The Ultimate Guide to SOT

As we previously mentioned, an SOT is a Special Occupational Taxpayer. That’s government speak for “somebody who does things we don’t like but everyone else loves, so we are going to tax and license them for it.”

SOT is really a status. That’s why it is technically incorrect to call an SOT a license, or refer to a “Class 3 license”. With an SOT all you are really doing is taking an existing Federal Firearms License, and adding a special occupational class and tax to it – that of somebody who works with NFA items on a commercial level.

So to start off with, an Special Occupational Taxpayers is something you get with certain FFL’s in order to engage in different forms of business involving NFA items. Now let’s take a look at which SOT’s do what with which FFL’s.

There are three different kinds of SOT’s you can get and each depends on what you plan to be doing with your FFL and SOT status.

• Class 1 SOT is an importer of NFA items. This is only allowed for research and development or sale to government clients. So you can’t import NFA items for resale to private parties. FFL 08 and 11 are used with the Class 1 SOT.
• Class 2 SOT is a manufacturer of NFA items. This means you can build NFA items subject to ATF oversight and policy, even machine guns! The Class 2 SOT pairs with the 07 and 10 FFL. When used with the 07 FFL, a person with a Class 2 SOT can also sell NFA items.
• Class 3 SOT. This is the one that people think is some sort of magical NFA license. The terms Class 3 License or Class 3 Dealer or Class 3 item all get tossed about with varying degrees of accuracy. However what it boils down to is a Class 3 SOT can engage in the retail sale of NFA items. This is your most common SOT and is paired with an 01 or 02 FFL.

For more information on the types of FFL’s and what they do, click here. This will help you understand why certain FFL’s are required with certain SOT’s. For instance, a Type 01 FFL is only for retail gun sales and gunsmithing. That’s why you’d never pair an 01 SOT with it, because that SOT is only for importers.

This is a very specialized SOT that serves little purpose unless you are a player in the military industrial complex or have picked up some rather oddball government contracts. Now there are an odd few NFA items that are also Curio and Relics that might be importable as such, but that is a case by case basis.

Use the Class 01 SOT with a Type 08 FFL if you are importing NFA items like machine guns and other traditional firearms or silencers. When used with a Type 11 FFL, you can import more exotic things like explosive munitions, artillery, or other such things. Basically for use when importing AOW’s and Destructive Devices.

So for most people, the Class 1 SOT is a strictly commercial endeavor for people with deep pockets and military or government contracts or who are doing some research and development. Either way, Joe or Jane Average American isn’t going after this Special Occupational Taxpayers, no matter how cool it would be to try and import a case of RPG-7’s.

The Class 2 SOT status is pretty darn cool. It lets you make NFA items when combined with a Type 07 or 10 FFL. Both of these are manufacturing FFL’s. The 07 FFL is a general purpose manufacturing FFL, while the Type 10 allows for creation of destructive devices and armor piercing ammo.

Most people find an 07 FFL/Class 2 SOT is the perfect combination because you can make and sell pretty much any kind of firearm or NFA device including machine guns. We should note that the market for machine guns is limited to other SOT holders and government agencies. But there is nothing stopping you from building a machine gun for any legitimate business purpose.

In fact, this is the most common way to gain access to post May 1986 machine guns and combine business with pleasure! Of course you can build other NFA devices too like silencers and short barrel rifles and shotguns which can be readily sold to private citizens.

The famous “Class 3 license”! The term Class 3 License is so embedded in popular culture, that like calling a magazine a clip, it simply will never go away. Your Class 3 SOT pairs with a Type 01 or 02 FFL (general retail gun sales or gunsmithing, and pawnbrokers respectively) and is simply an SOT for those who wish to resell NFA items.

Because the Type 01 FFL is very popular, and many FFL holders only wish to engage in resale, not manufacturing, a great many FFL holders go for the Class 3 SOT and become “Class 3 Dealers”.

In the gun business, there are two three-letter abbreviations that you’ll hear a lot. The first is FFL, and we all know that it means Federal Firearms License and we’ve covered at length what an FFL is. The other abbreviation is SOT.

An SOT, or Special Occupational Taxpayer, is an FFL who pays an additional tax for the privilege of manufacturing or importing various classes of NFA devices.

There are three SOT classes, which must be paired with an FFL. They are as follows:

• 01 SOT: an importer of NFA devices. This must be paired with an 08 or 11 FFL. These are FFLs for importing firearms other than destructive devices, and importing destructive devices respectively.
• 02 SOT: for manufacturing NFA devices. This must be paired with an 07 or 10 FFL. These are FFLs for manufacturing firearms other than destructive devices, and the manufacture of destructive devices.
• 03 SOT: for retailing NFA devices. This must be paired with an 01 or 02 FFL, which is a general retailer of firearms, or a pawnbroker.

Yes,  you need an FFL in order to get an SOT. You can have an FFL without a SOT, but not the other way around. SOT licenses must be paired with the logically correct FFL. That means if you are an 07 FFL, you can’t get an 01 SOT for importing because that type of FFL does not allow importing activities.

Many FFL holders choose to get an 02 or 03 SOT so they can participate in the lucrative market for NFA devices. What’s exciting, too, is that on 03 SOT can legally build and acquire post-May 1986 (or “post-86”) machine guns for any lawful business purpose, including testing, demonstration, and range rental purposes. For many Americans, it is the easiest and most profitable way to access a full-auto firearm.

SOTs have to pay a tax of either $500 or $1,000 to the ATF every single year. An FFL is good for multiple years, but an SOT is not. SOTs who have an income of under $500,000 per year may qualify for a reduced rate of $500. SOTs who engage in manufacturing may have to pay an additional $2500 ITAR fee each year, although enforcement and interpretation of that rule changes regularly.

Only government agencies can acquire new machine guns, but they still need dealers to buy them from and manufacturers to make them. If you are an 02 SOT, as a manufacturer you are entitled to build as many machine guns or other NFA devices as you wish (following a certain procedure of course) and may retain them for as long as you maintain your SOT. That’s right, you CAN build a machine gun legally and keep it for as long as you wish and are in business!

Now you might say this sounds all sorts of shady, but it’s really not. It is absolutely true if you are not using your FFL and SOT to conduct business, you’ll lose both (and any machine guns you built) really fast. However, as long as you are conducting business, there are all sorts of reasons to build legal machine guns, including proof of concept, experimentation, range rentals, demo guns, movie prop rentals, and more. And along the way, as an incidental to doing business, there is literally nothing wrong with enjoying the machine guns you have built or acquired. In fact, it would be stupid not to!

First you have to have an FFL. Then you need to download and fill out this form. However, there is more to getting an SOT than just filling out a form. While you might feel comfortable just getting the SOT status (and it really isn’t that hard) we do offer a special SOT license guide to help people fully understand the complexities of life as an SOT.

If you don’t have an FFL yet, and want to get an FFL and SOT, the we also have a deeply discounted package deal for our powerful FFL application guide, plus our industry leading SOT application guide!

SOT’s have to pay an annual tax of either $500 or $1000 dollars to the ATF every year. SOT’s who have an income of under $500,000 per year may qualify for a reduced rate of $500. SOT’s who engage in manufacturing may have to pay an additional $2500 ITAR fee each year, although enforcement and interpretation of that rule changes regularly.

Anyone can file a government form and pay a fee (well almost everyone, we all know that one person who struggles to walk and chew gum at the same time…) but there is more to having SOT status than just paying an annual fee.

SOT’s are subject to a hideously complicated web of laws, regulation, policy, rules and seemingly made up on the spot enforcement issues that can be very hard to understand and navigate.

When you purchase FFL123’s SOT kit, you get the rock solid backing of nearly two decades experience with NFA dealing and working with the ATF.

FFL123 founder Brandon Maddox combined his MBA and love of business with his love of firearms, and built from the ground up, the nation’s largest silencer dealer with FFL’s (and SOT’s) in all 42 silencer legal states. That means his SOT guide isn’t just another by the numbers application guide.

It is the cumulative business, and industry knowledge of a lifetime, and it is available to you at the cost of a nice dinner out. Is it any wonder then that FFL123 has helped over 100,000 Americans get their FFL’s and SOT’s? Wouldn’t you like to be one of those lucky Americans, living the dream selling and building guns and NFA devices?

We can help. Just pick up our SOT guide or SOT and FFL guide kit, and unlock an incredible future with:

• Build your own NFA items – even machine guns and silencers!
• Beat NFA wait times by buying or building your own NFA devices!
• Acquire guns for your personal collection at wholesale prices!
• Grow a profitable and lucrative business in the rapidly expanding NFA market!
• Gain unique protections from gun bans and future proof your gun collection!
• And much, much, much more!

FFL123 customers also enjoy unique, customized support, even after they get their FFL and/or SOT. Gain access to exclusive member only forums where our team of industry experts and your peers can answer your questions and share knowledge.

FFL123 offers guides to help you get your FFL, but we also offer help for getting your SOT. We have spent years and years helping thousands of people navigate the confusing process of getting both an FFL and SOT, and we’d love to help you do it, too! With our 150% money-back guarantee, there’s no reason not to get started right now!

What are you waiting for? Get started today with your FFL and SOT license kit!