Question: What if you don't engrave exactly as you have on your forms?
Reality: Nothing. When does ATF look into that? Maybe when you transfer it. That's about it. No one will get arrested. No AUSA will accept a prosecution. Want to see a US magistrate get pissed? Present this for prosecution. The agent AND AUSA will probably get their asses chewed out. No grounds for either a criminal or civil seizure either way. Different issue if you are a manufacturer AND decided to ignore ATF to fix it. As an individual/trust, what if you didn't engrave it to specified depth, size, font? Engrave it at all? What will that hypothetical ATF visit be like? Knock and talk, there will be a reason to be there other than "we are here to inspect the engravings". Recovered stolen. As long as ATF is notified, extremely doubtful an ATF agent will care and some ATF non-agent will handle entering the record. That's about it. A story that gets circulated a ATF agent, for whatever reason came across either improperly engraved or uningraved item and decided to hand engrave it. Ive yet to see or hear any truth behind it. If it was me, that SAC office will be buying me a new one.
Think of how that particular CFR applies to an individual. You complete a 80% receiver (non SBR) and markings are merely suggested, not required. Make an SBR and it needs to be engraved. Drop the middle name entirely, and for whatever unlikely reason ATF has to snoop in to it, do you really think that would really make their day?
My 1st Form 1 SBR on a trust I failed the "pick a short trust name for dummies" test. I wanted it in the trigger guard area. I told the engraver (LASTNAME RLT MYCITY, AZ), So sue me. The tax was paid, the weapon is identified at two levels, What else can ATF worry about? No intent to defraud or misrepresent. After all, it has my friken name on it.
Federal law requires banks to have braille embossed keys on drive up ATM machines. Who will inspect these? And who is going to complain?
So some GS14, 15, or SES along with the agency's OCC in DC come up with these and blessed by committee, who may have or not have bothered to read the written regulatory draft. It probably made that persons career desk DC goal. You field agent either won't know or give a crap you didn't engrave letter for letter. Or even engrave it at all. Just as long as it checked out in their database, on to the next thing.
If I was that ATF guy who was asked this specific question, of course I will say engrave it as you name it on the form 1. I'm supposed to say that otherwise people will engrave something no where near what they put on their forms. And if I dropped an initial or goofed by dropping revocable living trust, oopsie. My bad. I'll do better next time.
My opinion. That's it.
ETA: I looked at my Form 1 just now and noticed 4h left blank. This was completed Feb 2016. So we were told to leave it blank. Anyway to show if the intended engravings go here? A quick research through Google School of Law did not show any results. I'd would say I engraved the lower prior to receiving the form back, an/ or error made during engraving that does not match exactly as on block 3b. And I'm not engraving my entire address so saying that it has to be engraved identical is baloney. It would be logical and easier to amend the Form 1. I'm sure any ATF agent or supervisor can scratch in "YADA YADA TRUST" with notation and initials on block 4h easier than telling you to fix the engraving. But, I'm no lawyer. And I doubt a lawyer can answer that without a conference call to the AUSA and ATF.
Secondary issue is did anyone ever receive a letter or instruction from ATF explaining or directing individual makers for their own personal use how, where, and what to engrave? I know I didn't. All I got was from the wealth of misinformation provided in the interwebs and local gun store commandos.
I would not sweat the engravings that much.