What in the hell is a business?
This is one of the more frequently asked unanswerables for a C&R licenseholder. It is unanswerable because, while federal regs quite distinctly say a C&R license cannot be used in order to operate a ''business'' buying and selling firearms, the term ''business'' does not appear to be defined under the law.
Consensus seems to be that a ''business'' entails making some profit on firearm sales and a fair frequency of transactions. A frequency of transactions would show up in the legally required C&R record of acquisitions and dispositions. This, again, is based on a consensus opinion among several collectors of my acquaintance, not upon any known legal precedent or opinion.
Following are some discussions of the issues from TUCO'S SURPLUS FIREARMS FORUM:
Horse tradin' with Oberon, Ahab and TheOG
Hello.
I was just wondering... When I get my C&R license in the mail (hopefully in the next week or so),
how much leeway for horse trading will that allow?
For example, I know that trading upward is a
recognized method of building a collection, but how much of this can you do before ATF thinks
you're running a business?
Can you rent a table at a gun show to upgrade your collection, or is
that verboten? (My interest here is NOT in running a business on my C&R it's to keep my nose
clean with the Feds, who have been known to conspicuously lack a sense of humor about such
things.)
Of course I will properly document all my firearms transactions.
Lastly, if I decide I want to give one of those pretty M44 carbines as a gift to a friend of mine, a
friend who is legally eligible to own said firearm, will that bring Federal agents knocking on my
door? I wouldn't make a habit of it, of course, but then again I want to be able to treat these
weapons as possessions, not as some sort of white elephants for whom I am the steward in lieu
of the state.
Thanks in advance for the input.
Oberon
******
Your bound book does not have a category for HOW you disposed of (gift, sale, trade, etc.) a given firearm. Only date and to whom. As far as gunshow tables, gifts, whatever, are concerned, what your bound
book will show is FREQUENCY of transactions.
If you are filling a page a week with acquisitions
that are disposed out the same week, BATF is likely to think you are running a business.
I believe their assumption is that a ''collector'' will generally show more acquisitions than
dispositions AND possession for some length of time.
Can you pare your collection down and
buy lots of new stuff in a burst of activity? Probably no problem.
Can you do that once a month or once a week? Probably not.
The question of business intent will likely be indicated in the rapidity of turnover more than in the
number of acquisitions or dispositions.
This is not legal advice and I am not a lawyer. This my individual understanding of the law and
its application.
-kirbyTheOG
******
I agree. It is the frequency of dispositions which could raise scrutiny. There is no requirement
whatsoever to record the value of any disposition.
A collector should avoid the appearance of
buying with the intent of short-term sales.
It is assumed (by me) that gifts of C&R guns, especially pistols, are not made to persons not legally entitled to receive them. State laws are
very much at play here. As licensed collectors, we have no more (or less) authority to dispose of
our guns to unlicensed persons within our state than has any Citizen.
Just hunker down in the
weeds and slip a few out from time to time as then may be most appropriate to your collecting
interests.
I join kirbyTheOG in saying this is not legal advice and I am not a lawyer - heaven
forbid.
Ahab
And what about the paperwork?
As I eagerly await my C&R license I happened to think, 'how do I get rid
of the junk after I find the perfect rifle'?
The way I understand the
law is that you cannot be selling these on the open market.
Help!
Thankyou.
Graver
******
Graver,
there is no prohibition against selling your overages/unwanted
collectibles. There is a prohibition against ''operating a business'' on
the strength of your C&R.
If you sell to another licensee, it is a
simple matter of getting a copy of that licensee's signed license and
logging the disposition in your ''bound book'' record. If you sell to an unlicensed individual, you must get driver license or other ID and fill
out a form 4473 (for a long gun) or do the whole Brady thing for a
handgun, then log out the disposition.
As far as the ''business'' business is concerned, there is no definition
of what constitutes ''operating a business'' within the law. Consensus
is that a large number of acquisitions with quick subsequent
dispositions thereof might well set up ''red flags'' and, if you are
trading too wisely (making a bunch of bucks) you are probably
''operating a business.''
Can you sell, trade or otherwise dispose of C&Rs? YES. Can you
consistently sell a lot of C&Rs? NO.
This is not legal advice (I am not a lawyer). This is my layman's
understanding of the law.
-kirbyTheOG
******
I was under the strong impression that there was no requirement for a
C&R license holder to fill out a
form 4473 when selling to a private individual. Please
point me to the section of the regs that say that one has to fill it
out. (I'm a new C&R so I may have it wrong.)
Also, there has been some recent discussion on the C&R mailing list
about whether or not C&Rs will have to make the call for the instant
check when it comes on line.
The law as written says 'licensed dealers' must make the calls. The law is also very consistent in taking about 'licensed collectors' when they want to include C&Rs or in saying 'licensees' when they want to include all FFLs.
Since the law says 'licensed dealers' it means that the instant
check doesn't apply. Of course local (not federal) laws may require that
a C&R make the instant check as well, but it isn't in the current
federal law.
This will all probably require an explicit statement from
ATF or even a court case to be finally settled. (I AM NOT A LAWYER)
Dore
******
Dore,
You are correct that there is no requirement for a C&R license holder to fill out a form 4473 when selling to a private individual.That is just a
reasonable CYA and keep the completed Form 4473 in your records.
I have
not sold a C&R gun except interstate to other 03FFLers, but if I did
sell a long gun in my own state, I would have the buyer complete the
Form 4473 for my records before the transaction would be completed.
CYA = ''Better safe than sorry.''
Ahab
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