So far here is the information that I have found:
Title 2 firearms are not as commonly known nor as straight forward as the Title 1s. All title 2 weapons fall into 1 of 6 different categories. 1) Machineguns, 2) Short Barreled Rifles (SBRs), 3) Short Barreled Shotguns (SBSs), 4) Suppressors, 5) Any Other Weapon (AOWs) and 6) Destructive Devices.
All title 2 firearms are regulated by what's known as the National Firearm Act or what we like to refer to as NFA. One could spend months reading about NFA but I’ll hit the major misconceptions... which are (contrary to the assumptions by many individuals AND even law enforcement) that NFA weaponry ...
1) Is legal in almost every state. Most all 6 categories above are allowed in just about all states within the Continental United States. A few states restrict machinegun ownership, others may restrict short barreled shotguns (SBSs) or suppressors, etc..
2) One does not need or obtain a "Class 3" license to own. In fact there really is no such thing as a class 3 license. When a Title 1 FFL dealer pays what's known as a Special Occupation Tax, he/she then becomes a SOT that can then deal in NFA/Title 2 weapons. SOTs have several classes too and they are based on the type of FFL license you currently hold. The term Class 3 comes from when a normal Type 1 (standard dealer) FFL holder pays his SOT tax. He becomes a Type 3 SOT hence the term Class 3. When a manufacturer like myself (a type 7 FFL) pays his/her SOT, they become a Type 2 SOT and can both MAKE and DEAL in NFA weapons.
3) Transfering ownership of an NFA weapon - All NFA weapons regardless of category (machineguns, silencers, etc.) are controlled during their transfership from one person/entity to another. These weapons transfer to another entity on what is called ATF tax forms. Each ownership transfer MUST be approved by the ATF before the transfer takes place. This approval takes sometimes many months. Generally individual transfership is approved in 3-4 months, dealer to dealer in 3-4 weeks. When the ATF approves the transfer, they cancel a tax stamp and this is why you sometimes hear some say class 3 stamp. Transfers from/to individuals require a one time $200 tax stamp to be paid for EACH transfer (AOWs require just a $5 stamp). These are considered tax paid transfers and usually are on ATF form 4s. Dealers can transfer to other dealers using a tax free Form 3. If a person buys a NFA item from someone outside his/her domicile (home) state, the weapon must be transferred 1st to a SOT holder within the buyer's state. Similar to a Title 1 firearm transaction. It must go to a FFL/SOT dealer in the buyer's state before going to the buyer.
http://www.lawenforcementsalestn.com/NFA_-_Title_2_Weapons.php
Per the BATFE:
c. Payment of /Exemption from Payment of Tax. As provided in 26 U.S.C. § 5821, there is a $200.00 tax on each firearm made, except as provided in 26 U.S.C. §§ 5852 and 5853, when an NFA firearm may be made without payment of the tax when made by, or on behalf of the United States or any State or political subdivision thereof. Documentation that the firearm is being made for a government entity, such as a United States government contract or a State or local government agency purchase order, must accompany the application. The reactivation of a registered unserviceable firearm is subject to the making tax.
https://www.atf.gov/files/forms/download/atf-f-5320-1.pdf
Some other Good information:
http://quarterbore.com/library/pdf_files/shortbarreledriflefaq.pdf
And some more:
THE NATIONAL FIREARMS ACT OF 1934 (NFA 34 ): This law placed certain classes of firearms into a registered ownership category. Private individuals can possess a functional machine gun, suppressor ( silencer ), short-barreled rifle or shotgun, smooth-bore pistol, cane gun, destructive device (certain shotguns, grenade launchers, hand grenades, bazookas, mortars, cannon, etc..)only after first paying a Federal Transfer Tax of either $5 or $200 per firearm / device. The $5 tax applies to pen guns, cane guns, smoothbore pistols, or any other such firearm that the Bureau of Alcohol, Tobacco and Firearms classifies as "ANY OTHER WEAPON" ( AOW ). All other functional guns or devices in the NFA registry require payment of a $200 federal tax for each private transfer. The is not an annual tax. It only is paid each time a functional NFA firearm is being transferred to or from a private owner ( excepting inheritance ).
http://www.nfagear.com/title-ii-laws-explained-nfa-weapons.html