January 2nd, 2011

BATFE Ruling Covers Manufacturing Work by Dealer-Gunsmiths

BATFELast week, the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) issued an important ruling affecting gunsmiths. The ruling covers the obligations of dealer-gunsmiths who work as sub-contractors for a licensed firearm manufacturer. Specifically, the ruling addresses record-keeping requirements and whether dealer-gunsmiths must have a manufacturers’ license to complete certain types of production work. We recommend that all gunsmiths involved in external finish work (such as cerakoting or parkerizing) review the ruling carefully.

The ATF explains: “The Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) has received inquiries from firearms industry members asking whether licensed dealer-gunsmiths who would be engaged in the business of repairing, modifying, embellishing, refurbishing, or installing parts in or on firearms for, or on behalf of a licensed importer or manufacturer are required to be licensed as manufacturers and abide by the requirements imposed on manufacturers.

In recent years, licensed firearms importers and manufacturers have contracted certain firearms manufacturing activities on their behalf to specialized licensed firearms manufacturers. Such activities include applying special coatings and treatments to firearms (e.g., bluing, anodizing, powder-coating, plating, polishing, heat/chemical treating).

This has caused confusion over which importers and manufacturers are required to identify/mark firearms and maintain permanent records of importation or manufacture. For this reason, licensed importers and manufacturers have asked whether licensed dealer-gunsmiths, who are not required to mark firearms and keep production records, may engage in such manufacturing activities on their behalf.”

Summary of ATF Ruling 2010-10
ATF Ruling 2010-10 addresses questions about activities such as bluing, anodizing, powder-coating, plating, polishing, heat and chemical treating. There has been confusion over whether these activities require a federal firearms manufacturers license, and what are subcontractors’ firearms-marking and record-keeping requirements. As stated by the BATFE in a 12/30/2010 Press Release:

Ruling 2010-10 holds that licensed firearms dealer-gunsmiths are not engaged in a manufacturing business, and are not required to hold a manufacturers license, under certain specified conditions. The ruling was issued to address modern firearms manufacturing processes, which often involve a number of contractors other than the manufacturer whose name is marked on the firearm.

Under the ruling, licensed dealers may perform manufacturing services if:

(1) The firearms are not owned by the licensed dealer-gunsmith;
(2) The licensed dealer-gunsmith returns the firearms to the licensed manufacturer or licensed importer upon completion of the manufacturing process and does not sell or distribute the firearms to any other person; and
(3) The firearms were properly identified and marked by the importer or manufacturer in accordance with the law and regulations.

We recommend that gunsmiths whose activities may be covered by ATF Ruling 2010-10 read the complete text of the ruling: ATF RULING 2010-10 Official Complete Text.