We have previously discussed the ways an FFL can be used for personal use (yes, it’s perfectly acceptable as long as you follow a few simple rules and guidelines), but people often wonder about a Class 3 License for personal use. After all, in some states and with some items, a Class 3 license is the only way many people will ever get to have access to things like machine guns.
However, a Class 3 license, or more properly, a Class 3 SOT and the required 01 or 02 FFL to go with it, then you can engage in the retail sale of NFA items like silencers, short barrel rifles and shotguns NFA devices, pre May 1986 machine guns and full auto weapons to qualified government buyers.
So it seems having a Class 3 license opens you up to accessing a lot of really cool items. But can you enjoy that while also conducting a business? Well, yes. But with conditions.
A Class 3 License for Personal Use?
The ATF takes NFA devices very seriously. After all these are registered items that require a tax stamp and complicated registration process. In addition, the penalties for unlawful ownership are very steep, so it should not be surprising that in order to sell them, you have to jump through a lot of hoops.
We are going to assume you have a relevant SOT here. If you don’t know about that, read through the links at the start of this article.
The most common SOT is a Class 03 SOT which allows you to sell NFA devices. It does not allow for manufacturing. An 03 SOT can purchase for resale any NFA device they wish, although explosive ammo and the like may require additional licenses and permits, but let’s just focus on the common sort of NFA items, not oddball stuff.
With an 03 SOT you cannot manufacture NFA items. That means you are limited to buying from licensed manufacturers or owners of legal NFA devices. While this is fine for most items, if you wish to handle machine guns, you are restricted to pre May 1986 guns, or dealer samples to authorized government agencies.
But what if you want some of these admittedly fun toys for yourself?
Using Your Class 3 License for Personal Use
Any SOT holder is expected to have their licenses for primarily commercial use. In fact holding those licenses without an intent and effort to engage in commercial activity will get your license revoked in a hurry.
That doesn’t mean the ATF doesn’t understand retailers have many legitimate reasons to make personal use of their inventory or acquire the kind of merchandise they sell for personal use. That means there are a few ways you can use your class 3 license for personal use.
- Incidental acquisition of an NFA device during the normal course of business. Say you get a really good deal on something from a distributor and want one for your collection or to rent out, or study further so you can decide if you want to sell more. It’s perfectly fine to grab something now and then and log it as a personal acquisition.
- Casual personal purchases. Let’s face it, as an NFA dealer you are going to want to use what you sell. The ATF is perfectly fine with you buying something now and then for your private use as long as you can show that such transactions are not a significant portion of your activity. There is no hard and fast rule for this, but if you log acquisitions for 100 NFA devices, you better show that most of them aren’t going to yourself, or friends or family. If it appears you seem as interested in personal use as commercial sales you might be in hot water.
- Purchases for evaluation. You can totally buy something to evaluate its suitability for your business and keep it afterwards. Again the key is to show you aren’t doing this so often as to raise suspicion.
What About Machine Guns?
Full auto and select fire weapons are a real problem for class 3 dealers looking to grow their collection along with their business. As a retailer you can only handle pre May 86 guns without additional paperwork. And these are the only full auto guns you can keep if you ever close your business. Post May 86 guns require a demo letter from a law enforcement agency before you can even buy one, and those must be surrendered or transferred to another SOT if you close your business.
However, there is a way to acquire machine guns for personal use without a demo letter. Curious? Keep reading!
The 02 SOT
Some call it a loophole, but this not so secret secret of the NFA world requires a bit of work. While an 03 SOT with an 01 or 02 FFL can SELL NFA devices, an 02 SOT with an 07 FFL can MANUFACTURE as well as sell NFA devices.
Manufacturers do not require a law enforcement demo letter to build or acquire post May 86 machine guns. There is no limit on the guns they can build as long as they follow ATF procedures and you guessed it, show that they are engaged in actual business.
What does that mean for you, the person who wants to have an 02 SOT manufacturing business, and enjoy the perks of playing with your inventory?
It means as long as you are making a honest effort to turn a profit (and really selling silencers alone should do that for you) you have a lot of latitude for building machine guns. In fact, it would be pretty stupid not to have a selection of guns you built to show what is available. And you can even rent them out at a controlled range to make your creations pay for themselves many times over.
The downside to all this is as with all post 86 machine guns you will have to destroy, surrender or transfer to another SOT whatever you build when you go out of business. However, for somebody who is keen to have the ultimate FFL and SOT combos and can understand how to make money with them, this is a fabulous perk and for many the only way to really access full auto weapons easily and legally.
Keeping NFA Items Acquired For Personal Use
Because SOT’s take full ownership of NFA devices they buy or make to sell, those items are already registered with the ATF. If you choose to keep anything other than post May 86 machine guns, you simply retain them. The ATF offers handy guidance and explanations of how this works.
So there you have it. If you acquire NFA items for personal use simply do so and enjoy as long as they are done incidental to your main business activities. If or when you go out of business you are free to retain ownership of whatever inventory you have that is not a post May 86 machine gun.
Are You Ready to Get Your Class 3 License or Other SOT?
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