September 8th, 2014

When Do Gunsmiths Need a Firearms Manufacturing License?

colorado school of trades gunsmithing ATF

When does a gunsmith become a “firearms manufacturer”? That’s an important legal question that professional gunsmiths need to consider. Normally, a gunsmith (with an FFL) can receive firearms, chamber/fit barrels, do bedding jobs, and install stocks without requiring a firearms manufacturer’s license. However, other gunsmithing tasks may spill over into “manufacturing activities”. Sometimes the distinctions are not so obvious. Consider these three examples provided by the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF):

Surplus Rifle Sales Version 1: A gunsmith purchases surplus firearms, cleans the firearms, then offers them for sale to the public.

ATF Verdict: The company does NOT need to be licensed as a manufacturer.

But consider this…

Surplus Rifle Sales Verson 2: A gunsmith buys surplus military rifles or pistols and removes the stocks, adds new stocks or pistol grips, cleans the firearms, then sends the firearms to a separate contractor for bluing. These firearms are then sold to the public.

ATF Verdict: This would be considered manufacturing of firearms and the gunsmith should be licensed as a manufacturer.

And “Sporterizing” an old military rifle can be considered “manufacturing” as well:

Surplus Rifle Sales Version 3: A gunsmith buys surplus military rifles, bends the bolts to accept a scope, and then drills the receivers for a scope base. The gunsmith offers these firearms for sale.

ATF Verdict: This would be considered the manufacturing of firearms and the gunsmith should be licensed as a manufacturer.

These three examples provided by the ATF suggest that gunsmiths need to study the law, and be mindful that the more a firearm is altered and modified (with the objective of resale), the greater the possibility that a manufacturer’s license would be required.

ATF Guidelines for Gunsmiths
On its Manufacturers FAQ Page, the ATF has provided some guidelines to help gunsmiths and FFL-holders determine when a manufacturing license is required:

“Generally, a person engaged in gunsmithing requires only a dealer’s license (type 01). However, there are circumstances in which a gunsmith might require a manufacturing license. Generally, a person should obtain a license as a manufacturer of firearms if the person is:

1. Performing operations which create firearms or alter firearms (in the case of alterations, the work is not being performed at the request of customers, rather the person who is altering the firearms is purchasing them, making the changes, and then reselling them), 2. is performing the operations as a regular course of business or trade, and 3. is performing the operations for the purpose of sale or distribution of the firearms.”

ATF Examples Showing When Manufacturer License Is or Is Not Required
Below are examples of gunsmithing operations with guidance as to whether or not such operations would be considered manufacturing under the Gun Control Act (GCA). A key factor is whether the “operations performed on the firearms were… for the purpose of sale or distribution”. (NOTE: These examples do not address the question of whether the operations are considered manufacturing for purposes of determining excise tax.) View ATF Manufacturer FAQ Page for more details.

  • Example 1: Completing Rifle on Customer-Supplied Action.
    A company receives firearm frames from individual customers, attaches stocks and barrels, and returns the firearms to the customers for the customers’ personal use.
    ATF Verdict: Manufacturer License NOT Required.
    The operations performed on the firearms were not for the purpose of sale or distribution. The company should be licensed as a dealer or gunsmith, not as a manufacturer of firearms.
  • Example 2: Barrel-Making. A company produces barrels for firearms and sells the barrels to another company that assembles and sells complete firearms.
    ATF Verdict: Manufacturer License NOT Required.
    Because barrels are not firearms, the company that manufactures the barrels is not a manufacturer of firearms. [However], the company that assembles and sells the firearms should be licensed as a manufacturer of firearms.
  • Example 3: Single Gun Project. A company acquires one receiver, assembles one firearm, and sells the firearm.
    ATF Verdict: Manufacturer License NOT Required.
    The company is not manufacturing firearms as a regular course of trade or business and is not engaged in the business of manufacturing firearms. This company does not need to be licensed as a manufacturer.
  • Example 4: Production of actions or frames for direct sale. A company produces a quantity of firearm frames or receivers for sale to customers who will assemble firearms.
    ATF Verdict: Manufacturer License IS Required.
    The company is engaged in the business of manufacturing firearms and should be licensed as a manufacturer of firearms.
  • Example 5: Production of actions as parts suppliers. A company produces frames or receivers for another company that assembles and sells the firearms.
    ATF Verdict: Manufacturer License IS Required
    BOTH companies are engaged in the business of manufacturing firearms and each should be licensed as a manufacturer of firearms.
  • Example 6: Modification of Pistols. A gunsmith buys government model pistols and installs “drop-in” precision trigger parts or other “drop-in parts” for the purpose of resale.
    ATF Verdict: Manufacturer License IS Required.
    This would be considered the manufacturing of firearms, as the gunsmith is purchasing the firearms, modifying the firearms and selling them. The gunsmith should be licensed as a manufacturer.

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