Legally Armed: March 2018

By Teresa G. Ficaretta, Esq. & Johanna Reeves, Esq.

Applying for a Federal Firearms License

We are frequently asked to provide assistance to individuals and companies who wish to obtain a federal firearms license (FFL) from the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF). This article provides guidance on the process of applying for a FFL and how to avoid problems and delay.

Background

The Gun Control Act of 1968 (GCA), 18 U.S.C. Chapter 40, makes it unlawful for any person to engage in the business of importing, manufacturing or dealing in firearms without obtaining a license from ATF. The GCA sets forth the fees ATF may charge for a license and the criteria ATF must apply in approving or denying an application. The statute requires ATF to issue a license if the following criteria are satisfied:

• The applicant is 21 years of age or over (this requirement applies only to sole proprietors and not to corporations, partnerships and other business organizations);
• The applicant (including responsible persons, discussed in more detail below) is not prohibited from transporting, shipping or receiving firearms or ammunition under the statute;
• The applicant has not willfully violated the GCA or implementing regulations;
• The applicant has not willfully failed to disclose any material information or made any false statement as to any material fact on the license application;
• The applicant has in a state premises from which he will conduct business subject to the license or from which he intends to conduct business within a reasonable period of time;
• The applicant certifies to compliance with state or local law in the place where the licensed premises are located; and
• In the case of a dealer’s license, the applicant certifies that secure gun storage or safety devices will be available at the licensed premises.
• The GCA requires ATF to approve or deny an application within the 60-day period beginning on the date it is received. ATF’s position is that the 60-day time period begins to run on the date the agency receives a complete and accurate application.

Pursuant to ATF’s regulations implementing the GCA, applicants for manufacturer and importer licenses do not need a separate license to deal in the firearms they manufacture or import, but ATF does require a separate license for each place (premises) at which the firearms business will be conducted, with the exception of separate storage facilities.

Before applying for an FFL, it is imperative to understand the responsibilities that go along with a license. Licensees must comply with all recordkeeping and firearm and ammunition transfer requirements and restrictions. In addition, the GCA authorizes ATF to conduct warrantless compliance inspections once every 12-month period, during which ATF may inspect all records required under the GCA and the regulations. In addition, licensees are required to respond to ATF trace requests within 24 hours of receipt, which can place a significant burden on resources. Licensees who fail to operate their businesses in compliance with federal and state law may be subject to inventory seizures, federal and state investigations and/or license revocation.

The Process of Applying for a License

1. Business Establishment

Before starting the licensing process with ATF, every business needs to be created under state law. There are any number of forms a business can take, including a sole proprietorship, general partnership, limited liability company, limited liability partnership and various types of corporations. Before ATF will issue a license, it will confirm that the applicant may engage in the business specified on the Form 7 Application for Federal Firearms License, including possession of all licenses, permits or variances required under state and/or local law. It is also important to ensure that zoning for the location will not present an issue for operation of a firearms business. One of the most common reasons for license denial is a zoning problem of which the applicant was not aware before filing the license application.

The Form 7 application requires identification of the physical address of the licensed premises and whether the premises are owned, leased or rented. If the property is leased or rented, ATF may contact the landlord to ensure the tenant/applicant is not prohibited under the terms of the lease or rental agreement from operating a firearms business at the premises. It is wise for an applicant to discuss this in advance with the landlord to avoid delays in processing the ATF application.

2. Fill out the Form 7 Application

Applicants for FFLs must complete ATF Form 7, Application for Federal Firearms License. The form is available on ATF’s website, www.atf.gov. The form is fillable and should be completed on a computer for readability. Once completed, the Form 7 should be printed on standard white paper and all copies executed under penalties of perjury and include information relating to each “responsible person” of the applicant.

The instructions for the Form 7 define the term “responsible person” to include a sole proprietor and— In the case of a corporation, partnership, or association, any individual possessing, directly or indirectly, the power to direct or cause the direction of the management, policies, and practices of the corporation, partnership, or association, insofar as they pertain to firearms.

In the case of a partnership, responsible persons would include all partners. In the case of a corporation, responsible persons would generally include all officers and directors. However, if a particular officer or director does not have the authority to direct the management and policies of the corporation as to its firearms business, that individual is not a responsible person. For example, ATF has in the past advised licensees that a Vice President for Human Resources is not a “responsible person” if the individual’s authority does not extend to operation of the firearms business. If the business has an on-site manager, ATF generally views that individual as a responsible person. Questions about particular employees and whether they are responsible persons should be referred to ATF’s Federal Firearms Licensing Center.

The law and regulations also require that each responsible person submit photographs and fingerprints with the Form 7. Photographs must be 2×2 inches and be recent (within the last 6 months); fingerprint cards must be completed on FBI Form FD-258. Most state and local police departments prepare fingerprint cards for a modest fee.

Applicants for manufacturer licenses may also be required to complete ATF Forms 5000.29 and 5000.30. Information on ATF’s website indicates it is the responsibility of the applicant to determine whether these forms are required and ATF investigators will verify the need for the forms during the on-site application inspection. Both forms are required for manufacturers only if the manufacturing activity may result in a discharge of pollutants into navigable waters. Questions concerning completion of these forms should be referred to the Federal Firearms Licensing Center or the nearest ATF office.

3. Submit the Application to ATF and State/Local Law Enforcement

The instructions for the Form 7 indicate that Copy 3 of the Form 7 must be submitted to the Chief Law Enforcement Officer (CLEO) of the locality in which the premises sought to be licensed are located. The CLEO is the Chief of Police, Sheriff or an equivalent officer in the appropriate jurisdiction.

One copy of the Form 7 must be submitted with the appropriate fee, photographs and fingerprint cards to a post office box in Atlanta, Georgia. The other copies of the Form 7 should be retained by the applicant. The copy of the Form 7 mailed to ATF is processed by contract personnel in Atlanta. Those personnel deposit the payment for the license and forward the license application to the Federal Firearms Licensing Center in Martinsburg, West Virginia. Personnel in Martinsburg will make sure the application is complete. If the application is not complete the applicant will be contacted, and the additional information will be requested. If the applicant fails to provide information within the timeframe requested, the application will be deemed abandoned. Personnel in Martinsburg will send the responsible person fingerprints and photographs to the Federal Bureau of Investigation (FBI) to conduct a criminal background check. While background checks are being processed, the application will be forwarded to the appropriate ATF field division for a field inspection.

What happens if the background checks result in a determination that one or more of the responsible persons is prohibited from possessing firearms because of a felony conviction or other GCA disability? If such a determination is made, the FBI will notify the individual of the determination and his or her appeal rights. ATF will also be notified that the individual is prohibited. ATF will then notify the applicant the individual is prohibited and may not act as a responsible person on the license. The applicant will be given an opportunity to revise the license application to remove the prohibited individual so the application may continue to be processed. If the applicant refuses to remove the individual as a responsible person, ATF will deny the application.

4. Application Inspection

All applicants for FFLs will be contacted by their local ATF office for a field inspection. An Industry Operations Investigator (“IOI”) will make contact to arrange a convenient time for the on-site application inspection. During the inspection, the IOI will go over the requirements of the law and regulations. It is likely the IOI will complete a form titled “Acknowledgement of Federal Firearms Regulations.” This form lists a number of areas of regulatory compliance, including the following:

• Definitions (e.g., “ammunition,” “firearm,” “frame or receiver,” “engaged in the business”)
• Miscellaneous Provisions (e.g., right of entry and examination, straw purchase, tracing request, compliance with state law, reporting thefts or losses of firearms)
• Licenses (e.g., duration/renewal, premises covered, discontinuance of business)
• Conduct of business (e.g., sales/deliveries between FFLs, gun show guidelines, NICS requirements, obliterated serial number, non-resident aliens, sales to law enforcement officers)
• Required records (e.g., Form 4473, acquisition & disposition record; report of multiple sales, personal firearms)
• State laws and local ordinances (e.g., waiting periods, concealed carry permits)
• NFA dealer (the IOI will go over this topic only if the applicant will be engaging in transactions involving National Firearms Act firearms)
• Importer (the IOI will go over this topic only if the applicant will be importing firearms, ammunition or other defense articles)
• Firearms and ammunition manufacturers (the IOI will go over this topic only if the applicant is applying for a manufacturer license)

The IOI will go over all the requirements outlined on the acknowledgement form and answer any questions the applicant raises. Applicants should take advantage of this training opportunity and ensure you understand all that is expected of you as a federal firearms licensee.

One of the most important aspects of the on-site license application inspection will be determining compliance with state or local law. As indicated above, the Form 7 application requires certifications that the applicant has either complied with state or local law or that the applicant will comply with state or local law before conducting the firearms business. The IOI conducting the inspection will ask about required state business licenses, compliance with zoning ordinances and compliance with any other requirements of state law. ATF investigators are generally familiar with the requirements of state and local law and will expect applicants to either have all licenses/qualifications or be in the process of obtaining such qualifications from appropriate authorities. A wise applicant will be familiar with state and local law requirements before the ATF investigator shows up for the license application inspection.

If it is not possible for the applicant to comply with state or local law or if the applicant fails to comply with such law, ATF has the authority to deny the application. The basis for denial will be a false statement on the Form 7 application indicating that the business to be conducted is not prohibited by state or local law. For example, if the business premises are zoned residential and zoning ordinances prohibit operation of a business in such an area, it will not be possible to operate the firearms business in compliance with local law. Unless there is a process for obtaining a zoning variance, ATF will likely deny such a license application. ATF will also deny a license application (or revoke a license if it has already been issued) if the applicant fails to obtain any business licenses or other qualifications required under state law.

5. Issuance of the License

If the field inspection results in a finding the applicant is qualified and meets all the criteria for licensing, the ATF field division will recommend the Federal Firearms Licensing Center issue the license. The licensing center will print the license in Martinsburg, West Virginia, and mail it to the applicant. Licenses are valid for 3 years from the date of issuance.

If the field inspection results in a finding that the applicant fails to meet the licensing criteria of the GCA, the ATF field office conducting the license application inspection will recommend denial. If the Director of Industry Operations for the ATF field division agrees, the applicant will receive notification that the license has been denied. The notice of denial (ATF Form 4498) will provide the legal basis for the agency’s determination and provide information on requesting a hearing to review the denial. The applicant will be given 15 days from the date of receipt of the notice in which to request an administrative hearing. If no request is submitted, the application will be disapproved. Administrative hearings to review license denial recommendations are held before ATF hearing officers. If the hearing results in a finding that the denial is legally justified, the applicant will receive a final notice of denial. The agency’s denial may be appealed to federal district court. If the hearing results in a finding that the application should be issued, the license will be issued by the Federal Firearms Licensing Center.

Conclusion

Before deciding to obtain a federal firearms license, it is important to learn the requirements of federal, state and local laws applicable to firearms businesses. Firearms are heavily regulated commodities, and FFLs must maintain consistent levels of regulatory compliance to avoid criminal and civil penalties, including license revocation.

The information contained in this article is for general informational and educational purposes only and is not intended to be construed or used as legal advice or as legal opinion. You should not rely or act on any information contained in this article without first seeking the advice of an attorney. Receipt of this article does not establish an attorney-client relationship.

ABOUT THE AUTHORS

Teresa Ficaretta is an expert on ATF regulations under the Gun Control Act, the National Firearms Act, the Arms Export Control Act and Federal explosives laws. Teresa served as legal counsel to ATF for 26 years, followed by 2 years as Deputy Assistant Director in Enforcement Programs and Services. Teresa joined Reeves & Dola in 2013 and was partner from January 1, 2016 until December 31, 2017. Teresa can be reached at jtficaretta@gmail.com.

Johanna Reeves is the founding partner of the law firm Reeves & Dola, LLP, in Washington, DC (www.reevesdola.com). For 15 years she has dedicated her law practice to advising and representing U.S. companies on compliance matters arising under the federal firearms laws and U.S. export controls. Since 2011, Johanna also has served as Executive Director for the FireArms Importers/Exporters Roundtable (F.A.I.R.) Trade Group (http://fairtradegroup.org). In 2016, Johanna was appointed by the U.S. Department of State, Bureau of Political-Military Affairs to serve on the 2016-18 Defense Trade Advisory Group (DTAG). Johanna can be reached at 202-683-4200, or at jreeves@reevesdola.com.