Maybe this is a dupe, if so Admins lock please. If not, can we have someone with more legal knowledge than myself (mechanical engineer by trade, fun enthusiast by night)

Because unincorporated trusts are not “persons” under the GCA, a Federal firearms licensee (FFL) cannot transfer firearms to them without complying with the GCA. Thus, when an FFL transfers an NFA firearm to a trustee or other person acting on behalf of a trust, the transfer is made to this person as an individual (i.e., not as a trust). As the trustee or other person acting on behalf of the trust is not the approved transferee under the NFA, 18 U.S.C. 5812, the trustee or other person acting on behalf of a trust must undergo a NICS check. The individual must also be a resident of the same State as the FFL when receiving the firearm.

So, ATF, trying to be cute and find a way to require NICS checks without Congressional action, declared trusts not to fit the definition of a “person” under the GCA. No big deal, especially for us in Pennsylvania, as Pennsylvania Instant Check System (PICS) checks are already required for all NFA firearms, except silencers. But, not so quick…let’s look at Section 922(o) of the Gun Control Act…

Section 922(o) provides:

(1) Except as provided in paragraph (2), it shall be unlawful for any person to transfer or possess a machinegun.
(2) This subsection does not apply with respect to–
(A) a transfer to or by, or possession by or under the authority of, the United States or any department or agency thereof or a State, or a department, agency, or political subdivision thereof; or
(B) any lawful transfer or lawful possession of a machinegun that was lawfully possessed before the date this subsection takes effect.
So, we have a prohibition on any “person” transferring or possessing a machinegun which was not lawfully registered before May 19, 1986. BUT, an unincorporated trust is not a “person” under the GCA, so this provision cannot apply to it.

In turning to the National Firearms Act, as amended, 26 U.S.C. 5801, et seq., we find that a “person” is defined as including a trust, pursuant to 26 U.S.C. 7701. Yet, there exists no 922(o)esque provision in Section 5801, et seq.

Therefore, pursuant to 26 U.S.C. 5812 and 5822, an unincorporated trust may lawfully transfer and make machineguns, as it is not a “person” for purposes of the GCA and Section 922 only applies to “persons” as defined by the GCA. And yes, this opens up a lot more issues for ATF in relation to the purchase of firearms by trusts under the GCA. Someone isn’t likely to be employed much longer…

ATF Determination on NICS checks open doors for manufacture

Big ol tag on this one!

.gat a ton si sihT

So basically everyone needs to submit a form 1 for the MG of their choice asap?  

Yeah, like that's really gonna happen!

A trust cannot manufacture anything because a trust is just a piece of paper, it doesn't have hands.  The trust only owns property.  The person, even if their name is listed on a trust, who does the physical work of manufacturing a machinegun today would be breaking the law.

Then everyone that Form 1'ed any other Title II weapon is breaking the law as well.  Corporations that have SOTs are breaking the law as well, because they're also just pieces of paper.  The individual that's doing the machining on that brand new machine gun doesn't have an SOT, so he must be breaking the law.

This does make sense but there are plenty of class 2 manufacturers out there who make dias for LE and dealer use. They have people that do the machining that may or may not be owners of the company, the 02 is usually in an LLC afaik.

My Trust is manufacturing an SBR with a stamp.

Have the trust own a CNC mill.  Load "mini gun receiver" G-code and go have lunch.  The mill makes the receiver; no human hands involved.

^golf clap

Mental Masturbation.

Wrong.

You are legally MAKING an SBR as the Grantor (and probly trustee) of your trust by acquiring the required tax stamp and registering ownership of said asset to the trust.

Manufacturing and Making are two different things and specifically defined.

Your trust is "making" an SBR.  "Manufacturing" in this context means a licensed entity is doing the work.

Trusts cannot hold business licenses due to the nature of what they are.  A trust is not a business or money-making organization, thus is will not be granted any such license. That's not to say a trust cannot make money, but they are not set-up or designed to do so.

Not going to work. The Code bans "possession" of any post-86 machinegun (with the usual exceptions) by any "person." So any human being who possesses the trust's machinegun is now in violation. Just like the human being who picks up the NFA item on behalf of a trust now has to be NICS'ed.

That's the entire point of the article. A trust isn't a person.





 

But a human being holding a post-86 machinegun is a person, and would be in violation of 922(o) unless he possesses it under the authority of a government agency. 922(o) bans possession, not just transfers.

The people who think this is a viable theory need to carefully read the Code and understand the differences between making, transferring, owning, and possessing. And then look at what the Code actually says.

There is no way this is going to fly.


I bet that the first F-1 submitted will be denied. Court case ensues, player loses. Business as usual.

technically, the Form 1 should be approved, it is when you make the MG the trouble begins.

If nothing else, it seems it would be legal to transfer a pre sample to a trust because the pre sample was legally possessed before 1986.
 

+1

I didn't want to be the one who first posted it but even if a trust (which is legally not a person) was able make a post-GCA MG, I don't see how a trustee (who is a person) could actually possess a post-GCA MG.

The same way a trustee possesses an SBR without an illegal transfer taking place.  Trustees are allowed to use the property that is in possession of the trust.

So who is gonna do it!

Interesting thoughts though.

That's one possible interpretation (and the best possible outcome, which I'd hope for too).

There is no federal prohibition against a trustee possessing a trust-owned SBR though.  The same can't be said about post '86 MG possession.

Yup. I could see an argument for approving the Form 1, but as soon as a human possesses the post-86 MG ... problems ....

Except that the GCA does not recognize a trust as a person. It's a "disregarded entity," to borrow a tax term, which is the whole basis for this recent letter requiring that the human being who takes possession of the NFA item on behalf of a trust be subject to the NICS check (which is part of the GCA).

Following on that, it's the GCA, not the NFA, that bans possession of post-86 MGs. So if a trust isn't a thing under the GCA and because of that its human representative has to be NICS'ed, then logically it follows that its human representative is the possessor for GCA purposes.

In other words, a trust cannot be a transferee or possessor of a firearm under the GCA because a trust doesn't exist under the GCA. For GCA purposes, including the post-86 MG ban which is codified in the GCA (not the NFA), it's the human that's the possessor and transferee in the case of a trust.

I doubt that the alternative view - that the failure to address trusts in the definitions of the GCA means that the GCA doesn't apply to them (and by extension, their representatives) - is going to get much traction. In fact, this NICS letter pretty much throws that notion out the window altogether and makes clear that the ATF views it as simply a transfer to a human being for GCA purposes.

I'm confused by all of this. I thought the GCA was in 1968 and FOPA was in 1986?

Technically the '86 FOPA provisions are amendments to the '68 GCA.  

Im anxious to see what comes of this. The ATF has been very strict by the book on things such as the sig brace, so maybe theres a chance...

Plus the Brady Act which created NICS. It's all piled into 18 USC 921-922.

Think of it this way - for purposes of transfer and possession, you have to comply with the GCA for regular (non-NFA) firearms.

For NFA firearms, you have to comply with both the NFA and the GCA. The GCA doesn't recognize the existence of trusts while the NFA does. So your trust can be the transferee for NFA purposes, but not GCA purposes ... which leaves you, the human being, as the GCA transferee.

Yessir, that it is.

The conflict sets up a lawsuit challenging the entire construct... A trust could conceivably make a MG, since there is no legal basis for disapproving the F1, but the trustee can't possess the trust's property...

First, I'll note that I think this has almost as much chance as proving
to be a winning argument as Ron Paul has winning the presidency in
2024.  Second, I won't argue the point about Trusts can't be
manufactures under GCA or NFA laws because I haven't thought about.  
However, I have no reason to believe that a trust  can't be established
with the purpose of generating income and conducting a business.  Likely
the trust owns a controlling interest in a corporation or some other
entity, but I'm not aware of any reason it has to be so.  In fact, I
believe in recent news surrounding the incident with the NBA owner
Sterling, its been mentioned that the team is owned by a trust in which
he and his wife have an interest.  



 

Not only that, but every variation of the Uniform Trust Code (used in some form in at least 39 states) I've ever seen contains some variation of the "prudent investor" rule which, unless the grantor/settlor specifically says otherwise, imposes a duty on trustees to invest and manage the trust's assets in a financially prudent manner.

This would be just one example of things that people who use Quicken or other canned trusts simply don't even realize when they roll their own gun trust, which inevitably loses money unless it invests in machineguns.

That's very pertinent for a Form 4 transfer, but how does it apply for a Form 1 creation, where a receiver already owned by the trust is transmuted into a machine gun where no transfer takes place?

The GCA doesn't just ban transfer of post-86 MGs, it also bans POSSESSION of them. Because the GCA does not include "trusts" in its definition of persons, it views the human trustee as the possessor just as it (according to the recent ATF letter) views the human trustee as the transferee for NICS purposes.

So if you want to get really technical about it ... you could successfully argue that a trust can Form 1 a new machinegun. But no actual human could possess it.

So how does this apply when say a HK or Colt rep has possession of post-samples doing a demo "on location"?  The NFA Forms would have Colt or HK on them, NOT the rep doing the demo.

Or how about when a prop-house/armory sends a post-sample MG for filiming "on location"?

They are employees of a licensed manufacturer or dealer that holds a valid FFL/SOT who are acting in the scope of their employment to possess the machineguns on behalf of the FFL/SOT.  The machineguns are legally registered to the FFL/SOT and can be possessed by their employees for that purpose.

Ok, is the bit about employees able to possess post-samples codified in a regulation or law?

I understand that the corp entity, having a 07/02 allows them to Form 2 new MGs.  But I think the bit about employees (trustees?) possessing something owned by the corp (and trusts) is an interesting area.

Lots of NFA is not in Law or even CFR. It is just the way it is done. Estate transfers from Individual owners being a good example. There might be Case Law behind it though.

Fair enough.  My trust owns a pair of gloves.  

In addition to which, the whole "I'm a duly authorized agent of the licensed corporation" doesn't work here because trusts do not exist in the eyes of the GCA. That's the whole point of the letter to the dealer in SD back in March that started this whole brouhaha. When a trust is involved, the GCA looks through and ignores that "entity" because it's not a person under the GCA definition, and thus it is the human being who is the transferee for NICS purposes. It would logically follow that that the possessor of a MG under the GCA is also the human trustee because, once again, trusts aren't a thing under the GCA.

Couldn't the ATF approve Form 1s for MGs anyway, since they would be transferred under the authority of the ATF?

IMO yes, though they refuse to do it as it wasn't the intent of the law.

 

Forgive my lack of understanding on the matter.  Wouldn't this be like having a felon on a gun trust?  The trust can own items, which the felon trustee can never possess?  Ie, there already exists mechanism for a trust to legally own property, which the individual is prohibited from physically touching?



Or would it be difference, since there would be no legal outlet for possession of the trust's property?  The hypothetical felon on my trust can't touch the trust property, but I can.  For the "trust creates a MG" scenario, there is no one that can actually touch the item.  



Perhaps I just need my proverbial morning coffee.  lol



 

My point more the latter, that no trustee could possess it... although courts have found that a trust is a legitimate way for a prohibited person to legally have guns (I forget the specific case)

 

Those cases probably focus on the ownership -- possession distinction. One can own a firearm without the legal ability to possess it. Take the classic case of an NFA firearm you've paid for in full but that's sitting at the dealer awaiting ATF approval. You paid for it and it's yours, and can even sell it while it's at the dealer to someone else. You just can't pick it up and carry it off the premises.

The possession rules for prohibited persons are even more stringent but the same principle applies. It's possible to draft a trust that gives a person a present or future ownership interest but no right to possess or use the property.

Exactly. A trust can own and manage firearms for the benefit of a felon - the felon just cannot possess them, so they have to be physically kept by a non-felon trustee. That's actually one of the advantages of using a gun trust. If you as the settlor/lifetime beneficiary become a prohibited person, then a co-trustee or successor trustee can keep the items and either sell them for your benefit or just hold on to them until you die and then give them to your remainder beneficiaries.