Theoretical questions...

1)  At what point does one need to have a Type 07 licenses, v. a Type 01?  Let's day a gun shop owner with a Type 01 license receives a lower or a complete AR, but decides to put a new or different upper on the lower.  Does that cross the line into manufacturing?

2)  Perhaps a Type 07 FFL holder receives a Colt lower, and wants to put an upper on that lower, and fully assembles the upper with barrel, etc.  Does he/she now need to mark the lower, or must the FFL 07 holder get a variance if he/she does not want to mark-up that nice Colt lower?  If a variance is needed, would Colt even pick up the phone to respond to a small FFL holder?

3)  Now, assume a Type 07 FFL holder who is invovled in assembling parts.  No manufacturing is taking place, but has some parts manufactured, by other sub-contractors.  Maybe sights or gas blocks, or barrels, etc., made to his specs (as many barrels are).  Must the 07 FFL holder also register for ITAR ?

4)  What safeguards must a Type 01 or Type 07 FFL holder take, if not registered for ITAR, to make sure that he or she is doing business, selling only to US Persons ?  (also asked in another thread)

Thanks, follks.  Noob questions from a non-FFL holder who is contemplating...

1. As you probably know, a Type 1 FFL allows for gunsmithing. It can be difficult to determine the difference between gunsmithing and manufacturing. As a firearms attorney, I often guide my clients (this is not legal advice - you aren't my client) that it's all about your intent. If you take your inventory and make a rifle (even merely assemble a rifle) for sale, then you are likely a manufacturer and need a Type 07 (and ITAR registration). However, if a customer comes in and requests a change to their firearm, you might be ok as a gunsmith as long as you aren't changing the type of firearm (receiver -> rifle).

2. You're not going to get a variance for that. The ATF now requires that the marked manufacturer (in this case, Colt) is the last one to "touch it" and send it into commerce. That's so the ATF can do a trace by calling Colt (the markings found on a crime gun) and know where it went.

3. Regardless of what type of FFL you have (or whether you have one at all), manufacturing firearms parts requires ITAR registration. Here's more on that: ITAR Registration

4. Registering for ITAR has nothing to do with selling to US persons.  Even if you only sell to US persons, you MUST register for ITAR as a manufacturer of items on the USML (part of ITAR) called "defense article"  See link above for more info. You should have a disclaimer on your website and invoices that warn people that they're dealing with controlled items (look to Magpul's products on their website for a good example).

Thanks.  You are very generous in your reply.  Of course this is not legal advise for me.  I understand, and thus the theoretical questions.  Your insights and education for the group are appreciated.

With regards to #2, it would sound like you are saying that an FFL 07 cannot mate a Colt lower with an upper and sell it?  Is that correct?  I suppose one could resell the lower, and make the upper, but then is only required to have an FFL 01.  If one alters the Colt lower, with different parts for resale, and not at at a 1:1 customer request, like a gunsmith, how would the FFL holder now be required to have an 07?  Would you see a scenario where a custom rifle builder could be appropriately licensed to design and assemble parts made by others, and marked (ATF markings) into a complete rifle for sale to the public, and not on a 1:1 basis?

On the ITAR topic.  I do not read ITAR as being limited to the manufacturer, but also to any seller.  If a business, whether licensed by ATF or not, is assembling parts, or just reselling parts that are covered by ITAR, and the manufacturer of the parts is ITAR registered, is not the reseller also required to be ITAR registered?  Maybe I am reading too much into ITAR, but I know how federal enforcement can just grow from nowhere, like RICO.