INDUSTRY NEWS: V13N3

ATF CONSIDERING MG AMNESTY

By Robert M. Hausman

The Bureau of ATF is considering granting an amnesty period for holders of unregistered machine guns, industry members were told during the eighth annual ATF and the Imports Community meeting held at the Willard InterContinental Hotel in Washington, D.C. held August 10 – 11.

ATF Assistant Director Carson Carroll mentioned the possible amnesty almost as an aside during his remarks before the 250 assembled members of industry. Carroll said that it has not yet been decided if the amnesty would apply to all unregistered NFA firearms, or only certain types, or only those possessed under certain circumstances. ATF has also not decided if it will grant an amnesty period but is considering it.

Imports Branch

All applications for importation of AK-47, 75-round drum magazines are being evaluated as to the origin of the magazines before importation applications will be approved, noted Kevin L. Boydston, Firearms & Explosives Imports Branch Chief.

While the Imports Branch had recently been conditionally approving permit applications for AK drums, Customs and Border protection has informed ATF that it believed some of the drums approved for importation as being Bulgarian-made were actually from one or more proscribed countries and thus not importable, Boydston revealed.

In response, the Imports Branch, after consultation with the ATF Firearms Technology Branch (FTB), then decided to conditionally approve all permit applications seeking the importation of what importers listed as “Bulgarian-made” AK-47 75-round drum magazines so that the FTB could make a determination of their actual origin. After further consultation with the FTB, ATF has now determined that all AK-47, 75-round drum magazines should be evaluated by FTB prior to importation.

Until further notice, the Imports Branch will limit Form 6 applications of 75-round drum magazines to “conditional importation.” To expedite the final determination, importers are advised to include any certification of origin documentation available when the sample drum magazine is forwarded to the FTB for evaluation.

Barrel Lengths

A point of contention arose on the issue of barrel length reporting requirements. Many of the importers present expressed surprise when they were told that they had to report the individual barrel length of each and every firearm and incomplete firearm being imported. This rule applies even when the shipment contains firearms of a single make and model but with varying barrel lengths.

The individual barrel length must be reported on the Form 6 application and other attendant forms. The processing of applications may be delayed if ATF has to call the importer to determine the barrel lengths as the importer will then have to amend the Form 6 and/or the attachments.

Boydston reminded importers that the Voluntary Restraint Agreement (VRA) restricts the models of handguns and rifles that may be imported from, or were manufactured in, one of the FSU states. A further restriction applies to firearms parts in that only parts for firearms listed on the VRA may be imported into the U.S.

Thus, if importers wish to avoid delays in the processing of applications to import firearms parts manufactured in or imported from one of the states of the FSU, Boydston advised importers to indicate on the permit which model(s) the parts are for.

Completion of Form 6 and Attachments for Parts Importation

Boydston said the Imports Branch continues to receive permit applications in which the Implements of War section and its attachments are not properly completed, particularly when the application is for firearms parts for various types of firearms.

When importing firearms parts, a separate parts list must be made for each type and model of firearm, even if the importer wants to import the same parts for each type of firearm. The Imports Branch needs this information for entry into its database and to ensure the parts are importable. For example, a barrel for a revolver and a barrel for a rifle have different minimum lengths required for importation.

Form 6 Processing Times

During fiscal year 2008, a total of 9,308 Form 6 applications (Parts I and II) were received by ATF. These broke down into 718 applications by military, 413 by non-residents (usually to bring a firearm into the country for hunting or an organized target competition), 428 applications by dealers and 7,610 applications were commercial interests. Another 139 applications were for unspecified reasons.

Of these applications last year, 5,414 were processed within 11 to 30 days, 2,139 were closed within 1 to 10 days, 613 were closed within 31 to 45 days and 305 applications were processed in 45 or more days.

During fiscal year 2009, a total of 7,646 ATF Form 6 Parts I and II were processed by ATF. These were composed of 6,398 applications from the commercial sector, 461 from the military, 381 from dealers, 394 from non-residents and another 12 from unspecified applicants. Of these applications, 4,028 were closed within 11 to 30 days, 1,253 were closed within 1 to 10 days, 722 in 31- 45 days and 335 took 45 or more days to process.

NFA Branch

Efficiency records continue to be set despite an increased workload, noted Stephen B. Albro, Chief, ATF National Firearms Act Branch during his presentation.

There was an over 15% increase in the number of applications processed between fiscal year 2008 and the projected number for fiscal year 2009. The month of June 2009 saw the highest number of NFA applications that were ever processed in the NFA Branch – 9,219.

For the tax year ended June 30, 2009 special tax stamps were issued as follows:
Class 1 Importer – 133
Class 2 Manufacturer – 1,430
Class 3 Dealer – 2,125
Total (Special Occupational Taxpayers) SOT Taxpayers 3,688

USG Exemption

Albro noted the exemption from the payment of special occupational tax for those manufacturing NFA firearms exclusively for or on behalf of the United States Government (U.S.G.) (see 27 C.F.R. 479.33). The exemption is obtained by filing a letter request to the Chief, NFA Branch and is supported by proof of the contract with the U.S.G.

C.F.R. 479.33 also allows ATF to relieve the manufacturer of firearms for the U.S.G. from filing Form 2 to register the firearms manufactured and from filing the Form 5 to transfer the firearms to the U.S.G. This exemption does not apply to importers. Granting of this exemption does not relive the manufacturer from maintaining the manufacturing and disposition records required by the Gun Control Act.

The exemption from filing the Form 2 may be granted only to the person to whom the U.S.G. contract is issued. Subcontractors are not eligible to receive the exemption and any subcontractor manufacturing the firearm would have to register and apply to transfer any firearms manufactured under the contract.

Just as for a subcontractor manufacturing firearms for the prime contractor under a U.S.G. contract, if the firearms need to be transferred to another FFL before being transferred to the U.S.G., the registration and transfer procedures apply.

NFA Branch Forms Process

In case anyone was wondering, Albro detailed how NFA forms are processed within the branch. Incoming registration and transfer documents are sorted from each day’s mail receipts and assigned to data entry clerks for input into the NFRTR. In addition to capturing the information related to the person submitting the form and the firearms information, the date of receipt and date of posting to the system are captured.

After data entry, the forms are distributed to a Legal Instruments Examiner who is responsible for processing the forms. With few exceptions, the forms are assigned to an examiner alphabetically by the last name or trade name of the person submitting the form. The examiner’s job is to ensure that the form is correct, that the parties involved are qualified to conduct the transaction and that the entry in the database is correct and complete. The examiner then accepts and approves the form and applies the appropriate restrictions on the possession of the firearm. An approved copy is returned to the submitter.

To check on the status of a form, contact a customer service rep at the NFA Branch at (304) 616-4500. To obtain a copy of a missing registration form, submit a written request to the Chief, NFA Branch describing the circumstances and a description of the firearm.

Albro mentioned that the NFA Branch will provide registrants with an inventory printout of what that individual has registered in the NFA registry, upon request.

Pre-Inspection Preparation

How industry firms can prepare for an inspection and thus head off problems were detailed by Chad Yoder, Program manager, Field Management Staff, Field Operations, ATF.

While taking a periodic inventory is not mandated by regulation, Yoder advised licensees to conduct periodic inventory reconciliations. At a minimum, count open entries, count physical inventory, and then compare the two. Conduct sample inventory reconciliations. Periodically audit the different aspects of the business as it relates to accountability of firearms, traceability of all firearms and ensuring that persons not qualified to receive firearms are denied access.

Foreign Trade Zones

The little understood but important trade option for importers known as Foreign Trade Zones was detailed by Augustine Moore, Assistant Port Director for Trade Operations, Baltimore, Maryland Customs and Border Protection.

Foreign Trade Zones (FTZ) is the United States version of what are known internationally as free-trade zones. FTZs are secure areas under CBP supervision that are generally considered outside the Customs territory upon activation. Goods can stay in a FTZ indefinitely (as opposed to a Bonded Warehouse where it can stay only up to 5 years). There are presently 264 general purpose FTZs in the U.S. with about 50 additional pending. They are usually located within 50 miles from a port of entry.

Authority for establishing these facilities is granted by the Foreign Trade Zone Board under the Foreign Trade Zones Act of 1934, as amended (19 U.S.C. 81a-81u). The Executive Secretariat of the Board is located within the Import Administration of the Dept. of Commerce in Washington, D.C.

The advantage of a FTZ is that foreign and domestic merchandise may be stored, sold, exhibited, repacked, assembled, etc., without being subject to U.S. Customs laws for entry and other purposes. FTZs are visited at least once annually by Customs and are subject to inspection several times a year.

Under FTZ procedures, payments of duties are not required unless and until the foreign merchandise enters Customs territory for domestic consumption, at which point the importer generally has the choice of paying duties at the rate of either the original foreign materials or the finished product.

Bringing firearms into an FTZ involves obtaining the written concurrence of the FTZ board. An ATF Form 6 must be presented to the CBP port director along with CBP Form 214 (application for Foreign Trade zone admission). Articles on the U.S. Munitions List that have been imported for re-export may be admitted to an FTZ upon presentation to the port director of a State Dept. In-Transit license on DSP Form 61 along with CBP Form 214.

Note that a quota on importation cannot be circumvented by placing merchandise subject to such quota into a FTZ.

(To be continued next issue)

The author publishes two of the small arms industry’s most widely read trade newsletters. The International Firearms Trade covers the world firearms scene, and The New Firearms Business covers the domestic market. Visit www.FirearmsGroup.com. He may be reached at: FirearmsB@aol.com.