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Posted: 12/10/2003 10:07:48 AM EDT
[Last Edit: 12/10/2003 3:55:00 PM EDT by HK_Shooter_03]
Im thinking of starting a MG rental biz or just going through the 07 paperwork to get Post samples. I know you have to have regular hours. Can you be appointment only? Can you sell guns at a loss on purpose just to make the minimum to stay a C3 dealer?

I figure going through paperwork paying somewhere less than $500 and selling guns at a major loss is still cheaper than buying a full priced C3 gun and having several post samples. Maybe we could just make a minor profit and break even and that could be the price of having several post samples. We might just make it an appointment only MG rental in co-op with the local range.

What do you have to do to become a 07 C3 dealer?
What rules do you have to follow?
Whats the minmum you have to make to be a C3 dealer in the eyes of the BATF?
If you only do rentals and do not sell C3s can you stay in bussiness in the eyes of the ATF?
I have no trouble with filling out paperwork and we actually might make a profit in the rental idea and not have to bother with anything else...

We wold make a profit but we would not be in bussiness for a profit. We would not go to gun shows unless we had to. We would only rent not sell MGs. We would probably rent about 8 MGs and have 2 personal ones. I see on the form that it says are you going to use this permit to acquire guns for yourself. We would probably have one or two guns for ourselves and use the others only as rentals.
Link Posted: 12/10/2003 10:16:24 AM EDT
You have to have a letter from LEO stating that they want to buy a machine gun from you to have a post sample. You arent the first guy to think of this, so I am sure the ATF has a way to twart your plan.
Link Posted: 12/10/2003 10:20:29 AM EDT
Link Posted: 12/10/2003 10:35:33 AM EDT
Originally Posted By Guns_N_Shizzle: You have to have a letter from LEO stating that they want to buy a machine gun from you to have a post sample. You arent the first guy to think of this, so I am sure the ATF has a way to twart your plan.
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I believe the BATF has been paying a bit more attention to this in the last few years... [url]http://www.aberdeennews.com/mld/aberdeennews/news/nation/4647881.htm[/url]
Link Posted: 12/10/2003 10:46:27 AM EDT
Well my point is now is that if we do rentals only can we stay in bussiness. IT WOULD NOT BE JUST FOR PERSONAL FIREARMS. The person below did not actually conduct bussiness and only used these guns for himself. What do you have to do to become a 07 C3 dealer? What rules do you have to follow? Whats the minmum you have to make to be a C3 dealer in the eyes of the BATF? If you only do rentals and do not sell C3s can you stay in bussiness in the eyes of the ATF? I have no trouble with filling out paperwork and we actually might make a profit in the rental idea and not have to bother with anything else... We wold make a profit but we would not be in bussiness for a profit. We would not go to gun shows unless we had to. We would only rent not sell MGs. We would probably rent about 8 MGs and have 2 personal ones. I see on the form that it says are you going to use this permit to acquire guns for yourself. We would probably have one or two guns for ourselves and use the others only as rentals.
Link Posted: 12/10/2003 10:51:59 AM EDT
[Last Edit: 12/10/2003 11:04:02 AM EDT by CS223]
Can you be appointment only?
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No.
Can you sell guns at a loss on purpose just to make the minimum to stay a C3 dealer?
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No, it's a disqualifier on the application.
What do you have to do to become a 07 C3 dealer?
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All you need is a type 01 dealer and the $500 annual SOT to deal with MG's. A type 07 is to manufacture. A 07 & SOT & State Dept Fee makes you a C2.
What rules do you have to follow?
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You must be in business to make a profit, you must have regular hours, you must meet all local and state laws regarding zoning, you must have a business license if required by your locality, you will need a EIN and state sales tax number. In addition, on a type 07 license you will have to meet environmental standards and fill out paperwork stating how much and what kind of waste your manufacturing operation will generate and how it will be disposed of. In addition you MAY have to provide a survey or documentaion if there are any streams, or wetland areas near your property. In addition to the License fee, the annual SOT, you have to pay a $600 State Department fee for a 07 and C2.
Whats the minmum you have to make to be a C3 dealer in the eyes of the BATF?
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There isn't a minimum, you could be involved in strickly research as a C2. As a C3, you just have to be in businesss to make a profit.
If you only do rentals and do not sell C3s can you stay in bussiness in the eyes of the ATF?
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BATF wouldn't find that kind of operation favorable at all if you are a C2 manufacturing MG's. You could be a private NFA owner and rent your MG's all you want or a 01/C3 dealer and rent. But if you start a business strickly for building post-ban MG's to rent, you ain't going to last long. BATF does't permit you to be a dealer for the purpose of getting around the Tax. That is tax evasion pure and simple. Being a NFA mfr. for the purpose of having cheap shooters is not permitted either. Best thing I can do is recommend you buy the Machine Gun Dealers Bible by Dan Shea. You can get it from the Small Arms Review website. It seems that you have some things mixed up here so I'll try to help. If you want to rent, buy or sell machine guns. All you need is a regular FFL and pay the $500 annual SOT. If you want to build MG's you need the 07 license, $500 SOT and $600 annual State Dept Fee. Now, BATF wouldn't like it if you were renting Post-86 MG's, not at all. If you have transferable in inventory then you can rent all you like. TO get post-86 guns you will need a letter of request from your local LE agency for specific models. BATF probably wouldn't like it if you had alot of Post samples in inventory with no sales to LEA's. In fact, BATF limits you to 2 post samples of the same model. IMHO, you are playing with fire in your business scheme. You'd be better off buying transferables privately and starting your business, they pay for themselves pretty quickly.
Link Posted: 12/10/2003 11:16:50 AM EDT
Basically you are doing this for all the wrong reasons in the eyes of the ATF. Others have given specifics so no reason to go into the details again. If you don't want to become a gun dealer as in gun dealer who deals in guns, then re-think your position. Just buy a couple of transferables as an individual and make arrangements at this same gun range to have M-Gun rental night where you set up and rent your guns to help offset the high cost.
Link Posted: 12/10/2003 9:42:59 PM EDT
[Last Edit: 12/10/2003 9:43:22 PM EDT by HK_Shooter_03]
-------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Can you be appointment only? -------------------------------------------------------------------------------- No. How long minimum do you have to be open? Can your bussiness be a part of the household? --------------------------------------------------------------------- What rules do you have to follow? -------------------------------------------------------------------------------- You must be in business to make a profit. Yes You must have regular hours, you must meet all local and state laws regarding zoning. Probably Yes you must have a business license if required by your locality, you will need a EIN and state sales tax number. Yes In addition, on a type 07 license you will have to meet environmental standards and fill out paperwork stating how much and what kind of waste your manufacturing operation will generate and how it will be disposed of. Brass will be taken and the only waste will be lead. It would be an indoor range so that wouldnt be a problem. In addition you MAY have to provide a survey or documentaion if there are any streams, or wetland areas near your property. Yes In addition to the License fee, the annual SOT, you have to pay a $600 State Department fee for a 07 and C2. -------------------------------------------------------------------------------- Whats the minmum you have to make to be a C3 dealer in the eyes of the BATF? -------------------------------------------------------------------------------- There isn't a minimum, you could be involved in strickly research as a C2. As a C3, you just have to be in businesss to make a profit. -------------------------------------------------------------------------------- If you only do rentals and do not sell C3s can you stay in bussiness in the eyes of the ATF? -------------------------------------------------------------------------------- BATF wouldn't find that kind of operation favorable at all if you are a C2 manufacturing MG's. You could be a private NFA owner and rent your MG's all you want or a 01/C3 dealer and rent. But if you start a business strickly for building post-ban MG's to rent, you ain't going to last long. There is a range locally that rents several post samples. How did they do it? BATF does't permit you to be a dealer for the purpose of getting around the Tax. Im not worried about a tax. If I do this it will be for a profit. That is tax evasion pure and simple. Being a NFA mfr. for the purpose of having cheap shooters is not permitted either. Nope. If we went into bussiness we would probably rent 8 guns and have 2 personal ones. Best thing I can do is recommend you buy the Machine Gun Dealers Bible by Dan Shea. You can get it from the Small Arms Review website. It seems that you have some things mixed up here so I'll try to help. If you want to rent, buy or sell machine guns. All you need is a regular FFL and pay the $500 annual SOT. If you want to build MG's you need the 07 license, $500 SOT and $600 annual State Dept Fee. Now, BATF wouldn't like it if you were renting Post-86 MG's, not at all. If you have transferable in inventory then you can rent all you like. TO get post-86 guns you will need a letter of request from your local LE agency for specific models. Thats no problem. As I said the range near me only rents post samples. BATF probably wouldn't like it if you had alot of Post samples in inventory with no sales to LEA's. In fact, BATF limits you to 2 post samples of the same model. As I said we would probably rent 8 post samples and have two personal ones IMHO, you are playing with fire in your business scheme. If everything is legal I see no problem You'd be better off buying transferables privately and starting your business, they pay for themselves pretty quickly. If we could buy post samples and rent them for a profit we could stay in bussiness right? Its not for the sole purpose of acquiring machine guns. If it is so hard to get post samples, why would anyone go into this bussiness for anything else? The demand for postie machine guns is not great.
Link Posted: 12/11/2003 3:08:57 AM EDT
Originally Posted By natez: Remember, the "purpose" of post samples is for demos to Law Enforcement agencies. They let a Dealer have two of any model on the off chance that one breaks. You have to do bona fide demos at LE agencies, and the agency that requests the demo can't have any of the weapon that they are requesting a demo for. Lets say you wanted a post sample M4. If the LEA that you are getting the letter from HAS M4s already, then the letter is no good.
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The reasoning behind allowing two guns is so that one can cool or if one breaks durug a demo. I haven't heard anything regarding a limit if a PD already has a particular model. As far as I know, if they request it, you can demo it but I may be wrong.
While not an ATF requirement, LEAs are getting very leery of giving out demo letters. I am trying to help some local dealers with letters (support the local business community and all), but my bosses (and probably rightly, from an ethical standpoint) aren't going to sign letters for anything we wouldn't actually be interested in purchasing.
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It's getting a little goofy out there with PD requests for 1919's and MG 34's. There are alot of post-sample antiques floating around.
As a side note and question for the dealers who responded to this, what are the ATF regs on demos? We would like to do a fairly long demo, maybe a month or two, on a post-sample, where we actually qualified an officer on the MG and issued it to them for operational use and testing, but the dealer is unsure if he can do that. Thoughts?
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There are no regs on the actual demo. Dan Shea recommends that you schedule a demo for a day. You could loan the weapon to the PD for a training session but that's the only requirement. The point of the exercise is to show them the weapon and try to make a sale. If it were me, I'd write up a sales quote and get a thank you/declined purchase letter from the PD just for good measure.
Link Posted: 12/11/2003 3:46:09 AM EDT
Originally Posted By HK_Shooter_03: Can you be appointment only? No. How long minimum do you have to be open? Can your bussiness be a part of the household?
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BATF will permit a home based business if zoning allows it. It is difficult to do without a commercial front but if you are a shooting range, and your open for example fri, sat, sun. then there shouldn't be a problem, there is signage that you have to have posted at your point-of-sale etc. All transfers have to take place at the licensed location.
If you only do rentals and do not sell C3s can you stay in bussiness in the eyes of the ATF? >>>>BATF wouldn't find that kind of operation favorable at all if you are a C2 manufacturing MG's. You could be a private NFA owner and rent your MG's all you want or a 01/C3 dealer and rent. But if you start a business strickly for building post-ban MG's to rent, you ain't going to last long.<<< There is a range locally that rents several post samples. How did they do it?
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If they are in the business of selling C3 weapons with transfers on the books and they happen to have post samples in inventory, BATF probably won't say much. Remember to get a post sample, you need a PD letter. Now if you are in the business strickly for rentals, you will still need a PD letter to get a post-sample weapon. You should demo that weapon to the PD that requested it. If you are trying to obtain post-samples for the purpose of rentals, then you are breaking the law.
BATF does't permit you to be a dealer for the purpose of getting around the Tax. Im not worried about a tax. If I do this it will be for a profit. That is tax evasion pure and simple. Being a NFA mfr. for the purpose of having cheap shooters is not permitted either. Nope. If we went into bussiness we would probably rent 8 guns and have 2 personal ones.
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Let me try to clarify this further. All transferable machine guns can be owned by private citizens, they are received on a [b]Form4 [/b]there is a $200 transfer tax per NFA item. Class 3 dealers can possess pre-May 86 dealer samples and keep them once their SOT or FFL expires. C3 dealers can possess post-may 86 dealer samples if requested by a PD for the purpose of a sales demo. If the dealer allows the SOT to lapse, they weapons must be cut up or sold prior to the SOT expiring. When a C3 dealer aquires a pre-may or post-may sample, he receives them on a [b]Form 3[/b], a tax exempt transfer, no $200. Just like when you buy goods for resale and you don't pay state sales tax. If you use your C3 (or state sales tax ID) to avoid paying the $200 transfer tax (or sales tax) you are breaking the law, and BATF has prosecuted people for this. If you bought transferable machine guns on a Form 4 for a rental operation, there would be no questions because you would pay $200 on each one. [b]Best thing I can do is recommend you buy the Machine Gun Dealers Bible by Dan Shea. You can get it from the Small Arms Review website. [/b] Again to clairify things further: A type 07 and a SOT and the State Dept fee makes you a [b]Class 2 manufacturer[/b] you will have to meet environmental standards. A type 01 and a SOT makes you a FFL that can buy & sell machine guns. Here is what I would do if I were you: 1. Form a corporation, ABC Gun Club LLC or what ever. 2. Buy transferable machine guns. With the Corp, you don't need to go thru the fingerprint and LEO signoff and the transfer only takes 30 days instead of 6 months. Start with one or two fun guns, 1919's are a good deal right now. As you make money, buy more and add them to your inventory. By taking this approach, BATF is out of the picture totally. You don't have to worry about any legal compliance, inspections, getting PD demo letters, doing the demos, having transfers on your books to legitimize your license, keeping all the paperwork. Etc. Just for the BATF fees, you will pay $700 out of pocket up front then $500 every year for the SOT. THe SOT isn't prorated, it runs from July 1 to June 30 so if you pay now, you will pay $500 again July 1. For the first two years, thats $1200 in fees. That's 6 $200 private transfers without the hassle of BATF. Yes, trasnferables cost more. But what other commodity do you know of that you can buy,use, then resale for more than you paid for it? Take out a home eq loan to buy your first transferable MG(s). Get your rental business going and you will be set without gov't looking over your shoulder.
Link Posted: 12/11/2003 5:55:11 AM EDT
BTW, I'm an FFL & SOT, (a newbie but I have been reading the regs), so I have some idea of what I'm talking about. Even as a dealer, I can't take advantage of pre & post May samples without making sales. If I were to aquire, for example, a bunch of transferables just for myself, BATF would hit me for tax evasion. In theory, I could do that, I could pay my $500 SOT and then buy a pile of transferables, for example 10, which as a private citizen would cost me $2000 in transfer taxes but as an SOT $500. I could then let my SOT lapse after the first year. BATF would take one look at my records and charge me with $1500 tax evasion and what ever else they can think of.
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