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Closing the “NFA Trust Loophole”

Oct 22

NFA Trust Loophole – Obama

The document aimed at closing the “NFA trust loophole,” otherwise known as the ATF 41P Proposed Rule Change, is fourteen pages of arguments and data laid out to convince Congress that there needs to be a rule change and why. The ATF is leaving the proposal open for comments, and many in the firearms industry have already voiced their opinions.

One general consensus, with which we agree, is the potential of this proposal to negatively impact the silencer industry financially in a big way. In North Dakota, South Dakota, Nebraska, and Wyoming, where our firearms company Dakota Silencer is licensed to do business; we’re very fortunate that CLEOs (Chief Law Enforcement Officers) have been very willing to sign Form 4s. However, in other states, such as North Carolina or Texas, where many sheriffs refuse to sign a Form 4, customers are forced to purchase their NFA items using a trust. Within the 41P, the ATF would require sheriffs to sign all Form 4s, whether submitted by a trust or an individual. The signature would stand to certify that the photographs and fingerprints of each individual were acceptable. Although there would be no portion stating that the sheriff does not know of any reason that the individual should not have an NFA item (as it still stands for applications submitted by individuals), sheriffs may still refuse to sign the form on principal.

If consumers suddenly have no way to purchase a silencer or other NFA regulated item, there will obviously be no sale of any of those items. Silencer dealers across the nation will lose a huge portion of their income in a very short time period. The Wall Street Journal spoke with the owner of Silencer Shop based in Austin, TX about the impact that they, as only one silencer dealer, would feel with the implementation of 41P. The owner, Dave Matheny, said that about 80% of his sales are through NFA trusts, and he does almost $1 million of sales each month. It’s easy to see how 41P would negatively impact Silencer Shop, as Mr. Matheny could suddenly see a drop of $800,000 in sales each month.

FFL123.com is a small business started in pursuit of the American dream. So to see another small business, created to provide great service and products to customers, take such a huge hit because of unnecessary government regulations, is heart breaking. In a portion of 41P, the ATF lays out their estimated increased cost to trusts and other corporations affected by the legislation. However, one cost they do not factor in is the loss of business to every silencer dealer in states which experience difficulty obtaining sheriff or other CLEO signatures. At a time when the economy is far from booming, it’s extremely unwise for the government to put hundreds of small businesses out of business.

Another esteemed person in the NFA world, the Gun Trust Lawyer (David Goldman), voiced his opinion after looking over the proposed regulations of 41P. We can’t help but agree with his analysis of the ATF’s misjudgment in costs. Mr. Goldman feels that the ATF’s estimate of increased costs for trusts and corporations which would now need to get fingerprints and photos for each responsible person are too low. The ATF made their calculations based on two responsible persons listed on each trust or corporation documents. At Dakota Silencer, we see many trusts which do only have one or two responsible persons listed. However, we see far more which have at least 3-5 responsible persons listed. Many times, in the Dakotas, when trusts are created, it is so that silencers and other NFA items can be shared amongst family members and close friends. Therefore, it is very common to see one trust with 6-7 responsible persons listed who would all need to obtain fingerprints, photos, and CLEO signatures for each NFA item purchase. We believe that trend is likely true in many other states as well.

As mentioned before, we don’t feel that 41P would greatly impact silencer sales in the area of Dakota Silencer. However, as one dealer amongst a network in the silencer industry, we stand in solidarity with other who voice their concerns with the regulations proposed by the ATF. We are prepared to take up a lawsuit against any sheriff in our area who refuses to sign a Form 4 under the new regulations if enacted as written, as it’s not up to the sheriff to make an opinion about the sale of a silencer, but to perform their elected duty and sign that the photos and fingerprints match the individual. We feel it’s part of our responsibility to stand up for our customers and help to retain their freedom to purchase NFA items. The ATF is accepting comments through December 9, 2013. If you’d like to submit your own comments on the proposed rule change, you can do so by following the steps laid out by the ATF. You can access those step and read the proposal itself via the Gun Trust Lawyer website’s .pdf version of the document. We encourage anyone who has an interest in NFA items to voice their comments and concerns to the ATF so that changes could be made this measure, or so that it does not go through at all.

Another step dealers can take, especially if this proposal does take effect, is encourage customers to find other acceptable Chief Law Enforcement Officers to sign the Form 4. Examples include the Chief of Police (for those who live within the city limits), the county attorney, or a local judge who presides in that county. Just because many sheriffs have refused to sign does not mean the customers are completely out of luck! Dealers and customers both have means to work around the new regulations should Congress actually put them into effect.

Keeping firearms out of the hands of criminals is an essential part of the ATF and the entire network of federal firearms licensees. However, the ATF is not taking any steps in a forward direction by fixing a non-issue. We feel that the implementation of the ATF 41P Proposed Rule Change is simply a move by the Obama Administration to appear as though they are gaining ground on gun control. 41P is a solution to a problem which is simply not there.

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