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Posted: 7/18/2018 12:14:52 AM EDT
[#1]
Replying to my own with more info.....
If I purchase a complete lower, as opposed to stripped and parts, does that change the scenario? Example - could I buy a complete lower from XYZ Corp at dealer prices, and them swap parts? I would think taxes and fees were already paid, since I bought it complete, no? |
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Posted: 7/18/2018 1:16:02 AM EDT
[#2]
Quoted:
I read one archived thread about this, but I wanted to see if there's an updated info. I'm considering a bit of a side gig - custom configuring ARs. I would be buying parts, assembling, and selling assembled rifles. I won't make my own lowers. This will be very low volume - 2 or 3 guns a month. It's something I enjoy doing with my sons, and it might just pay for my ammo habit! Do I need an 07 even if I'm not manufacturing serialized parts? The State Department fee would make this pretty much a non starter.... ETA: even buying complete lowers and putting uppers on them is manufacturing, under the law. Excise tax has not been paid even on complete lowers (only on complete firearms), so you'd be the one paying that tax after completing the assembly with an upper. Even buying complete rifles and performing substantial work on them constitutes manufacturing - only performing work on customer-supplied parts or firearms does not require an 07. |
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Posted: 7/18/2018 1:25:45 AM EDT
[#3]
ITAR is currently under review and they are going to change the rules on a lot of stuff when it is all said and done.
Get your 7 and move forward, there is no reason not to. |
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Posted: 7/18/2018 12:52:23 PM EDT
[#4]
ATF considers assembly of parts manufactured by others as a manufacturing activity and requires an 07FFL.
State Department DDTC says mere assembly of parts manufactured by others is not a manufacturing activity and does not require ITAR registration. (but if you go to machining a part to fit? ITAR) |
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Posted: 7/18/2018 11:14:40 PM EDT
[#5]
This is awesome info. Thanks!
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Posted: 7/19/2018 10:34:21 AM EDT
[#6]
What about selling the upper and lower separate and never pinning them together for a "complete rifle". Just let the customers choose a lower and upper and sell them separately. Might be a way to get around it, but i am in no way an expert in this matter
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Posted: 7/19/2018 12:23:14 PM EDT
[#7]
Quote HistoryQuoted:
What about selling the upper and lower separate and never pinning them together for a "complete rifle". Just let the customers choose a lower and upper and sell them separately. Might be a way to get around it, but i am in no way an expert in this matter How long of a time between those transactions? Only ATF knows. |
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Posted: 7/19/2018 1:48:21 PM EDT
[#8]
I've considered going the separate lower/upper route, but two transactions makes it a little shady. My target customer is, well, me: suburban dude who wants something "custom", is a little too intimidated to build it himself, but doesn't want to spend $2000. Asking that buyer to split it in to two transactions smacks of "this might not be legal".
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Posted: 7/19/2018 2:40:12 PM EDT
[#9]
Quote HistoryQuoted:
I've considered going the separate lower/upper route, but two transactions makes it a little shady. My target customer is, well, me: suburban dude who wants something "custom", is a little too intimidated to build it himself, but doesn't want to spend $2000. Asking that buyer to split it in to two transactions smacks of "this might not be legal". |
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Posted: 7/19/2018 6:17:42 PM EDT
[#10]
Quote HistoryQuoted:
What about selling the upper and lower separate and never pinning them together for a "complete rifle". Just let the customers choose a lower and upper and sell them separately. Might be a way to get around it, but i am in no way an expert in this matter |
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Posted: 7/19/2018 10:55:49 PM EDT
[#11]
There's a way ATF states you can do things as a 01 gunsmith...
Write up a transaction for the lower, then note how they want it built. Now it's gunsmithing. They used to call that "bespoke", because the customer is specifying the build. Transfer the lower upfront when that part is paid for, then log it in for gunsmithing and build it out. They have an old FFL newsletter somewhere that covers it in more detail. I always worked under 07, so I have no direct experience with that method. |
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Posted: 7/19/2018 11:35:22 PM EDT
[#12]
Quote HistoryQuoted:
Someone tried that at Dallas Gun Shows, now they no longer have an FFL. Thought they were clever and could fool ATF by having the upper sold by a separate business. Quote HistoryQuoted:
Quoted:
What about selling the upper and lower separate and never pinning them together for a "complete rifle". Just let the customers choose a lower and upper and sell them separately. Might be a way to get around it, but i am in no way an expert in this matter So silly. |
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Posted: 7/20/2018 12:00:40 PM EDT
[#13]
I'm really more concerned about the ITAR reqs. It seems that the difference between 1 and 7 are pretty small, requirements wise, no? If I understand it correctly, they're both going to require an onsite visit, but the 1 is a couple bucks less than 7. It's that $2k+ State Department tax that would make the 7 ridiculous.
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Posted: 7/23/2018 8:20:19 PM EDT
[#14]
Quote HistoryQuoted:
I'm really more concerned about the ITAR reqs. ... It's that $2k+ State Department tax that would make the 7 ridiculous. |
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Posted: 7/23/2018 10:20:12 PM EDT
[#15]
Quote HistoryQuoted:
Gotta pay to play. Quote HistoryQuoted:
Quoted:
I'm really more concerned about the ITAR reqs. ... It's that $2k+ State Department tax that would make the 7 ridiculous. |
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Posted: 7/24/2018 8:50:37 AM EDT
[#16]
Quote HistoryQuoted:
Gotta pay to play. " Registration Required – Manufacturing: In response to questions from persons engaged in the business of gunsmithing, DDTC has found in specific cases that ITAR registration is required because the following activities meet the ordinary, contemporary, common meaning of “manufacturing” and, therefore, constitute “manufacturing” for ITAR purposes: a) Use of any special tooling or equipment upgrading in order to improve the capability of assembled or repaired firearms; b) Modifications to a firearm that change round capacity; c) The production of firearm parts (including, but not limited to, barrels, stocks, cylinders, breech mechanisms, triggers, silencers, or suppressors); d) The systemized production of ammunition, including the automated loading or reloading of ammunition; e) The machining or cutting of firearms, e.g., threading of muzzles or muzzle brake installation requiring machining, that results in an enhanced capability; f) Rechambering firearms through machining, cutting, or drilling; g) Chambering, cutting, or threading barrel blanks; and h) Blueprinting firearms by machining the barrel." Nope you dont have to pay to play. Get a 07 and I would not worry about the itar unless you get into real manufacturing and not assembly |
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Posted: 7/25/2018 11:01:03 AM EDT
[#17]
Let me ask you an honest question, what sets your builds that you build apart from Hodge, SOLGW, SIONICS, etc? Not to mention, many of these higher end well known builders are in TX too.
There are a thousand brands out there and it's a cut throat market, what makes your builds of parts you just buy over the counter, make you think you will sell 2-3 a month? I'm just curious, as the ATF interview will probably ask you that very same question. |
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Posted: 7/25/2018 11:19:42 AM EDT
[#18]
Quote HistoryQuoted:
Buying parts and assembling complete rifles from them is manufacturing, and requires an 07. ETA: even buying complete lowers and putting uppers on them is manufacturing, under the law. Excise tax has not been paid even on complete lowers (only on complete firearms), so you'd be the one paying that tax after completing the assembly with an upper. Even buying complete rifles and performing substantial work on them constitutes manufacturing - only performing work on customer-supplied parts or firearms does not require an 07. |
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Posted: 7/25/2018 11:27:00 AM EDT
[#19]
Quoted:
I read one archived thread about this, but I wanted to see if there's an updated info. I'm considering a bit of a side gig - custom configuring ARs. I would be buying parts, assembling, and selling assembled rifles. I won't make my own lowers. This will be very low volume - 2 or 3 guns a month. It's something I enjoy doing with my sons, and it might just pay for my ammo habit! Do I need an 07 even if I'm not manufacturing serialized parts? The State Department fee would make this pretty much a non starter.... |
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Posted: 7/25/2018 2:58:23 PM EDT
[#20]
My .02 from both behind the counter and a lathe. Although is has been some time..
You are not manufacturing. You are assembling parts that have already had any excise tax due..paid by the manufacturer of those parts. Receivers are taxed at the source of manufacture. Not wholesalers or dealers.. same as all other “subject to excise tax” manufacted items in the firearms industry. You are not altering beyond original or commonly accepted design specs. You are merely swapping known commonly available parts or making minor alterations that do not exceed the original design. Finishing an 80% receiver for sale or on behalf of someone else would be manufacturing. Fitting a barrel or cylinder or assembly of already manufactured parts for a specific firearm is gunsmithing. Common gunsmithing practices include threading and contouring barrels for all manor of firearms. Fixing, repairing or altering an existing firearm within the original design spec is gunsmithing. |
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Posted: 7/25/2018 3:42:30 PM EDT
[#21]
Quote HistoryQuoted:
My .02 from both behind the counter and a lathe. Although is has been some time.. You are not manufacturing. You are assembling parts that have already had any excise tax due..paid by the manufacturer of those parts. Receivers are taxed at the source of manufacture. Not wholesalers or dealers.. same as all other “subject to excise tax” manufacted items in the firearms industry. You are not altering beyond original or commonly accepted design specs. You are merely swapping known commonly available parts or making minor alterations that do not exceed the original design. Finishing an 80% receiver for sale or on behalf of someone else would be manufacturing. Fitting a barrel or cylinder or assembly of already manufactured parts for a specific firearm is gunsmithing. Common gunsmithing practices include threading and contouring barrels for all manor of firearms. Fixing, repairing or altering an existing firearm within the original design spec is gunsmithing. |
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Posted: 7/25/2018 4:37:33 PM EDT
[#22]
Quote HistoryQuoted:
My .02 from both behind the counter and a lathe. Although is has been some time.. You are not manufacturing. You are assembling parts that have already had any excise tax due..paid by the manufacturer of those parts. Receivers are taxed at the source of manufacture. Not wholesalers or dealers.. same as all other “subject to excise tax” manufacted items in the firearms industry. You are not altering beyond original or commonly accepted design specs. You are merely swapping known commonly available parts or making minor alterations that do not exceed the original design. Finishing an 80% receiver for sale or on behalf of someone else would be manufacturing. Fitting a barrel or cylinder or assembly of already manufactured parts for a specific firearm is gunsmithing. Common gunsmithing practices include threading and contouring barrels for all manor of firearms. Fixing, repairing or altering an existing firearm within the original design spec is gunsmithing. Correct information has been posted in this forum over the years. The State Department published a FAQ and guidance 2 years ago. Most bloggers have posted about it an got their info correct, even Prince. |
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Posted: 7/25/2018 5:42:57 PM EDT
[#23]
Quote HistoryQuoted:
Other than the 80% comment, almost everything in this post is incorrect. Correct information has been posted in this forum over the years. The State Department published a FAQ and guidance 2 years ago. Most bloggers have posted about it an got their info correct, even Prince. Quote HistoryQuoted:
Quoted:
My .02 from both behind the counter and a lathe. Although is has been some time.. You are not manufacturing. You are assembling parts that have already had any excise tax due..paid by the manufacturer of those parts. Receivers are taxed at the source of manufacture. Not wholesalers or dealers.. same as all other “subject to excise tax” manufacted items in the firearms industry. You are not altering beyond original or commonly accepted design specs. You are merely swapping known commonly available parts or making minor alterations that do not exceed the original design. Finishing an 80% receiver for sale or on behalf of someone else would be manufacturing. Fitting a barrel or cylinder or assembly of already manufactured parts for a specific firearm is gunsmithing. Common gunsmithing practices include threading and contouring barrels for all manor of firearms. Fixing, repairing or altering an existing firearm within the original design spec is gunsmithing. Correct information has been posted in this forum over the years. The State Department published a FAQ and guidance 2 years ago. Most bloggers have posted about it an got their info correct, even Prince. You Guys can do as you please. Having previously done everything mentioned without ITAR registration and with ATF knowledge. The jackasses at DTC changing the rules as they wish in order to get money does not nessarrarly constitute a legal change. I am unaware of anyone getting a letter from ATF or DTC threatening to pursue legal action against a gunsmith doing any commonly accepted work on firearms without a DTC registration. I am aware of BS ATF, DTC news letters making it sound that way...news letters are not Law ! I would force their hand. Write me up and send certified mail. I will turn over to attorney and we will see exactly how far it goes. Do what suits your feels. Were I still in the game. I would not take it lying down. |
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Posted: 7/25/2018 6:14:12 PM EDT
[#24]
Quote HistoryQuoted: No fucks to give.. Quote HistoryQuoted: No fucks to give.. You Guys can do as you please. Having previously done everything mentioned without ITAR registration and with ATF knowledge. The jackasses at DTC changing the rules as they wish in order to get money does not nessarrarly constitute a legal change.  I am unaware of anyone getting a letter from ATF or DTC threatening to pursue legal action against a gunsmith doing any commonly accepted work on firearms without a DTC registration. I am aware of BS ATF, DTC news letters making it sound that way...news letters are not Law ! I would force their hand. Write me up and send certified mail. I will turn over to attorney and we will see exactly how far it goes.
Do what suits your feels. Were I still in the game. I would not take it lying down. |
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Posted: 7/26/2018 5:45:35 AM EDT
[#25]
Were I still in the game Is the major problem, you are not in the game anymore and things change But posting misleading or incorrect information can cause another to incur penalties that he does not need to incur.
If you are not up to the current state of affairs, it would be best to not post. Better to be quiet than give out incorrect information on this type of situation. |
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Posted: 7/27/2018 10:26:42 AM EDT
[#26]
Quote HistoryQuoted:
Let me ask you an honest question, what sets your builds that you build apart from Hodge, SOLGW, SIONICS, etc? Not to mention, many of these higher end well known builders are in TX too. There are a thousand brands out there and it's a cut throat market, what makes your builds of parts you just buy over the counter, make you think you will sell 2-3 a month? I'm just curious, as the ATF interview will probably ask you that very same question. |
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Posted: 7/27/2018 1:27:57 PM EDT
[#27]
Quote HistoryQuoted:
It's a good question. My goal is to build a gun that is the sweet spot in the middle - a custom configured gun built to customer spec at a price the average Joe can justify to the wife. I built my first AR about 10 years ago, and I'm pretty much always shopping for something. I have never found a manufacturer who makes what I want right out of the box for a reasonable price for the gun I want at the moment - everything is a compromise or tinkering at home or too expensive. My target customer wants a specific gun, not just the deal of the week, but doesn't want to pay Noveski prices, and doesn't want to build it himself. You can get the exact gun you want without spending an extra $500 on tools just so you can "save money". Basically, my buyer doesn't want a batch made gun, but also thinks that $300 lowers and $90 charging handles are a bit ridiculous. Quote HistoryQuoted:
Quoted:
Let me ask you an honest question, what sets your builds that you build apart from Hodge, SOLGW, SIONICS, etc? Not to mention, many of these higher end well known builders are in TX too. There are a thousand brands out there and it's a cut throat market, what makes your builds of parts you just buy over the counter, make you think you will sell 2-3 a month? I'm just curious, as the ATF interview will probably ask you that very same question. Do you have an actual business plan? How many of these "custom configured guns" will you sell a year? How many of these cheapass, but picky buyers are out there? Will your pricing be enough to cover your expenses? (overhead, tools, your time, ITAR, profit, etc) "I have never found a manufacturer who makes what I want right out of the box for a reasonable price for the gun I want at the moment" is a premonition...…..how many buyers will think YOUR prices are not reasonable? |
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Posted: 7/27/2018 1:52:05 PM EDT
[#28]
Quote HistoryQuoted:
The above sounds like a recipe for disaster. Do you have an actual business plan? How many of these "custom configured guns" will you sell a year? How many of these cheapass, but picky buyers are out there? Will your pricing be enough to cover your expenses? (overhead, tools, your time, ITAR, profit, etc) "I have never found a manufacturer who makes what I want right out of the box for a reasonable price for the gun I want at the moment" is a premonition...…..how many buyers will think YOUR prices are not reasonable? Sales estimate? 20-30/year Number of buyers? I've been shocked at the number of people I've met who have lamented the "sameness" of their AR, but are afraid to turn a wrench on it. Then again, people pay $250 for car stereo installation. Pricing - Still playing with that as well. |
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Posted: 7/27/2018 3:53:31 PM EDT
[#29]
If I had to depend on the few guns I build a year, I would not be in business and that includes from the Mundane to the Outrageous guns, 20-30 guns a year is not even enough to pay your ITAR fees. It is very difficult to even make $50 profit on an AR now a days and it will be that way for a while to come. You better figure on something to go along with that 20-30 guns to bring some profit in.
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Posted: 7/27/2018 5:52:45 PM EDT
[#30]
Yeah, the ITAR thing may put the kabosh on this.
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Posted: 7/27/2018 6:10:34 PM EDT
[#31]
Quote HistoryQuoted: Business plan? Working on it. Good. Many times we've seen posts from forum members thinking the gun biz is quick and easy cash. Some of their failures are of epic proportions. Mostly because they didn't have a viable and well thought out business plan. Sales estimate? 20-30/year Don't give up your day job. Don't invest in any new tools. Don't rent a building. You have a hobby, not a business. Number of buyers? I've been shocked at the number of people I've met who have lamented the "sameness" of their AR, but are afraid to turn a wrench on it. How many people are you "meeting"? I'm a kitchen table dealer who does 2000 firearm transfers a year and at least 15% are AR's or AR lowers. NOT a single person in the last ten years has complained about the "sameness" of the AR platform. In fact that's why I think your plan isn't viable. IT'S TOO EASY to "customize" your own AR. Why on earth would I want you to do it when I can pretty much buy any configuration off the shelf? Then again, people pay $250 for car stereo installation. People also pay for oil changes and drive through hamburgers.....but why will they seek you out to build a cheap custom AR? Pricing - Still playing with that as well. You can play with the number all you want, but your profit margin on each gun will not be what you think. You target cheapasses that want a custom gun. Do you not see the inherent problem? You can build premium grade custom guns for Mr Moneybags and make more $$$. Do a good job and he'll return and likely tell his friends. Mr Cheapass will go buy from the next yahoo "manufacturer" who promises the same gun at 10% less than you charge. Racing to the bottom of the barrel is not a sustainable business model. |
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Posted: 7/31/2018 12:00:07 AM EDT
[#32]
Quote HistoryQuoted:
Yeah, the ITAR thing may put the kabosh on this. |
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Posted: 8/2/2018 12:42:28 PM EDT
[#33]
It will be hard to cover just the liability insurance with 15-20 guns a year.
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