 CFR 478.11, as a “person who devotes time, attention, and labor to manufacturing firearms as a regular course of trade or business with the principal objective of livelihood and profit through the sale or distribution of the firearms manufactured.”  The term “dealer” is defined by 18 U.S.C. 921(a)(11)(B) and 27 CFR 478.11 to include “any person engaged in the business of repairing firearms or of making or fitting special barrels, stocks, or trigger mechanisms to firearms …” (i.e., a gunsmith).  As applied to a gunsmith, the term “engaged in the business” is defined by 18 U.S.C. 921(a)(21)(D) and 27 CFR 478.11 as a “person who devotes time, attention, and labor to engaging in such activity as a regular course of trade or business with the principal objective of livelihood and profit …”

In Revenue Ruling 55-342 (C.B. 1955-1, 562), ATF’s predecessor agency interpreted the meaning of the terms “manufacturer” and “dealer” for the purpose of firearms licensing under the Federal Firearms Act, the precursor statute to the GCA.  It was determined that a licensed dealer could assemble firearms from component parts on an individual basis, but could not engage in the business of assembling firearms from component parts in quantity lots for purposes of sale or distribution without a manufacturer’s license.  Since then, ATF has similarly and consistently interpreted the term “manufacturer” under the GCA to mean any person who engages in the business of making firearms, by casting, assembly, alteration, or otherwise, for the purpose of sale or distribution.  Such persons must have a manufacturer’s license under the GCA, maintain permanent records of manufacture, and submit annual manufacturing reports.  The Revenue Ruling did not address whether dealer-gunsmiths who engage in the business of repairing, modifying, embellishing, refurbishing, or installing parts in or on firearms for, or on behalf of an importer or manufacturer are engaged in the business of manufacturing firearms requiring a manufacturer’s license.

Manufacturing

ATF’s long-standing position is that any activities that result in the making of firearms for sale or distribution, to include installing parts in or on firearm frames and receivers, and processes that primarily enhance a firearm’s durability, constitute firearms manufacturing that may require a manufacturer’s license.  In contrast, some activities are not firearms manufacturing processes, and do not require a manufacturer’s license.  For example, ATF Ruling 2009-1 (approved January 12, 2009) explained that performing a cosmetic process or activity, such as camouflaging or engraving, that primarily adds to or changes the appearance or decoration of a firearm is not manufacturing.  Likewise, ATF Ruling 2009-2 (approved January 12, 2009) stated that installing “drop-in” replacement parts in or on existing, fully assembled firearms does not result in any alteration to the original firearms.  Persons engaged in the business of these activities that do not constitute firearms manufacturing need only obtain a dealer’s license.

Although installing parts in or on firearms, and applying special coatings and treatments to firearms are manufacturing activities, the definition of “manufacturer” in 18 U.S.C. 921(a)(10) and 27 CFR 478.11 also requires that a person be “engaged in the business” before the manufacturer’s license requirement of section 923(a) applies.  Thus, a person who manufactures a firearm will require a manufacturer’s license if he/she devotes time, attention, and labor to such manufacture as a regular course of trade or business with the principal objective of livelihood and profit through the sale or distribution of the firearms manufactured.  If the person is performing such services only for a customer on firearms provided by that customer, and is not selling or distributing the firearms manufactured, the person would be a “dealer” as defined by 18 U.S.C. 921(a)(11)(B) and 27 CFR 478.11, requiring a dealer’s license, assuming the person is “engaged in the business” as defined in 18 U.S.C. 921(a)(21)(D) and 27 CFR 478.11 (i.e., “gunsmithing”).

To put it simply; You are only considered a manufacturer if you get compensated for it. But he would not be compensating you for assembling it for him would he; he would be paying you to keep him company while you give him pointers on how to do it ;)

To add another note, in that final paragraph, it's very clear that it has to be evident that assembling or "manufacturing" is a regular course of trade or business with the principal objective of livelihood and profit through the sale or distribution of the firearms manufactured. Getting paid for it ONE time would not constitute a livelihood and as a result, not make you a "manufacturer" without a license.

No licensing is needed.  The 07 applies to dealers, importers, and manufacturers of firearms and ammunition.  Any manufactured lower with a serial number or tax stamp from an approved Form 1 is already manufactured.  Assemble away.  Now if he gave you an 80%-95% completed lower and you finished that for him...you just manufactured a firearm.

edit - by 80%-95% completed, I am referring to the machining process.  Not the amount of parts already in it.

 

 Right on, help your friend learn how to assemble a lower receiver, buttstock, etc.  If he drops off the parts for you to do the work without his participation, he learns nothing.  Instead, let him do the wrench turning and pin driving while you supervise.  

As for the legal issue, IMO so long as you are not buying stripped receivers, assembling them and reselling the completed part, you are not manufacturing a firearm.  When you are adding parts to someone else's receiver, you are simply engaging in amateur gunsmithing, something the BATF is not interested in regulating. - CW

Topic Moved

I did 1 for a close friend. It took me all of 20 minutes. He thanked me with a handshake and about 2 weeks later he gave me 2 new Pmags he said he didn't need. Pretty good deal for both of us.