Just curious about if it’s actually worth it for a private individual.
I saw dealers samples no law letter, and such with prices like $1500.00 to $3k for f/a.
Would it be worth it to do this? I understand that I could never sell them unless it’s to another 07 dealer, or I would no longer be able to possess them if I let the license expire, but I also saw “keepers” which I don’t quite understand what that is all about.
Is it worth it to pursue or does it not work the way I think it does?
Thanks,
M.

Is this a thing? Create company/SOT just to generate no law letter post samples

Anyone can get an FFL. Only L/E can create a Law letter to show use at the agency using it.
Post banned don't need one... as far as I know.
Dealer samples are available for FFL/07 use.
I don't have all the details, which is why I pose the question.
Thanks,
M.

It's very much illegal to start a business and obtain a 07 FFL with 02 SOT paid just to get/manufacture NFA items with zero intention of doing business otherwise.

It's tax fraud at the least.

ETA: "Keepers" are dealer samples never sold outside of dealers/manufacturers but were made prior to the May 1986 cutoff. They're the SOT equivalent of transferables.

Thank You, Makes sense.
Why would it be tax fraud, wouldn’t the $200.00 tax stamp still be applicable?
Not debating you, just trying to learn a little about this.
Also, if I sell a gun through the FFL that I acquire, then it would be a legit buisness.

I apologize for the ambiguity of my post... if I understood this topic more, I think I would have phrased the question better.

Thanks,
M.

ETA: Thanks for the “Keepers” answer!!!

You will need to actually be in the business of selling firearms.  If you're not willing to do that, I would forget the idea.

You need to be "in the business" or they get unhappy. Remember, manufacturers can also deal... so you had better at least have some transfers for a buddy who buys stuff on gun broker and transfer/manufacture some silencers or SBRs to justify the SOT.

Our security company got an 07/02 and it has been a ton of work, but being able to possess and use my SOCOM mini while the Form 4 is processing has been worth it.

SOT's don't pay $200 for a tax stamp, we pay $500 (or more depending on sales) each year for our Special Occupational Tax.
The SOT allows a a dealer or manufacturer to engage in sales and transfers of NFA firearms.





Thats not what ATF looks at when issuing an FFL. While there is no defined minimum number of transfers a licensee must do, ATF makes it clear than an FFL is for those engaging in the business of dealing in firearms and not for enhancing ones personal collection. You CAN do both. Evidence of a business intent is your record of transfers and sales to others, business cards, advertising and above all else......sales tax permits or business licenses required by your state or local government.




     

Whats the legality or grey area-ness of setting up the SOT on your residence? I'm going to start my FFL soon but out at my rural property to do business out there, not in Houston at my current residence

The rural SOT location will be a by appointment walk in shop which also will be my legal residence after I sell my Houston house. It won't exactly be a house house, the shop area would probably best be described as a small warehouse with a tiny apartment in the back that I live in

Any premises where you can legally conduct business. That means being in compliance with all state and local requirements including zoning and HOA.
You cannot conduct business from any wheeled or towed vehicle.

Good Advise!
Thanks,
M.

I have no interest in making or manufacturing NFA items, just to own them and not pay $30 to 50K for a full auto!
I see the benefits in it, but I’m get the feeling that this may be way too much for me!

I appreciate the input!!!
Thanks,
M.

Thank You for that! I see what you are saying and realize this is out of my league. Perhaps after I retire or decide to do it full time... maybe. But for now, you have enlightened me!

Thank You!!!
M.

It's my understanding that up to the 90's, a lot of guys were getting FFL's to be able to direct buy firearms from wholesalers and out of staters.   The cost of the FFL wasn't much, and between not having to go to a dealer and pay their costs plus the conveniences, it was worth it to some.

Then under Clinton, the ATF tightened up on the polices for FFL, to get rid of both the above FFL holders, and guys doing low volume transactions from their home.  I think the number of FFL's dropped by a factor of 2 or 3 or so, maybe more.

Now, ATF wants you to use the FFL to run a business.  You may not be able to make money on it - that'll depend on lots of factors, but they want to see that you're using it to conduct the business of buying and selling, and facilitating transfers for others.

So that, plus any increased scrutiny and costs related to SOT's, I would think is gonna preclude it being possible to do all that to be able to buy cheaper MG's.  That's really the only aspect of NFA items that it would be useful for, as the rest can still be made so prices are not sky high.

Just think of MG's as an investment and it doesn't seem so expensive.

You can have it at your residence. I had a dealer do some transfers that set it up in his basement after his shop burnt down. Had a minigun and everything.  I've heard of home based FFLs using po boxes or ups boxes for their mailing address for security reasons. Not sure on the specifics for that.

I also know that the ATF required actual business hours (4years ago) so you could just have them as Wednesday 4-6pm and all other appointment only. The ATF can come for their compliance checks during that time or set up an appointment.

Appreciate the responses guys

well, like others said, there are alot of hoops.  The three biggest ones:

1). must be committed to be in business.  it can be small, but must do some business.  ATF agent will sniff this out and is the second higest reasons for rejections
2). zoning.  Will your locality allow you to have customers coming and going.  You have to have zoning permit before ATF will talk with you.
3). this idea of getting a LEO letter and getting a sample is BS.  In todays world you are not going to get a law letter without the agency committing to buy.  That was popular 5 years ago.  Now, you need to show you have a buyer in hand,  Also, there is pretty much no manufacturer that will deal with you to sell you full auto unless you have a sizable LE dealership

If you can get #1 and #2 done, and keep your ATF and accounting records, best to go wth 07/02 and make your own full auto.   Much easier to get paperwork to build an M16 or a full auto MP5 clone than gret the law letter.  one more time:  the law letter is fiction.

There is a reason why transferable MGs are so expensive.

Running a legit-enough FFL/SOT to be able to manufacturer/buy machines and still fly under the radar as a business and not some guy who gaming the system to get access to cheap machine guns is a significant amount of effort. If it were easy everyone would be doing it and transferable wouldn't be nearly as expensive.

Also, many MGs are not cheap, most belt feds can run tens of thousands of dollars for post samples.

Where will you shoot these MGs? Unless you have private land finding a range that allows full auto can be difficult in some areas. Most ranges wont mind a suppressed MP5 but a tripod mounted M2 50 cal will require a MASSIVE range.

Keep in mind its a $500 per year SOT fee, plus $200 every 3 years for the FFL. You might also need to pay ITAR which is $2,250 per year.

Will you do your own taxes or pay someone to do them?

What's your day job? Do you have minimum of 5+ hours a week to dedicate to this "Business"

Can you run a business out of your home? If so do you want people knowing you own firearms?   Will your spouse be cool with it? Do you want people coming into your home?  What if your neighbors find out there is a "gun shop" next door? If not how much is rent per month for a small hole in the wall?

Security system, you will need one if you are advertising as a firearms business.

Don't forget firearms insurance.

Oh and you will need a safe, a REAL safe, not one of those gun lockers people call safes.

I ran the numbers awhile back and it was several thousand dollars per year in expenses.

If you have your heart set on a massive MG collection that includes high end belt feds like a B240B ($200k+), M60 ($50k+), HK Sear ($35k+) then a couple grand a year to own a quarter of a million dollars equivalent in transferable MGs is a pretty damn good deal, not to mention the countless MGs designed and manufactured after 1986 such as the SCAR, m249, mk46, mk48, etc....

But if you think you can scratch that full auto itch with a MAC (($7k+), UZI ($10k+), or a M16 ($16k+) its really hard to justify going the FFL/SOT route. Within a few years your expenses could have bought you a entry level MG.

Where did you pull that "5+ hours a week" from?
There is no requirement to do a single transfer. There is no "mimimum" hours required to dedicate to your "Business".
Having evidence of business activity is great, but there isn't a set in stone checklist.


No requirement whatsoever for "people coming into your home". While a licensed premises is required, a licensee can also conduct business at a gun show or other special event. I know several FFL's who have such a high transfer fee they virtually have zero transfer business, only selling at gun shows.




It's a nicety, but not a requirement.


But it's all profit!

         

The ATF will not allow appointment only as hours of operation. You have to at least have 1 hour a day one day a week .

To answer your initial inquiry, no you cannot get an FFL for any purpose other than to sell firearms.


In reality if you like MGs and Silencers and can handle running a side gig definitely get an FFL/SOT.

From my experience online other SOTs/MG owners will try to discourage you because they have a "I have this and you can't superiority complex"

I highly recommend checking our FFL123, their online forum is worth it and makes getting your licenses a breeze.

Hell even at $10 transfer fees 10/month you will make a profit and technically be "engaged in the business"

Who knows maybe it will take off for you.


Oh, and the most difficult part of the entire process is zoning.

Hold on a minute

There is a difference between business hours listed on your application vs the business hours you keep.
The business hours you list on your FFL application will be the hours that ATF will use for compliance inspections.
ATF doesn't give a rats ass whether a licensee is "appointment only" or 24/7/365. The business hours a licensee has doesn't mean he is "open to the public" for a single minute.

Really? So......how did Josh Sugarman of the VPC get an FFL?
Research, testing, gun rag writing can and do have FFL's and may not have to "sell" a single firearm ever.




Somewhat true. Fifteen years ago a well known dealer in Dallas told me that ATF would issue an FFL to a home based business. He's out of business and I've been doing 2,000 traansfers a year from home.




Waste.Of.$$$$.



Bullshit. Transfers are pure profit. You don't really need insurance, alarm service, copiers, etc.


Barack Obama was my salesman of the month for eight years.


 
Maybe for you. Every city and state is different.

In this subforum we've seen dozens of wannabe FFL/s who have no business plan, have done zero market research and live in an area with a population of 2,000 in a twenty mile radius. They fail because they are terrible at business.        

I have a home based 07/02 for “research purposes”. ATF was cool with that. Testing suppressors and publishing the data.  

Thank you for that correction.  Still a valid thing to consider when applying for your ffl. Don't put "appointment only" on the app

As usual, Tom has all the bases covered. I will address one comment, "You have to at least have 1 hour a day one day a week" There is no requirement to have hours each day. One one point my regular job had a lot of travel, I only had 8-12 sat as my ATF hours. No problem.

I found getting an FFL/SOT to be an easy and enjoyable income source. It is not hard to "be in the business". Just sign up with Silencer Shop and you will get business. Dont let people talk you out of it. Get it, and if does not work out for you, do not renew.

You cannot get an FFL/sot for the primary purpose of increasing your personal collection. The ATF makes that perfectly clear in addition you have to sign a certification saying that you're in the business of selling firearms.

If you're working out of your home the ATF will check with the local zoning board to make sure that your home it's in the area zoned for business and they will also check your subdivision to make sure that your subdivision doesn't have Covenants preventing operation of a home business with drive-up customers.

Honestly as someone who was an 0702 it's not worth the time or expense setting up a corporation getting a business license having insurance and all the other things that go along with owning a business and that doesn't even include the ATF side of it.