Federal Register / Vol. 88, No. 173 / Friday, September 8, 2023 / Proposed Rules 61993 

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Issued on September 1, 2023. 

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Deputy Director, Compliance & Airworthiness 

Division, Aircraft Certification Service. 

[FR Doc. 2023–19365 Filed 9–7–23; 8:45 am] 

BILLING CODE 4910–13–P 

DEPARTMENT OF JUSTICE 

Bureau of Alcohol, Tobacco, Firearms, 

and Explosives 

27 CFR Part 478 

[Docket No. ATF 2022R–17; AG Order No. 

5781–2023] 

RIN 1140–AA58 

Definition of ‘‘Engaged in the 

Business’’ as a Dealer in Firearms 

AGENCY: Bureau of Alcohol, Tobacco, 

Firearms, and Explosives, Department of 

Justice. 

ACTION: Notice of proposed rulemaking; 

request for comment. 

SUMMARY: The Department of Justice 

(‘‘Department’’) proposes amending 

Bureau of Alcohol, Tobacco, Firearms, 

and Explosives (‘‘ATF’’) regulations to 

implement the provisions of the 

Bipartisan Safer Communities Act 

(‘‘BSCA’’), effective June 25, 2022, that 

broaden the definition of when a person 

is considered ‘‘engaged in the business’’ 

as a dealer in firearms other than a 

gunsmith or pawnbroker. This proposed 

rule incorporates the BSCA’s definition 

of ‘‘predominantly earn a profit,’’ 

creates a stand-alone definition of 

‘‘terrorism,’’ and amends the definitions 

of ‘‘principal objective of livelihood and 

profit’’ and ‘‘engaged in the business’’ to 

ensure each conforms with the BSCA’s 

statutory changes and can be relied 

upon by the public. The proposed rule 

also clarifies what it means for a person 

to be ‘‘engaged in the business’’ of 

dealing in firearms, and to have the 

intent to ‘‘predominantly earn a profit’’ 

from the sale or disposition of firearms. 

In addition, it clarifies the term 

‘‘dealer,’’ including how that term 

applies to auctioneers, and defines the 

term ‘‘responsible person.’’ These 

proposed changes would assist persons 

in understanding when they are 

required to have a license to deal in 

firearms. Consistent with the Gun 

Control Act (‘‘GCA’’) and existing 

regulations, the proposed rule also 

defines the term ‘‘personal collection’’ 

to clarify when persons are not 

‘‘engaged in the business’’ because they 

make only occasional sales to enhance 

a personal collection, or for a hobby, or 

if the firearms they sell are all or part 

of a personal collection. This proposed 

rule further addresses the lawful ways 

in which former licensees, and 

responsible persons acting on behalf of 

such licensees, may liquidate business 

inventory upon revocation or other 

termination of their license. Finally, the 

proposed rule clarifies that a licensee 

transferring a firearm to another licensee 

must do so by following the verification 

and recordkeeping procedures instead 

of using a Firearms Transaction Record, 

ATF Form 4473. 

DATES: Written comments must be postmarked and electronic comments must 

be submitted on or before December 7, 

2023. Commenters should be aware that 

the electronic Federal Docket 

Management System will not accept 

comments after midnight Eastern Time 

on the last day of the comment period. 

ADDRESSES: You may submit comments, 

identified by docket number ATF 

2022R–17, by either of the following 

methods— 

• Federal eRulemaking Portal: 

www.regulations.gov. Follow the 

instructions for submitting comments. 

• Mail: Helen Koppe, Mail Stop 6N– 

518, Office of Regulatory Affairs, 

Enforcement Programs and Services, 

Bureau of Alcohol, Tobacco, Firearms, 

and Explosives, 99 New York Ave. NE, 

Washington, DC 20226; ATTN: ATF 

2022R–17. 

Instructions: All submissions received 

must include the agency name and 

docket number (ATF 2022R–17) for this 

notice of proposed rulemaking 

(‘‘NPRM’’ or ‘‘proposed rule’’). All 

properly completed comments received 

from either of the methods described 

above will be posted without change to 

the Federal eRulemaking portal, 

www.regulations.gov. This includes any 

personal identifying information (‘‘PII’’) 

submitted in the body of the comment 

or as part of a related attachment. 

Commenters who submit through the 

Federal eRulemaking portal and who do 

not want any of their PII posted on the 

internet should omit PII from the body 

of their comment or in any uploaded 

attachments. Commenters who submit 

through mail should likewise omit their 

PII from the body of the comment and 

provide any PII on the cover sheet only. 

For detailed instructions on submitting 

comments and additional information 

on the rulemaking process, see the 

‘‘Public Participation’’ heading of the 

SUPPLEMENTARY INFORMATION section of 

this document. 

FOR FURTHER INFORMATION CONTACT: 

Helen Koppe, Office of Regulatory 

Affairs, Enforcement Programs and 

Services, Bureau of Alcohol, Tobacco, 

Firearms, and Explosives, U.S. 

Department of Justice, 99 New York 

Ave. NE, Washington, DC 20226; 

telephone: (202) 648–7070 (this is not a 

toll-free number). 

SUPPLEMENTARY INFORMATION: 

I. Background 

The Department is proposing to 

amend ATF regulations to implement 

the provision of the Bipartisan Safer 

Communities Act, Public Law 117–159, 

sec. 12002, 136 Stat. 1313, 1324 (2022) 

(‘‘BSCA’’), that amended the definition 

of ‘‘engaged in the business’’ in the Gun 

Control Act of 1968 (‘‘GCA’’) at 18 

U.S.C. 921(a)(21)(C), and to facilitate 

compliance with the statute. 

The Attorney General is responsible 

for enforcing the GCA. This 

responsibility includes the authority to 

promulgate regulations necessary to 

enforce the provisions of the GCA. See 

18 U.S.C. 926(a). Congress and the 

Attorney General have delegated the 

responsibility for administering and 

enforcing the GCA to the Director of 

ATF (‘‘Director’’), subject to the 

direction of the Attorney General and 

the Deputy Attorney General. See 28 

U.S.C. 599A(b)(1)–(2), (c)(1); 28 CFR 

0.130(a)(1) and (2); Treasury Department 

Order No. 221, sec. (2)(a), (d), 37 FR 

11696, 11696–97 (June 10, 1972). 

Accordingly, the Department and ATF 

have promulgated regulations necessary 


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1Persons who engage in the business of 

manufacturing or importing firearms, including 

those that are 3D printed or assembled from parts, 

must also be licensed. 18 U.S.C. 922(a)(1)(A), 

923(a). Once licensed, importers and manufacturers 

may also engage in the business of dealing but only 

at their licensed premises and only in the same type 

of firearms their license authorizes them to import 

or manufacture. See 27 CFR 478.41(b). 

2See generally Public Law 90–617, 82 Stat. 1213 

(1968). 

3 33 FR 18555 (Dec. 14, 1968). 

4Memorandum for Assistant Director, Regulatory 

Enforcement, ATF, from Chief, Regulations and 

Procedures Division, ATF, Re: Evaluation of 

Comments Received Concerning a Definition of the 

Phrase ‘‘Engaged in the Business,’’ Notice No. 331, 

at 1–2 (June 9, 1980) (‘‘ATF Internal 

Memorandum’’), attach. Summary Sheet on 

‘‘Engaged in the Business,’’ ANPRM No. 331, 

Published December 19, 1979, at 1. 

5 Id. 

6See id. at 2. 

7ATF Internal Memorandum at 4. 

8Public Law 99–308, sec. 101, 100 Stat. at 450. 

9 Id. 

10 Id. 

11Public Law 99–360, sec. 1(b), 100 Stat. 766, 766 

(1986). 

12S. Rep. No. 98–583, at 8 (1984). 

to implement the GCA. See 27 CFR part 

478. 

The GCA, at 18 U.S.C. 922(a)(1)(A), 

makes it unlawful for any person, 

except a licensed dealer, to ‘‘engage in 

the business’’ of dealing in firearms.1

The GCA further provides that no 

person shall engage in the business of 

dealing in firearms until the person has 

filed an application with and received a 

license to do so from the Attorney 

General (18 U.S.C. 923(a)), who has 

delegated that function to ATF (28 CFR 

0.130(a)(1)). The application contains 

information necessary to determine 

eligibility for licensing and must 

include a photograph, fingerprints of the 

applicant, and a license application fee. 

The fee for dealers in firearms other 

than destructive devices is currently set 

by the GCA at $200 for the first threeyear period and $90 for a renewal 

period of three years. 18 U.S.C. 

923(a)(3)(B); 27 CFR 478.42(c)(2). The 

Application for Federal Firearms 

License, ATF Form 7(5310.12)/7CR 

(5310.16) (‘‘Form 7’’), requires the 

applicant to include a completed 

Federal Bureau of Investigation (‘‘FBI’’) 

Form FD–258 (‘‘Fingerprint Card’’) and 

a photograph for all responsible 

persons, including sole proprietors. See 

ATF Form 7, Instruction 6. 

Significantly, under the GCA, once 

licensed, firearms dealers are required 

to conduct background checks through 

the FBI’s National Instant Criminal 

Background Check System (‘‘NICS’’) on 

prospective firearm recipients to 

prevent prohibited persons from 

receiving firearms, and to maintain 

firearms transaction records for crime 

gun tracing purposes. See 18 U.S.C. 

922(t); 923(g)(1)(A). Persons who 

willfully engage in the business of 

dealing in firearms without a license are 

subject to a term of imprisonment of up 

to five years, a fine of up to $250,000, 

or both. Id. 922(a)(1)(A); 924(a)(1)(D); 

3571(b)(3). 

A. Advance Notice of Proposed 

Rulemaking (1979) 

The term ‘‘dealer’’ is defined by the 

GCA, 18 U.S.C. 921(a)(11)(A), and 27 

CFR 478.11, to mean ‘‘any person 

engaged in the business of selling 

firearms at wholesale or retail.’’ 

However, as originally enacted, the GCA 

did not define the term ‘‘engaged in the 

business.’’ 2 Nor did ATF define the 

term ‘‘engaged in the business’’ in the 

original GCA implementing 

regulations.3 Although courts had 

‘‘continually found that the current 

situation’’ was ‘‘adequate for 

enforcement purposes,’’ ATF published 

an Advance Notice of Proposed 

Rulemaking (‘‘ANPRM’’) in the Federal 

Register in 1979 in an effort to ‘‘develop 

a workable, commonly understood 

definition of [‘engaged in the 

business’].’’ See 44 FR 75186, 75186–87 

(Dec. 19, 1979) (‘‘1979 ANPRM’’); 45 FR 

20930 (Mar. 31, 1980) (extending the 

comment period for 30 more days). The 

ANPRM referenced the lack of a 

common understanding of that term by 

the courts and requested comments 

from the public and industry on how 

the phrase should be defined and the 

feasibility and desirability of defining it. 

ATF received 844 comments in 

response, of which approximately 551, 

or 65.3 percent, were in favor of ATF 

defining that term.4 This included 

approximately 324 firearms dealers in 

favor of defining the term. However, 

none of the proposed definitions 

appeared ‘‘to be broad enough to cover 

all possible circumstances and still be 

narrow enough to be of real benefit in 

any particular case.’’ 5 One possible 

definition ATF considered would have 

established a threshold number of 

firearms sales per year to serve as a 

baseline for when a person would 

qualify as a dealer. The threshold 

numbers proposed ranged from ‘‘more 

than one’’ to ‘‘more than 100’’ per year. 

ATF did not adopt that proposal 

because it would have potentially 

interfered with tracing firearms by 

persons who avoided obtaining a license 

(and therefore kept no records) by 

selling firearms under the minimum 

threshold.6 Ultimately, ATF decided not 

to proceed further with rulemaking at 

that time. Congress also had not yet 

acted on then-proposed legislation—the 

McClure-Volkmer bill (discussed 

below)—which, among other provisions, 

sought to define ‘‘engaged in the 

business.’’ 7 For additional reasons why 

ATF has not adopted a minimum 

number of sales, see Section II.D of this 

preamble. 

B. Firearms Owners’ Protection Act of 

1986 

Approximately six years later, the 

McClure-Volkmer bill was enacted as 

part of the Firearms Owners’ Protection 

Act (‘‘FOPA’’), Public Law 99–308, 100 

Stat. 449 (1986). With its passage, FOPA 

added a statutory definition of ‘‘engaged 

in the business’’ to the GCA. As applied 

to a person selling firearms at wholesale 

or retail, it defined the term ‘‘engaged in 

the business’’ in 18 U.S.C. 921(a)(21)(C) 

as ‘‘a person who devotes time, 

attention, and labor to dealing in 

firearms as a regular course of trade or 

business with the principal objective of 

livelihood and profit through the 

repetitive purchase and resale of 

firearms.’’ 8 The term excluded ‘‘a 

person who makes occasional sales, 

exchanges, or purchases of firearms for 

the enhancement of a personal 

collection or for a hobby, or who sells 

all or part of his personal collection of 

firearms.’’ 9 FOPA further defined the 

term ‘‘with the principal objective of 

livelihood and profit’’ to mean ‘‘that the 

intent underlying the sale or disposition 

of firearms is predominantly one of 

obtaining livelihood and pecuniary 

gain, as opposed to other intents, such 

as improving or liquidating a personal 

firearms collection.’’ 10 Congress 

amended FOPA a few months later, 

clarifying that ‘‘proof of profit’’ was not 

required ‘‘as to a person who engages in 

the regular and repetitive purchase and 

disposition of firearms for criminal 

purposes or terrorism.’’ 11

Consistent with their text, the 

definitions’ purposes were to clarify that 

individuals not otherwise engaged in 

the business of dealing firearms who 

make only occasional firearms sales for 

a hobby are not required to obtain a 

license, and to benefit law enforcement 

‘‘by establishing clearer standards for 

investigative officers and assisting in the 

prosecution of persons truly intending 

to flout the law.’’ 12 The legislative 

history also reveals that Congress did 

not intend to limit the license 

requirement to only persons for whom 

selling or disposing of firearms is a 

principal source of income or a 

principal business activity. The 

Committee Report stated, ‘‘[t]hus, this 

provision would not remove the 

necessity for licensing from part-time 


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13 Id. The Committee Report further explained 

that a statutory reference to pawnbrokers in the 

definition of ‘‘engaged in the business’’ was deleted 

because ‘‘all pawnbrokers whose business includes 

the taking of any firearm as security for the 

repayment of money would automatically be a 

‘dealer.’ ’’ Id. at 9. 

14 53 FR 10480, 10491 (Mar. 31, 1988). 

15 Id. 10490–91. 

16S. Rep. No. 98–583, at 13. 

17 Id. 

18See Public Law 99–360, sec. 1(c), 100 Stat. at 

766–67. 

19See 53 FR 10480; 27 CFR 178.125a (now 

478.125a). 

20See also United States v. Brenner, 481 F. App’x 

124, 127 (5th Cir. 2012) (‘‘Needless to say, in 

determining the character and intent of firearms 

transactions, the jury must examine all 

circumstances surrounding the transaction, without 

the aid of a ‘bright-line rule.’’’); United States v. 

Bailey, 123 F.3d 1381, 1392 (11th Cir. 1997) (‘‘In 

determining whether one is engaged in the business 

of dealing in firearms, the finder of fact must 

examine the intent of the actor and all 

circumstances surrounding the acts alleged to 

constitute engaging in business.’’ (quotation marks 

and citation omitted)); United States v. 

Nadirashvili, 655 F.3d 114, 119 (2d Cir. 2011) 

(‘‘[T]he government need not prove that dealing in 

firearms was the defendant’s primary business. Nor 

is there a ‘magic number’ of sales that need be 

specifically proven. Rather, the statute reaches 

those who hold themselves out as a source of 

firearms. Consequently, the government need only 

prove that the defendant has guns on hand or is 

ready and able to procure them for the purpose of 

selling them from [time] to time to such persons as 

might be accepted as customers.’’ (quoting United 

States v. Carter, 801 F.2d 78, 81–82 (2d Cir. 1986))). 

21See The White House, Office of the Press 

Secretary, FACT SHEET: New Executive Actions to 

Reduce Gun Violence and Make Our Communities 

Safer (Jan. 4, 2016), https://obamawhitehouse.

archives.gov/the-press-office/2016/01/04/fact-sheetnew-executive-actions-reduce-gun-violence-andmake-our. 

businesses or individuals whose 

principal income comes from sources 

other than firearms, but whose main 

objective with regard to firearm transfers 

is profit, rather than hobby.’’ 13

Two years after enactment, FOPA’s 

definition of ‘‘engaged in the business’’ 

was incorporated into ATF’s 

implementing regulations at 27 CFR 

178.11 (now 478.11) in defining the 

term ‘‘Dealer in firearms other than a 

gunsmith or a pawnbroker.’’ 14 At the 

same time, consistent with the statutory 

text and legislative history, ATF 

amended the regulatory term ‘‘dealer’’ to 

clarify that the term includes ‘‘any 

person who engages in such business or 

occupation on a part-time basis.’’ 15

With respect to ‘‘personal 

collections,’’ FOPA included a 

provision, codified at 18 U.S.C. 923(c), 

that expressly authorized licensees to 

maintain and dispose of private firearms 

collections separately from their 

business operations. However, under 

FOPA, as amended, the ‘‘personal 

collection’’ provision was and remains 

subject to three limitations. 18 U.S.C. 

923(c). First, if a licensee records the 

disposition (i.e., transfer) of any firearm 

from their business inventory into a 

personal collection, that firearm legally 

remains part of the licensee’s business 

inventory until one year has elapsed 

after the date of transfer. Should the 

licensee wish to sell or otherwise 

dispose of any such ‘‘personal’’ firearm 

during that one-year period, the licensee 

must re-transfer the applicable firearm 

back into the business inventory at the 

licensee’s business premises ‘‘with 

appropriate recording.’’ 16 A subsequent 

transfer from the business inventory 

would then be subject to the 

recordkeeping and background-check 

requirements of the GCA applicable to 

all other firearms in the business 

inventory. Second, if a licensee acquires 

or disposes of any firearm for the 

purpose of willfully evading the 

restrictions placed upon licensees under 

the GCA, that firearm always legally 

remains part of the business inventory. 

Thus, ‘‘circuitous transfers are not 

exempt from otherwise applicable 

licensee requirements.’’ 17 Third, even 

when a licensee has made a bona fide 

transfer of a firearm from their personal 

collection, section 923(c) requires the 

licensee to record the description of the 

firearm in a bound volume along with 

the name, place of residence, and date 

of birth of an individual transferee, or if 

a corporation or other business entity, 

the transferee’s identity and principal 

and local places of business.18 ATF 

incorporated these provisions into its 

FOPA implementing regulations in 

1988.19

Courts interpreting the 1986 FOPA 

definition of ‘‘engaged in the business’’ 

found a number of factors relevant to 

assessing whether a person met that 

standard. For example, in one leading 

case, the U.S. Court of Appeals for the 

Third Circuit listed the following 

nonexclusive factors for consideration 

to determine whether the defendant’s 

principal objective was livelihood and 

profit (i.e., economic): (1) quantity and 

frequency of sales; (2) location of the 

sales; (3) conditions under which the 

sales occurred; (4) defendant’s behavior 

before, during, and after the sales; (5) 

price charged for the weapons and the 

characteristics of the firearms sold; and 

(6) intent of the seller at the time of the 

sales. United States v. Tyson, 653 F.3d 

192, 200–01 (3d Cir. 2011). The court 

expanded further that, ‘‘[a]s is often the 

case in such analyses, the importance of 

any one of these considerations is 

subject to the idiosyncratic nature of the 

fact pattern presented.’’ Id. at 201. In a 

separate case, the Third Circuit also 

stated, ‘‘[a]lthough the definition 

explicitly refers to economic interests as 

the principal purpose, and 

repetitiveness as the modus operandi, it 

does not establish a specific quantity or 

frequency requirement. In determining 

whether one is engaged in the business 

of dealing in firearms, the finder of fact 

must examine the intent of the actor and 

all circumstances surrounding the acts 

alleged to constitute engaging in 

business. This inquiry is not limited to 

the number of weapons sold or the 

timing of the sales.’’ United States v. 

Palmieri, 21 F.3d 1265, 1268 (3d Cir. 

1994), vacated on other grounds, 513 

U.S. 957 (1994).20

C. Executive Action To Reduce Gun 

Violence (2016) 

On January 4, 2016, President Obama 

announced several executive actions to 

reduce gun violence and to make 

communities across the United States 

safer. Among them was a requirement 

that ATF clarify, in a manner consistent 

with court rulings on the issue: (1) that 

a person can be engaged in the business 

of dealing in firearms regardless of the 

location in which firearm transactions 

are conducted, and (2) that there is no 

specific threshold number of firearms 

purchased or sold that triggers the 

licensure requirement.21 To provide this 

clarification, ATF published a guidance 

document entitled Do I Need a License 

to Buy and Sell Firearms?, ATF 

Publication 5310.2 (Jan. 2016), https://

www.atf.gov/file/100871/download, 

which addressed these topics. The 

guidance was developed to assist 

unlicensed persons in understanding 

when they will likely need to obtain a 

license as a dealer in firearms. ATF is 

updating this guidance to conform with 

the ‘‘engaged in the business’’ definition 

as amended by the BSCA. Further, once 

a final rule is adopted based on this 

NPRM, ATF intends to update the 

guidance to include additional detail as 

needed to conform with the rule. 

D. Bipartisan Safer Communities Act 

(2022) 

Over 35 years after FOPA’s 

enactment, on June 25, 2022, President 

Biden signed into law the Bipartisan 

Safer Communities Act, Public Law 

117–159, 136 Stat. 1313. Section 12002 

of the BSCA broadened the definition of 

‘‘engaged in the business’’ under 18 

U.S.C. 921(a)(21)(C) to all persons who 

intend to ‘‘predominantly earn a profit’’ 

from wholesale or retail dealing in 

firearms by eliminating the requirement 

that a person’s ‘‘principal objective’’ of 

purchasing and reselling firearms must 

include both ‘‘livelihood and profit.’’ 

The statute now provides that, as 

applied to a dealer in firearms, the term 


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22William J. Krouse, Cong. Research Serv., 

IF12197, Firearms Dealers ‘‘Engaged in the 

Business’’ at 2 (Aug. 19, 2022). 

23 Id.; 168 Cong. Rec. H5906 (daily ed. June 24, 

2022) (Statement of Rep. Jackson Lee) (‘‘[O]ur bill 

would . . . further strengthen the background 

check process by clarifying who is engaged in the 

business of selling firearms and, as a result, is 

required to run background checks.’’); 168 Cong. 

Rec. S3055 (daily ed. June 22, 2022) (Statement of 

Sen. Murphy) (‘‘We clarify in this bill the definition 

of a federally licensed gun dealer to make sure that 

everybody who should be licensed as a gun owner 

is. In one of the mass shootings in Texas, the 

individual who carried out the crime was mentally 

ill. He was a prohibited purchaser. He shouldn’t 

have been able to buy a gun. He was actually denied 

a sale when he went to a bricks-and-mortar gun 

store, but he found a way around the background 

check system because he went online and found a 

seller there who would transfer a gun to him 

without a background check. It turned out that 

seller was, in fact, engaged in the business, but 

didn’t believe the definition applied to him because 

the definition is admittedly confusing. So we 

simplified that definition and hope that will 

result—and I believe it will result—in more of these 

frequent online gun sellers registering, as they 

should, as federally licensed gun dealers which 

then requires them to perform background 

checks.’’); see also Letter for Director, ATF, et al., 

from Sens. John Cornyn and Thom Tillis at 2–3 

(Nov. 1, 2022) (‘‘Cornyn/Tillis Letter’’) (‘‘The BSCA 

provides more clarity to the industry for when 

someone must obtain a federal firearms dealers 

license. In Midland and Odessa, Texas, for example, 

the shooter—who at the time was prohibited form 

possessing or owning a firearm under federal law— 

purchased a firearm from an unlicensed firearms 

dealer.’’). 

24The BSCA retained the existing term ‘‘with the 

principal objective of livelihood and profit,’’ which 

still applies to persons engaged in the business as 

manufacturers, gunsmiths, and importers. That 

definition became 18 U.S.C. 921(a)(23), and 

Congress renumbered other definitions in section 

921 accordingly. 

25Reducing Gun Violence and Making Our 

Communities Safer, E.O. 14092, secs. 2, 3(a)(i)–(ii), 

88 FR 16527, 16527–28 (Mar. 14, 2023). 

26The Department is also issuing a separate 

rulemaking to amend ATF’s regulations to conform 

with other provisions in the BSCA. 

27 Krouse, Cong. Research Serv., Firearms Dealers 

‘‘Engaged in the Business’’ at 2. 

‘‘engaged in the business’’ means ‘‘a 

person who devotes time, attention, and 

labor to dealing in firearms as a regular 

course of trade or business to 

predominantly earn a profit through the 

repetitive purchase and resale of 

firearms.’’ However, the BSCA 

definition does not include ‘‘a person 

who makes occasional sales, exchanges, 

or purchases of firearms for the 

enhancement of a personal collection or 

for a hobby, or who sells all or part of 

his personal collection of firearms.’’ 18 

U.S.C. 921(a)(21)(C). 

As now defined by the BSCA, the 

term ‘‘to predominantly earn a profit’’ 

means that the person who engages in 

selling or disposing of firearms has a 

predominant intent of obtaining 

pecuniary gain, as opposed to other 

intents, such as improving or 

liquidating a personal firearms 

collection. The statutory definition 

further provides that proof of profit is 

not required as to a person who engages 

in the regular and repetitive purchase 

and disposition of firearms for criminal 

purposes or terrorism. 18 U.S.C. 

921(a)(22). According to the BSCA’s 

sponsors, the BSCA’s change to the 

definition was driven by ‘‘confusion 

about the GCA’s definition of ‘engaged 

in the business,’ as it pertained to 

individuals who bought and resold 

firearms repetitively for profit, but 

possibly not as the principal source of 

their livelihood.’’ 22 The sponsors 

‘‘maintain[ed] that these changes clarify 

who should be licensed, eliminating a 

‘gray’ area in the law, ensuring that one 

aspect of firearms commerce is more 

adequately regulated.’’ 23 Congress did 

not make the same amendment to the 

various definitions of ‘‘engaged in the 

business’’ in 18 U.S.C. 921(a)(21) with 

respect to licensed gunsmiths, 

manufacturers, or importers.24

E. Executive Order 14092 (2023) 

On March 14, 2023, President Biden 

issued Executive Order 14092, 

‘‘Reducing Gun Violence and Making 

Our Communities Safer.’’ That order 

requires the Attorney General to report 

actions taken to implement the BSCA 

and to develop and implement a plan to: 

(1) clarify the definition of who is 

engaged in the business of dealing in 

firearms, and thus required to become 

Federal firearms licensees (‘‘FFLs’’), in 

order to increase compliance with the 

Federal background check requirement 

for firearm sales, including by 

considering a rulemaking, as 

appropriate and consistent with 

applicable law; and (2) prevent former 

FFLs whose licenses have been revoked 

or surrendered from continuing to 

engage in the business of dealing in 

firearms.25

This NPRM proposes to implement 

the ‘‘engaged in the business’’ 

provisions of the BSCA 26 and the 

Department’s plan in response to 

Executive Order 14092 by making 

conforming changes to the new or 

amended definitions, by clarifying the 

updated BSCA definition of ‘‘engaged in 

the business,’’ and by preventing former 

FFLs whose licenses have been revoked 

or surrendered from continuing to 

engage in the business of dealing in 

firearms. The rule proposes to 

accomplish this clarity and deterrence 

by setting forth specific activities 

demonstrating when an unlicensed 

person’s buying and selling of firearms 

presumptively rises to the level of being 

‘‘engaged in the business,’’ thus 

requiring that person to obtain a dealer’s 

license, conduct background checks, 

and abide by the other requirements set 

forth in the GCA. At the same time, it 

recognizes that individuals who 

purchase firearms for the enhancement 

of a personal collection or a legitimate 

hobby are permitted by the GCA to 

occasionally buy and sell firearms for 

those purposes without the need to 

obtain a license. 

II. Proposed Rule 

As stated previously, the BSCA 

revised 18 U.S.C. 921(a)(21)(C) to 

change part of the definition of persons 

‘‘engaged in the business’’ of dealing in 

firearms. This amendment broadened 

the definition to reflect that it applies to 

persons who engage in the business of 

purchasing and selling firearms at 

wholesale or retail with the 

predominant purpose of earning a 

profit, rather than just to persons whose 

primary purpose is both livelihood and 

profit. This means ‘‘that the intent 

underlying the sale or disposition of 

firearms is predominantly one of 

obtaining pecuniary gain, as opposed to 

other intents, such as improving or 

liquidating a personal firearms 

collection.’’ 18 U.S.C. 921(a)(22). ‘‘As a 

result, the BSCA definitional changes 

could make some, but not all, intrastate, 

private firearm transfers subject to GCA 

recordkeeping and background check 

requirements’’ that previously were not 

subject to those requirements, ‘‘if those 

transfers are made by profit-oriented, 

repetitive firearms buyers and 

sellers.’’ 27

To implement the new statutory 

language, this proposed rule amends 

paragraph (c) of the regulatory 

definition of ‘‘engaged in the business,’’ 

in § 478.11, pertaining to a ‘‘dealer in 

firearms other than a gunsmith or 

pawnbroker,’’ to conform with 18 U.S.C. 

921(a)(21)(C) by removing the phrase 

‘‘with the principal objective of 

livelihood and profit’’ and replacing it 

with the phrase ‘‘to predominantly earn 

a profit.’’ This proposed rule also 

amends § 478.11 to conform with new 

18 U.S.C. 921(a)(22) by adding the 

statutory definition of ‘‘predominantly 

earn a profit’’ as a new regulatory 

definition. Additionally, this rule 

proposes to move the regulatory 

definition of ‘‘terrorism,’’ which 

currently exists in the regulations under 


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28 53 FR at 10481 (‘‘The final rule retains the 

sentence [including part-time dealers] since it 

comports with legislative intent as expressed in 

committee reports.’’); see also United States v. 

McGowan, 746 F. App’x 679, 680 (9th Cir. 2018) 

(‘‘Selling firearms need not have been McGowan’s 

primary source of income.’’); United States v. Focia, 

869 F.3d 1269, 1281 (11th Cir. 2017) (‘‘[N]othing in 

the [FOPA] amendments or the rest of the statutory 

language indicates that a person violates 

§ 922(a)(1)(A) only by selling firearms as his 

primary means of income.’’); United States v. 

Valdes, 681 F. App’x 874, 877 (11th Cir. 2017) 

(‘‘The government must prove the defendant’s 

activity rose above ‘the occasional sale of a 

hobbyist,’ but does not need to show ‘the 

defendant’s primary business was dealing in 

firearms or that [she] necessarily made a profit from 

dealing.’ ’’); United States v. Ibarra, 581 F. App’x 

687, 690 (9th Cir. 2014) (‘‘The statute requires that 

the defendant have a ‘principal objective of 

livelihood and profit,’ . . . but nowhere requires a 

principal objective that that profit be one’s primary 

source of income.’’); United States v. Shipley, 546 

F. App’x 450, 454 (5th Cir. 2013) (upholding 

conviction for dealing in firearms as a regular side 

business to supplement lawful income); United 

States v. Gray, 470 F. App’x 468, 472 (6th Cir. 2012) 

(‘‘[A] defendant need not deal in firearms as his 

primary business for conviction.’’); Nadirashvili, 

655 F.3d at 119 (quoting Carter, 801 F.2d at 81–81, 

as holding that ‘‘[t]he government need not prove 

that dealing in firearms was the defendant’s 

primary business’’); United States v. Manthey, 92 F. 

App’x 291, 297 (6th Cir. 2004) (‘‘[A] defendant need 

not deal in firearms as his primary business for 

conviction.’’); United States v. Allah, 130 F.3d 33, 

43–44 (2d Cir. 1997) (‘‘[I]t is not a necessary 

element of the crime [of dealing without a license] 

that a defendants’ only business be that of selling 

firearms’’); United States v. Beecham, Nos. 92– 

5147, 92–5399, 1993 WL 188295, at *3 (4th Cir. 

June 2, 1993) (‘‘The government need not prove that 

a defendant’s primary business was dealing in 

firearms or that he necessarily made a profit from 

it.’’ (internal quotation marks omitted)). 

29See Cornyn/Tillis Letter at 3 (‘‘Our legislation 

aims at preventing someone who is disqualified 

from owning or possessing a firearm from shopping 

around for an unlicensed firearm dealer.’’). 

30See ATF FFL Newsletter, July 2017, at 9 (gun 

show guidelines); Important Notice to Dealers and 

Other Participants at This Gun Show, ATF 

Information 5300.23A (Sept. 2010); ATF Ruling 69– 

59. 

31See ATF Q&A, How may a licensee participate 

in the raffling of firearms by an unlicensed 

organization?, https://www.atf.gov/firearms/qa/ 

how-may-licensee-participate-raffling-firearmsunlicensed-organization (May 22, 2020); ATF FFL 

Newsletter, June 2021, at 8–9 (addressing conduct 

of business at firearm raffles); Letter to Pheasants 

Forever, from Acting Chief, Firearms Programs 

Division, ATF at 1–2 (July 9, 1999) (addressing 

nonprofit fundraising banquets); 1 ATF FFL 

Newsletter, Feb. 1999, at 4–5 (addressing dinner 

banquets). 

32See ATF FFL Newsletter, June 2010, at 5–6 (flea 

market guidelines). 

33See Selling firearms—legally: A Q&A with the 

ATF, Auctioneer, at 22–27 (June 2010). 

34See, e.g., United States v. Buss, 461 F. Supp. 

1016 (W.D. Pa. 1978) (holding that mail order sales 

by unlicensed defendant violated statute 

proscribing illegally engaging in business of dealing 

in firearms, even though defendant acted in concert 

with licensed firearms dealers who recorded the 

transfers). 

35See ATF FFL Newsletter, June 2021, at 8 

(addressing internet sales of firearms); ATF 

Intelligence Assessment, Firearms and Internet 

Transactions (Feb. 9, 2016); Felon Seeks Firearm, 

No Strings Attached: How Dangerous People Evade 

Background Checks and Buy Illegal Guns Online, 

City of New York (Sept. 2013), https://

www.nyc.gov/html/om/pdf/2013/felon_seeks_

firearm.pdf; Point, Click, Fire: An Investigation of 

Illegal Online Gun Sales, City of New York (Dec. 

2011); Focia, 869 F.3d at 1274 (affirming 

defendant’s conviction for engaging in the business 

without a license by dealing firearms through the 

‘‘Dark Web’’). 

the definition of ‘‘principal objective of 

livelihood and profit,’’ to a new standalone definition. This is because the 

BSCA definitions of ‘‘to predominantly 

earn a profit’’ (18 U.S.C. 921(a)(22)) and 

‘‘with the principal objective of 

livelihood and profit’’ (18 U.S.C. 

921(a)(23)) both include the same 

exception to the requirement to prove 

intent to profit when a licensee engages 

in the firearms business for the purpose 

of terrorism. 

To further implement these statutory 

changes, this rule then proposes to 

clarify when a person is ‘‘engaged in the 

business’’ as a dealer in firearms at 

wholesale or retail by: (a) clarifying the 

definition of ‘‘dealer’’; (b) defining the 

terms ‘‘purchase’’ and ‘‘sale’’ as they 

apply to dealers; (c) clarifying when a 

person would not be engaged in the 

business of dealing in firearms as an 

auctioneer, or when purchasing firearms 

for, and selling firearms from, a personal 

collection; (d) setting forth conduct that 

is, in civil and administrative 

proceedings, presumed to constitute 

‘‘engaging in the business’’ of dealing in 

firearms and presumed to demonstrate 

the intent to ‘‘predominantly earn a 

profit’’ from the sale or disposition of 

firearms, absent reliable evidence to the 

contrary; (e) adding a single definition 

for the terms ‘‘personal collection,’’ 

‘‘personal firearms collection,’’ and 

‘‘personal collection of firearms’’; (f) 

adding a definition for the term 

‘‘responsible person’’; (g) clarifying that 

the intent to ‘‘predominantly earn a 

profit’’ does not require the person to 

have received pecuniary gain, and that 

intent does not have to be shown when 

a person purchases or sells a firearm for 

criminal or terrorism purposes; (h) 

addressing how former licensees, and 

responsible persons acting on behalf of 

former licensees, may lawfully liquidate 

business inventory upon revocation or 

other termination of their license; and 

(i) clarifying that licensees must follow 

the verification and recordkeeping 

procedures in 27 CFR 478.94 and 

subpart H of title 27, part 478, rather 

than using a Firearms Transaction 

Record, ATF Form 4473 (‘‘Form 4473’’) 

when firearms are transferred to other 

licensees, including transfers by a 

licensed sole proprietor to that person’s 

personal collection. 

A. Definition of ‘‘Dealer’’ 

In enacting the BSCA, Congress 

expanded the definition of ‘‘engaged in 

the business’’ ‘‘as applied to a dealer in 

firearms,’’ as noted above. 18 U.S.C. 

921(a)(21)(C). Consistent with the text 

and purpose of the GCA, ATF 

regulations have long defined the term 

‘‘dealer’’ to include persons engaged in 

the business of selling firearms at 

wholesale or retail, or as a gunsmith or 

pawnbroker, on a part-time basis. 27 

CFR 478.11 (definition of ‘‘Dealer’’).28

Due to the BSCA amendments, the 

Department has further considered what 

it means to be a ‘‘dealer’’ engaged in the 

firearms business in light of new 

technologies, mediums of exchange, and 

forums in which firearms are bought 

and sold with the predominant intent of 

obtaining pecuniary gain. 

Since 1968, advancements in 

manufacturing (e.g., 3D printing) and 

distribution technology (e.g., internet 

sales) and changes in the marketplace 

for firearms and related products (e.g., 

large-scale gun shows) have increased 

the ways in which individuals shop for 

firearms, and therefore have created a 

need for further clarity in the regulatory 

definition of ‘‘dealer.’’ 29 The 

proliferation of new communications 

technologies and e-commerce has made 

it simple for persons to advertise and 

sell firearms to a large potential market 

at minimal cost and with minimal effort, 

using a variety of means, and often as 

a part-time activity. The proliferation of 

sales at larger-scale gun shows, flea 

markets, other similar events, and 

online has also altered the marketplace 

since the GCA was enacted in 1968. 

Therefore, to provide additional 

guidance on what it means to be 

engaged in the business as a ‘‘dealer’’ 

within the diverse modern marketplace, 

this rule first proposes to amend the 

regulatory definition of ‘‘dealer’’ in 27 

CFR 478.11 to clarify that firearms 

dealing may occur wherever, or through 

whatever medium, qualifying activities 

may be conducted. This includes at any 

domestic or international public or 

private marketplace or premises. The 

revised definition provides 

nonexclusive examples of such 

marketplaces: a gun show 30 or event,31

flea market,32 auction house,33 or gun 

range or club; at one’s home; by mail 

order; 34 over the internet; 35 through the 

use of other electronic means (e.g., an 


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36See, e.g., Fulkerson v. Lynch, 261 F. Supp. 3d 

779, 783–86, 788–89 (W.D. Ky. 2017) (denying 

summary judgment to applicant whose license was 

denied by ATF for previously willfully engaging in 

the business of dealing without a license through 

an online broker and granting summary judgement 

to the government). Although some dealers may sell 

firearms through online services sometimes called 

‘‘brokers,’’ like a magazine or catalog company that 

only advertises firearms listed by known sellers and 

processes orders for them for direct shipment from 

the distributor to their buyers, these ‘‘brokers’’ are 

not themselves considered ‘‘dealers.’’ This is 

because these online ‘‘brokers’’ do not purchase the 

firearms for valuable consideration (i.e., take or 

transfer title to them). Rather, they typically only 

collect a commission or fee for providing contracted 

services to market and process the transaction for 

the seller. This is distinguished from a broker who, 

for example, purchases the firearms from a 

manufacturer, importer, or other distributor, sells 

the firearms to the buyer, and has them shipped 

directly to the buyer from the distributor. Such 

persons must be licensed as dealers since they are 

purchasing and selling the firearms with the 

predominant intent to earn a profit. See, e.g., ATF 

FFL Newsletter, Sept. 2016, at 3; 2 ATF FFL 

Newsletter, Mar. 2023, at 6–7. 

37See, e.g., Press Release, Department of Justice 

Office of Public Affairs (‘‘OPA’’), Minnesota Man 

Indicted for Dealing Firearms without a License 

(Feb. 18, 2016), https://www.justice.gov/opa/pr/ 

minnesota-man-indicted-dealing-firearms-withoutlicense (defendant dealt in firearms through 

websites such as gunbroker.com, an online auction 

website). 

38See, e.g., Press Release, OPA, Odenton, 

Maryland Man Exiled to 8 Years in Prison for 

Firearms Trafficking Conspiracy, DOJ/OPA (Apr. 

27, 2017), https://www.justice.gov/usao-md/pr/ 

odenton-maryland-man-exiled-8-years-prisonfirearms-trafficking-conspiracy (defendant texted 

photos of firearms for sale to his customer and 

discussed prices). 

39See ATF FFL Newsletter, June 2021, at 9 

(‘‘Social media gun raffles are gaining popularity on 

the internet. In most instances, the sponsor of the 

event is not a Federal firearms licensee, but will 

enlist the aid of a licensee to facilitate the transfer 

of the firearm to the raffle winner. Often, the 

sponsoring organization arranges to have the 

firearm shipped from a distributor to a licensed 

third party and never takes physical possession of 

the firearm. If the organization’s practice of raffling 

firearms rises to the level of being engaged in the 

business of dealing in firearms, the organization 

must obtain a Federal firearms license.’’). 

40See, e.g., Press Release, Department of Justice 

United States Attorney’s Office (‘‘USAO’’), 

Snapchat Gun Dealer Convicted of Unlawfully 

Manufacturing and Selling Firearms (Oct. 4, 2022), 

https://www.justice.gov/usao-edca/pr/snapchatgun-dealer-convicted-unlawfully-manufacturingand-selling-firearms; Press Release, USAO, Sebring 

Resident Sentenced to Prison for Unlawfully 

Dealing Firearms on Facebook (Nov. 7, 2016), 

https://www.justice.gov/usao-sdfl/pr/sebringresident-sentenced-prison-unlawfully-dealingfirearms-facebook. 

41See Letter for Outside Counsel to National 

Association of Arms Shows, from Chief, Firearms 

and Explosives Division, ATF, Re: Request for 

Advisory Opinion on Licensing for Certain Gun 

Show Sellers at 1 (Feb. 17, 2017) (‘‘Anyone who is 

engaged in the business of buying and selling 

firearms, regardless of the location(s) at which those 

transactions occur is required to have a Federal 

firearms license. ATF will issue a license to persons 

who intend to conduct their business primarily at 

gun shows, over the internet, or by mail order, so 

long as they otherwise meet the eligibility criteria 

established by law. This includes the requirement 

that they maintain a business premises at which 

ATF can inspect their records and inventory, and 

that otherwise complies with local zoning 

restrictions’’); ATF FFL Newsletter, June 2010, at 5 

(Unless there is a permanent business premises 

from which to conduct firearms business (e.g., an 

identified rented space that can securely hold 

required records), ‘‘[t]he GCA prohibits any person 

from engaging in the business of selling, dealing, or 

trading in firearms at flea markets. The only 

exceptions would be an unlicensed individual 

making an occasional firearm sale or for a Federal 

firearms licensee to display firearms and take orders 

of firearms.’’); Letter for Sen. Dan Coats, from 

Deputy Director, ATF (Aug. 22, 1990) (an FFL 

cannot be issued at a table or booth at a temporary 

flea market); ATF Internal Memorandum #23264 

(June 15, 1983) (same); United States v. Allman, 119 

Fed. App’x. 751, 754 (6th Cir. 2005) (‘‘Illegal gun 

transactions at flea markets are not atypical.’’); 

United States v. Orum, 106 F. App’x 972 (6th Cir. 

2004) (defendant illegally displayed and sold 

firearms at flea markets and gun shows). 

42See Abramski v. United States, 573 U.S. 169, 

172, 181 (2014) (‘‘The statute establishes a detailed 

scheme to enable the dealer to verify, at the point 

of sale, whether a potential buyer may lawfully own 

a gun. Section 922(c) brings the would-be purchaser 

onto the dealer’s ‘business premises’ by prohibiting, 

except in limited circumstances, the sale of a 

firearm ‘to a person who does not appear in person’ 

at that location.’’); National Rifle Ass’n v. Brady, 

914 F. 2d 475, 480 (4th Cir. 1990) (holding that 

FOPA did not eliminate the requirement that a 

licensee have a business premises from which to 

conduct business ‘‘so that regulatory authorities 

will know where the inventory and records of a 

licensee can be found’’); Meester v. Bowers, No. 

12CV86, 2013 WL 3872946 (D. Neb. July 25, 2013) 

(upholding ATF’s denial of license in part because 

the applicant lacked a means of accessing the 

premises). 

43See, e.g., United States v. Baptiste, 607 F. 

App’x 950, 953 (11th Cir. 2015) (upholding section 

922(a)(1) conviction where firearms purchased in 

the United States were to be resold in Haiti); United 

States v. Murphy, 852 F.2d 1, 8 (1st Cir. 1988) (same 

with firearms to be resold in Ireland); United States 

v. Hernandez, 662 F.2d 289, 291 (5th Cir. 1981) 

(same with firearms to be resold in Mexico). But see 

United States v. Mowad, 641 F.2d 1067 (2d Cir. 

1981) (reversing conviction for purchasing firearms 

for resale in Lebanon on the basis that there was 

no mention of exporting firearms in the GCA or any 

suggestion of Congressional concern about firearm 

violence in other countries). 

online broker,36 online auction,37 text 

messaging service,38 social media 

raffle,39 or website 40); or at any other 

domestic or international public or 

private marketplace or premises. These 

examples are provided to clarify for 

unlicensed persons that firearms dealing 

requires a license in whatever place or 

through whatever medium the firearms 

are purchased and sold, including the 

internet and locations other than a 

traditional brick and mortar store.41

However, regardless of the medium or 

location at which a dealer buys and sells 

firearms, to obtain a license under the 

GCA, the dealer must still have a fixed 

premises in a State from which to 

conduct business subject to the license, 

and comply with all applicable State 

and local laws regarding the conduct of 

such business.42 18 U.S.C. 923(d)(1)(E)– 

(F). 

Even though an applicant must have 

a business premises in a particular State 

to obtain a license, under the GCA, 

firearms purchases or sales requiring a 

license in the United States may involve 

conduct outside of the United States. 

Specifically, 18 U.S.C. 922(a)(1)(A) has 

long prohibited any person without a 

license from shipping, transporting, or 

receiving any firearm in foreign 

commerce while in the course of being 

engaged in the business of dealing in 

firearms,43 and 18 U.S.C. 924(n) 

prohibits travelling from a foreign 

country to a State in furtherance of 

conduct that constitutes a violation of 

section 922(a)(1)(A). 

Further, as recently amended by the 

BSCA, the GCA now expressly prohibits 

a person from smuggling or knowingly 

taking a firearm out of the United States 

with intent to engage in conduct that 

would constitute a felony for which the 

person may be prosecuted in a court in 

the United States if the conduct had 

occurred within the United States. 18 

U.S.C. 924(k)(2). Willfully engaging in 

the business of dealing in firearms 

without a license is an offense 

punishable by more than one year in 

prison, see 18 U.S.C. 924(a)(1)(D), and 

constitutes a felony. Therefore, 

unlicensed persons who purchase 

firearms in the United States and 

smuggle or take them out of the United 

States (or conspire or attempt to do so) 

for resale in another country would still 

be engaging in unlawful dealing in 

firearms without a license, among other 

violations of United States law. 

Accordingly, this rule proposes to 

clarify in the definition of ‘‘dealer’’ that 

purchases or sales of firearms as a 

wholesale or retail dealer may occur 

either domestically or internationally. 

B. Definition of ‘‘Engaged in the 

Business’’—‘‘Purchase’’ and ‘‘Sale’’ 

To further clarify the regulatory 

definition of a dealer ‘‘engaged in the 

business’’ with the predominant intent 

of earning a profit through the repetitive 

purchase and resale of firearms in 27 

CFR 478.11, this rule also proposes to 

define, based on common dictionary 

definitions and relevant case law, the 

terms ‘‘purchase’’ and ‘‘sale’’ (and 

derivative terms thereof, such as 

‘‘purchases,’’ ‘‘purchasing,’’ 

‘‘purchased,’’ and ‘‘sells,’’ ‘‘selling,’’ or 

‘‘sold’’). This should help clarify, 

through examples, how those terms 

apply to dealing in firearms. 

Specifically, this rule proposes to define 

‘‘purchase’’ (and derivative terms 

thereof) as ‘‘the act of obtaining a 

firearm in exchange for something of 


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44This definition is consistent with the common 

meaning of ‘‘purchase,’’ which is ‘‘to obtain (as 

merchandise) by paying money or its equivalent.’’ 

Webster’s Third New International Dictionary 1844 

(1971); see also Black’s Law Dictionary 1491 (11th 

Ed. 2019) (The term ‘‘purchase’’ means ‘‘[t]he 

acquisition of an interest in real or personal 

property by sale, discount, negotiation, mortgage, 

pledge, lien, issue, reissue, gift, or any other 

voluntary transaction.’’). 

45This definition is consistent with the common 

meaning of ‘‘sale,’’ which is ‘‘a contract transferring 

the absolute or general ownership of property from 

one person or corporate body to another for a price 

(as a sum of money or any other consideration).’’ 

Webster’s Third New International Dictionary 2003 

(1971). The related term ‘‘resale’’ is ‘‘the act of 

selling again.’’ Id. at 1929. 

46See, e.g., United States v. Gross, 451 F.2d 1355, 

1360 (7th Cir. 1971) (defendant ‘‘had traded 

firearms [for other firearms] with the object of profit 

in mind’’). 

47See, e.g., United States v. Huffman, 518 F.2d 

80 (4th Cir. 1975) (defendant traded large quantities 

of ammunition in exchange for firearms). 

48See, e.g., United States v. 57 Miscellaneous 

Firearms, 422 F. Supp. 1066, 1070–71 (W.D. Mo. 

1976) (defendant obtained the firearms he sold or 

offered for sale in exchange for carpentry work he 

performed). 

49See, e.g., Johnson v. Johns, No. 10–CV– 

904(SJF), 2013 WL 504446 (E.D.N.Y. Feb. 5, 2013) 

(on at least one occasion, petitioner, who was 

engaged in the unlicensed dealing in firearms 

through straw purchasers, compensated a straw 

purchaser with cocaine base). 

50See, e.g., Focia, 869 F.3d at 1274 (defendant 

sold pistol online to undercover ATF agent for 15 

bitcoins). 

51The term ‘‘medium of exchange’’ generally 

means ‘‘something commonly accepted in exchange 

for goods and services and recognized as 

representing a standard of value,’’ and ‘‘valuable 

consideration’’ is ‘‘an equivalent or compensation 

having value that is given for something (as money, 

marriage, services) acquired or promised and that 

may consist either in some right, interest, profit, or 

benefit accruing to one party or some responsibility, 

forbearance, detriment, or loss exercised by or 

falling upon the other party.’’ Webster’s Third New 

International Dictionary 1403, 2530 (1971). See, 

e.g., United States v. Berry, 644 F.2d 1034, 1036 

(5th Cir. 1981) (defendant sold firearms in exchange 

for large industrial batteries to operate his 

demolition business); United States v. Reminga, 493 

F. Supp. 1351, 1357 (W.D. Mich. 1980) (defendant 

traded his car for three guns that he later sold or 

traded). 

52See ATF Q&A, Does an auctioneer who is 

involved in firearms sales need a dealer’s license?, 

https://www.atf.gov/firearms/qa/does-auctioneerwho-involved-firearms-sales-need-dealer-license 

(July 10, 2020); ATF Federal Firearms Regulations 

Reference Guide, P 5300.4, Q&A L1, at 207 (2014); 

ATF FFL Newsletter, May 2001, at 3; ATF Ruling 

96–2, Engaging in the Business of Dealing in 

Firearms (Auctioneers); 1 ATF FFL Newsletter, 

1990, at 7; Letter for Editor, CarPac Publishing 

Company, from Acting Assistant Director 

(Regulatory Enforcement), ATF, CC–28,953 (July 26, 

1979). 

53 Id. 54 In Fiscal Year 2022, for example, ATF 

conducted 11,156 qualification inspections of new 

applicants for a license, and 6,979 compliance 

inspections of active licensees. See ATF, Fact 

Sheet—Facts and Figures for Fiscal Year 2022 (Jan. 

2023), https://www.atf.gov/resource-center/factsheet/fact-sheet-facts-and-figures-fiscal-year-2022. 

55See footnotes 62 through 72, infra. 

56See, e.g., United States v. Four Hundred 

Seventy Seven (477) Firearms, 698 F. Supp. 2d 890 

(E.D. Mich. 2010) (civil forfeiture of firearms 

intended to be sold from an unlicensed gun store); 

United States v. One Bushmaster, Model XM15–E2 

Rifle, No. 5:06–CV–156 (WDO), 2006 WL 3497899 

(M.D. Ga. Dec. 5, 2006) (civil forfeiture of firearms 

intended to be sold by an unlicensed person who 

acquired an unusually large amount of firearms 

quickly for the purpose of selling or trading them); 

United States v. Twenty Seven (27) Assorted 

Firearms, No. SA–05–CA–407–XR, 2005 WL 

2645010 (W.D. Tex. Oct. 13, 2005) (civil forfeiture 

of firearms intended to be sold at gun shows 

without a license). 

57Over the years, ATF has issued numerous 

letters warning unlicensed persons not to continue 

to engage in the business of dealing in firearms 

without a license, also called a ‘‘cease and desist’’ 

letter. See, e.g., United States v. Kubowski, 85 F. 

App’x 686, 687 (10th Cir. 2003) (defendant served 

cease and desist letter after selling five handguns 

and one rifle to undercover ATF agents). 

value,’’ 44 and the term ‘‘sale’’ (and 

derivative terms thereof, including 

‘‘resale’’) as ‘‘the act of providing a 

firearm in exchange for something of 

value.’’ 45 The term ‘‘something of 

value’’ includes money, credit, personal 

property (e.g., another firearm 46 or 

ammunition 47), a service,48 a controlled 

substance,49 or any other medium of 

exchange 50 or valuable 

consideration.’’ 51

Defining these terms to include any 

method of payment for a firearm would 

clarify that persons cannot avoid 

licensing by, for instance, bartering or 

providing or receiving services in 

exchange for firearms with the 

predominant intent to earn pecuniary 

gain even where no money is 

exchanged. It would also clarify that a 

person requires a license to engage in 

the business of dealing in firearms even 

when the medium of payment or 

consideration is unlawful, such as 

exchanging illicit drugs or performing 

illegal acts for firearms, and that it is a 

distinct crime to do so without a 

license. 

C. Definition of ‘‘Engaged in the 

Business’’ as Applied to Auctioneers 

Because the definitions of ‘‘purchase’’ 

and ‘‘sale’’ broadly include services 

provided in exchange for firearms, both 

as defined by common dictionaries and 

as proposed in this rule, the Department 

further proposes to make clear that 

certain persons who provide auctioneer 

services are not required to be licensed 

as dealers. ATF has long interpreted the 

statutory definition of ‘‘engaged in the 

business’’ as excluding auctioneers who 

provide only auction services on 

commission by assisting in liquidating a 

personal collection of firearms at an 

‘‘estate-type’’ auction.52 The new 

definition in the BSCA does not affect 

that determination. The Department is 

proposing to incorporate this 

longstanding interpretation into the 

regulations while otherwise clarifying 

the regulatory definition. 

In this context, the auctioneer is 

generally providing services only as an 

agent of the owner or executor of an 

estate who is liquidating a personal 

collection. The firearms are within the 

estate’s control and the sales made on 

the estate’s behalf. This limited 

exclusion from the definition of 

‘‘dealer’’ is conditioned on the 

auctioneer not purchasing the firearms, 

taking possession of the firearms prior 

to the auction, or consigning the 

firearms for sale. If the auctioneer were 

to engage in any of that conduct, the 

auctioneer would need to have a 

dealer’s license because that person 

would be engaged in the business of 

purchasing and reselling firearms to 

earn a profit. An ‘‘estate-type’’ auction 

as described above differs from 

liquidating a personal collection of 

firearms by means of a ‘‘consignmenttype’’ auction, in which the auctioneer 

is paid to accept firearms into a business 

inventory and then resells them in lots, 

or over a period of time. In this 

‘‘consignment-type’’ auction, the 

auctioneer generally inventories, 

evaluates, and tags the firearms for 

identification.53 Therefore, under 

‘‘consignment-type’’ auctions, an 

auctioneer would generally need to be 

licensed. 

D. Presumptions That a Person Is 

‘‘Engaged in the Business’’ 

The Department has observed through 

its enforcement efforts and subjectmatter expertise that persons who are 

engaged in certain firearms purchaseand-sale activities are highly likely to be 

‘‘engaged in the business’’ of dealing in 

firearms at wholesale or retail. These 

activities have been observed through a 

variety of criminal, civil, and 

administrative enforcement actions and 

proceedings brought by the Department, 

to include: (1) ATF inspections of 

prospective and existing wholesale and 

retail dealers of firearms who are 

engaged, or intend to engage in the 

business; 54 (2) criminal investigations 

and prosecutions of persons who 

engaged in the business of dealing in 

firearms without a license; 55 (3) civil 

and administrative actions under 18 

U.S.C. 924(d) to seize and forfeit 

firearms intended to be sold by persons 

engaged in the business without a 

license; 56 (4) ATF cease and desist 

letters issued to prevent section 

922(a)(1)(A) violations; 57 and (5) ATF 

administrative proceedings under 18 

U.S.C. 923 to deny licenses to persons 

who willfully engaged in the business of 

dealing in firearms without a license, or 

to revoke or deny renewal of existing 


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58See, e.g., In the Matter of Scott, Application 

Nos. 9–93–019–01–PA–05780 and 05781 (Seattle 

Field Division, Apr. 3, 2018) (denied applicant for 

license to person who purchased and sold 

numerous handguns within one month; In the 

Matter of S.E.L.L. Antiques, Application No. 9–87– 

035–01–PA–00725 (Phoenix Field Division, Feb. 21, 

2006) (denied applicant who repetitively sold 

modern firearms from unlicensed storefront). 

59See footnote 20, supra, and accompanying text. 

60While rebuttable presumptions may not be 

presented to a jury in a criminal case, jury 

instructions may include, for example, reasonable 

permissive inferences. See Francis v. Franklin, 471 

U.S. 307, 314 (1985) (‘‘A permissive inference 

suggests to the jury a possible conclusion to be 

drawn if the [government] proves predicate facts, 

but does not require the jury to draw that 

conclusion.’’); County Court of Ulster County v. 

Allen, 442 U.S. 140 (1979) (upholding jury 

instruction that gave rise to a permissive inference 

available only in certain circumstances, rather than 

a mandatory conclusion); Baghdad v. Att’y Gen. of 

the U. S., 50 F.4th 386, 390 (3d Cir. 2022) (‘‘Unlike 

mandatory presumptions, permissive inferences 

. . . do not shift the burden of proof or require any 

outcome. They are just an ‘evidentiary device . . . 

[that] allows—but does not require—the trier of fact 

to infer’ that an element of a crime is met once basic 

facts have been proven beyond a reasonable 

doubt.’’); Patton v. Mullin, 425 F.3d 788 (10th Cir. 

2005) (upholding jury instruction that created a 

permissive inference rather than a rebuttable 

presumption); United States v. Warren, 25 F.3d 890, 

897 (9th Cir. 1994) (same); United States v. 

Washington, 819 F.2d 221 (9th Cir. 1987) (same); 

Lannon v. Hogan, 719 F.2d 518 (1st Cir. 1983) 

(same); United States v. Gaines, 690 F.2d 849 (11th 

Cir. 1982) (same); cf., e.g., United States v. 

Antonoff, 424 F. App’x 846, 848 (11th Cir. 2011) 

(district court relied on permissive inference of 

current drug use in ATF’s definition of ‘‘unlawful 

user’’ in 27 CFR 478.11 to conclude that the 

defendant’s drug use was ‘‘contemporaneous and 

ongoing’’ sufficient to apply the 2K2.1 sentencing 

guideline); United States v. McCowan, 469 F.3d 

386, 392 (5th Cir. 2006) (upholding application of 

a sentencing enhancement based on the permissive 

inference of current drug use in 27 CFR 478.11); 

United States v. Stanford, No. 11–10211–01–EFM, 

2012 WL 1313503 (D. Kan. Apr. 16, 2012) 

(upholding arrest under 18 U.S.C. 922(g)(3) relying, 

in part, on ATF’s regulatory definition of ‘‘unlawful 

user’’). 

61See generally 2 Handbook of Fed. Evid. § 303:4 

(9th ed. 2020) (explaining Federal Rule of Evidence 

Standard 303(c), which ‘‘provides that whenever 

the existence of a presumed fact against the accused 

is submitted to the jury, the court should instruct 

the jury that it may regard the basic facts as 

sufficient evidence of the presumed fact but is not 

required to do so. In addition, if the presumed fact 

establishes guilt, is an element of the offense, or 

negatives a defense, the court should instruct the 

jury that its existence on all the evidence must be 

proved beyond a reasonable doubt. . . . The 

applicability and constitutionality of Standard 

303(b) must be evaluated in light of the Supreme 

Court decisions in County Court of Ulster v. Allen, 

Sandstrom v. Montana, and Francis v. Franklin. As 

a result of these decisions it is clear, if it wasn’t 

before, that it is never permissible to shift to the 

defendant the burden of persuasion to disprove an 

element of a crime charged by means of a 

presumption, and of course, that a conclusive or 

irrebuttable presumption operating against the 

criminal defendant is also unconstitutional.’’). 

62See Do I Need a License to Buy and Sell 

Firearms?, ATF Publication 5310.2 (Jan. 2016). See 

also Nadirashvili, 655 F.3d at 120–21 (despite 

defendants’ knowledge of only a single firearms 

transaction, there was sufficient evidence to prove 

they had ‘‘engaged in the business’’ because they 

knew co-defendant held himself out generally as a 

source of firearms, and was ready to procure them 

for customers); United States v. Shan, 361 F. App’x 

182 (2d Cir. 2010) (defendant sold two firearms 

within roughly a month and acknowledged he had 

a source of supply for other weapons); United States 

v. Shan, 80 F. App’x 31 (9th Cir. 2003) (sale of 

weapons in one transaction where the defendant 

was willing and able to find more weapons for 

resale); Murphy, 852 F.2d at 8 (‘‘[T]his single 

transaction was sufficiently large in quantity, price 

and length of negotiation to constitute dealing in 

firearms.’’); United States v. Swinton, 521 F.2d 

1255, 1259 (10th Cir. 1975) (‘‘Swinton’s sale [of one 

firearm] to Agent Knopp, standing alone, without 

more, would not have been sufficient to establish 

a violation of section 922(a)(1). That sale, however, 

when considered in conjunction with other facts 

and circumstances related herein, established that 

Swinton was engaged in the business of dealing in 

firearms. The unrebutted evidence of the 

Government established not only that Swinton 

considered himself to be and held himself out as 

a dealer, but that, most importantly, he was actively 

engaged in the business of dealing in guns.’’ 

(internal citation omitted)). 

63See King, 735 F.3d at 1107 (defendant 

attempted to sell one of the 19 firearms he had 

ordered, and represented to the buyer that he was 

buying, selling, and trading in firearms and could 

procure any item in a gun publication at a cheaper 

price). 

64See, e.g., Focia, 869 F.3d at 1282 (‘‘And finally, 

despite efforts to obtain Focia’s tax returns and 

Social Security information, agents found no 

evidence that Focia enjoyed any source of income 

other than his firearms sales. This evidence 

overwhelmingly demonstrates that Focia’s sales of 

firearms were no more a hobby than working at 

Burger King for a living could be described that 

way.’’). 

licenses held by licensees who aided 

and abetted that misconduct.58 In 

addition, numerous courts have 

identified certain activities or factors 

they deemed relevant to determining 

whether a person is ‘‘engaged in the 

business’’ even prior to Congress’s 

decision to expand the definition in the 

BSCA.59 This rule, therefore, proposes 

to establish rebuttable presumptions in 

certain contexts to help unlicensed 

persons, industry operations personnel, 

and others determine when a person is 

presumed to be ‘‘engaged in the 

business’’ requiring a dealer’s license. 

These rebuttable presumptions would 

apply in civil and administrative 

proceedings. While the criteria set forth 

in the proposed rule may be useful to 

a court in a criminal case—for example, 

to inform appropriate jury instructions 

regarding permissible inferences 60—the 

regulatory text makes clear that the 

presumptions shall not apply to 

criminal cases.61

The Department has considered, but 

not proposed in the NPRM, an 

alternative that would have set a 

minimum numerical threshold of 

firearms sold by a person within a 

certain period of time. That approach 

has not been proposed for several 

reasons. First, while selling large 

numbers of firearms or engaging or 

offering to engage in frequent 

transactions may be highly indicative of 

business activity, neither the courts nor 

the Department has recognized a set 

minimum number of firearms purchased 

or resold that triggers the licensing 

requirement. Similarly, there is no 

minimum number of transactions that 

determines whether a person is 

‘‘engaged in the business’’ of dealing in 

firearms. Instead, the established 

approach for determining whether an 

individual is ‘‘engaged in the business’’ 

is to look at the totality of 

circumstances. Thus, even a single 

firearm transaction, or offer to engage in 

a transaction, when combined with 

other evidence, may be sufficient to 

require a license. For example, even 

under the previous statutory definition, 

courts have upheld convictions for 

dealing without a license when few 

firearms, if any, were actually sold, 

provided other factors were also 

present, such as the person representing 

to others a willingness and ability to 

repetitively purchase firearms for resale. 

See, e.g., United States v. King, 735 F.3d 

1098, 1107 n.8 (9th Cir. 2013) 

(upholding conviction where defendant 

attempted to sell one firearm and 

represented that he could purchase 

more for resale and noting that ‘‘Section 

922(a)(1)(A) does not require an actual 

sale of firearms’’).62 Second, in addition 

to the tracing concerns expressed by 

ATF in response to comments on the 

1979 ANPRM, a person could structure 

their transactions to avoid a minimum 

threshold by spreading out their sales 

over time. Finally, the Department does 

not believe there is a sufficient 

evidentiary basis, without consideration 

of additional factors, to support a 

specific minimum number of firearms 

bought or sold for a person to be 

considered ‘‘engaged in the business.’’ 

Rather than establishing a minimum 

threshold number of firearms purchased 

or sold, this rule proposes to clarify that, 

absent reliable evidence to the contrary, 

a person will be presumed to be engaged 

in the business of dealing in firearms 

when the person: 

(1) sells or offers for sale firearms, and 

also represents to potential buyers or 

otherwise demonstrates a willingness 

and ability to purchase and sell 

additional firearms; 63

(2) spends more money or its 

equivalent on purchases of firearms for 

the purpose of resale than the person’s 

reported taxable gross inome during the 

applicable period of time; 64

(3) repetitively purchases for the 

purpose of resale, or sells or offers for 

sale firearms— 


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65See, e.g., MEW Sporting Goods, LLC. v. 

Johansen, 992 F. Supp. 2d 665, 674–75 (N.D.W.V. 

2014), aff’d, 594 F. App’x 143 (4th Cir. 2015) 

(corporate entity disregarded where it was formed 

to circumvent firearms licensing requirement); 

King, 735 F.3d at 1106 (defendant felon could not 

‘‘immunize himself from prosecution’’ for dealing 

without a license by ‘‘hiding behind a corporate 

charter.’’); United States v. Fleischli, 305 F.3d 643, 

652 (7th Cir. 2002) (‘‘In short, a convicted felon who 

could not have legitimately obtained a 

manufacturer’s or dealer’s license may not obtain 

access to machine guns by setting up a sham 

corporation.’’); National Lending Group, L.L.C. v. 

Mukasey, No. CV 07–0024, 2008 WL 5329888 (D. 

Ariz. Dec. 19, 2008), aff’d, 365 F. App’x 747 (9th 

Cir. 2010) (straw ownership of corporate pawn 

shops); Casanova Guns, Inc. v. Connally, 454 F.2d 

1320, 1322 (7th Cir. 1972) (‘‘[I]t is well settled that 

the fiction of a corporate entity must be disregarded 

whenever it has been adopted or used to 

circumvent the provisions of a statute.’’); XVP 

Sports, LLC v. Bangs, No. 2:11CV379, 2012 WL 

4329258, at *5 (E.D. Va. Sept. 17, 2012) (‘‘unity of 

interest’’ existed between firearm companies 

controlled by the same person); Virlow LLC v. 

Bureau of Alcohol, Tobacco, Firearms & Explosives, 

No. 1:06–CV–375, 2008 WL 835828 (W.D. Mich. 

Mar. 28, 2008) (corporate form disregarded where 

a substantial purpose for the formation of the 

company was to circumvent the statute restricting 

issuance of firearms licenses to convicted felons); 

Press Release, OPA, Utah Business Owner 

Convicted of Dealing in Firearms without a License 

and Filing False Tax Returns (Sept. 23, 2016), 

https://www.justice.gov/opa/pr/utah-businessowner-convicted-dealing-firearms-without-licenseand-filing-false-tax-returns (defendant illegally sold 

firearms under the auspices of a company owned 

by another Utah resident). 

66See, e.g., Bryan v. United States, 524 U.S. 184, 

189 (1998) (defendant used straw purchasers to buy 

pistols in Ohio for resale in New York); United 

States v. Ochoa, 726 F. App’x 651, 652 (9th Cir. 

2018) (‘‘[W]hile the evidence demonstrated that 

Ochoa did not purchase and sell the firearms 

himself, it was sufficient to demonstrate that he had 

the princip[al] objective of making a profit through 

the repetitive purchase and sale of firearms, even 

if those purchases and sales were carried out by 

others.’’); United States v. Hosford, 843 F.3d 161, 

163 (4th Cir. 2016) (defendant purchased firearms 

through a straw purchaser who bought them at gun 

shows); United States v. Paye, 129 F. App’x 567, 

570 (11th Cir. 2005) (defendant paid straw 

purchaser to buy firearms for him to sell); United 

States v. Bryan, 122 F.3d 90, 92 (2d Cir. 1997) 

(defendant enlisted the aid of two straw purchasers 

to buy guns for resale in another state). 

67See, e.g., United States v. Simmons, 485 F.3d 

951 (7th Cir. 2007); United States v. Perkins, 633 

F.2d 856 (8th Cir. 1981). 

68See, e.g., United States v. Ilarraza, 963 F.3d 1 

(1st Cir. 2020); United States v. Fields, 608 F. App’x 

806 (11th Cir. 2015); United States v. Barrero, 578 

F. App’x 884 (11th Cir. 2014); United States v. 

Teleguz, 492 F.3d 80 (1st Cir. 2007); United States 

v. Bostic, 371 F.3d 865 (6th Cir. 2004); United 

States v. Kitchen, 87 F. App’x 244 (3d Cir. 2004); 

United States v. Ortiz, 318 F.3d 1030 (11th Cir. 

2003); United States v. Jackson, No. 97–6756, 1997 

WL 618902 (4th Cir. Oct. 8, 1997); United States v. 

Rosa, 123 F.3d 94 (2d Cir. 1997); United States v. 

Twitty, 72 F.3d 228 (1st Cir. 1995); United States 

v. Collins, 957 F.2d 72 (2d Cir. 1992). 

69See, e.g., United States v. Fridley, 43 F. App’x 

830 (6th Cir. 2002) (defendant purchased and sold 

unregistered machineguns); United States v. 

Idarecis, No. 97–1629, 1998 WL 716568 (2d Cir. 

Oct. 9, 1998) (defendant converted rifles to 

automatic weapons and obliterated the serial 

numbers on the firearms he sold). 

70See, e.g., Press Release, OPA, Minnesota Man 

Indicted for Dealing Firearms without a License 

(Feb. 18, 2016), https://www.justice.gov/opa/pr/ 

minnesota-man-indicted-dealing-firearms-withoutlicense#:∼:text=U.S.%20Attorney%20

Andrew%20M.,least%20nine%20firearms

%20transaction%20records (defendant sold 

firearms he purchased through online websites, and 

the average time he actually possessed a gun before 

offering it for sale was only nine days); Press 

Release, USAO, Ex-Pasadena Police Lieutenant 

Sentenced to One Year in Federal Prison for 

Unlicensed Selling of Firearms and Lying on ATF 

Form (Feb. 25, 2019), https://www.justice.gov/usaocdca/pr/ex-pasadena-police-lieutenant-sentencedone-year-federal-prison-unlicensed-selling 

(defendant resold 79 firearms within six days after 

he purchased them); United States v. D’Agostino, 

No. 10–20449, 2011 WL 219008 (E.D. Mich. Jan. 20, 

2011) (some of the weapons defendant sold at gun 

shows were purchased ‘‘a short time earlier’’). 

71See, e.g., United States v. Carter, 203 F.3d 187, 

189 n.1 (2d Cir. 2000) (defendant admitted to 

willfully shipping and transporting interstate 

eleven handguns in the course of engaging in the 

business of dealing in firearms without a license 

that were contained in their original boxes); United 

States v. Van Buren, 593 F.2d 125, 126 (9th Cir. 

1979) (defendant’s ‘‘gun displays were atypical of 

those of a collector because he exhibited many new 

weapons, some in the manufacturers’ boxes’’); 

United States v. Powell, 513 F.2d 1249 (8th Cir. 

1975) (defendant acquired and sold six ‘‘new’’ or 

‘‘like new’’ shotguns over several months); United 

States v. Posey, 501 F.2d 998, 1002 (6th Cir. 1974) 

(defendant offered firearms for sale, some of them 

in their original boxes); United States v. Day, 476 

F.2d 562, 564, 567 (6th Cir. 1973) (60 of the 96 guns 

to be sold by defendant were new handguns still in 

the manufacturer’s original packages). 

72See, e.g., Press Release, USAO, FFL Sentenced 

for Selling Guns to Unlicensed Dealers (May 27, 

2022), https://www.justice.gov/usao-ndtx/pr/fflsentenced-selling-guns-unlicensed-dealers 

(defendant regularly sold large quantities of 

identical firearms to unlicensed associates who sold 

them without a license); Shipley, 546 F. App’x at 

453 (defendant sold mass-produced firearms of 

similar make and model that were not likely to be 

part of a personal collection). 

(A) through straw or sham 

businesses,65 or individual straw 

purchasers or sellers; 66 or 

(B) that cannot lawfully be purchased 

or possessed, including: 

(i) stolen firearms (18 U.S.C. 922(j)); 67

(ii) firearms with the licensee’s serial 

number removed, obliterated, or altered 

(18 U.S.C. 922(k); 26 U.S.C. 5861(i)); 68

(iii) firearms imported in violation of 

law (18 U.S.C. 922(l), 22 U.S.C. 2778, or 

26 U.S.C. 5844, 5861(k)); or 

(iv) machineguns or other weapons 

defined as firearms under 26 U.S.C. 

5845(a) that were not properly 

registered in the National Firearms 

Registration and Transfer Record (18 

U.S.C. 922(o); 26 U.S.C. 5861(d)); 69

(4) repetitively sells or offers for sale 

firearms— 

(A) within 30 days after they were 

purchased; 70

(B) that are new, or like new in their 

original packaging; 71 or 

(C) that are of the same or similar kind 

(i.e., make/manufacturer, model, 

caliber/gauge, and action) and type (i.e., 

the classification of a firearm as a rifle, 

shotgun, revolver, pistol, frame, 

receiver, machinegun, silencer, 

destructive device, or other firearm); 72

(5) who, as a former licensee (or 

responsible person acting on behalf of 

the former licensee) sells or offers for 

sale firearms that were in the business 

inventory of such licensee at the time 

the license was terminated (i.e., license 

revocation, denial of license renewal, 

license expiration, or surrender of 

license), and were not transferred to a 

personal collection in accordance with 

18 U.S.C. 923(c) and 27 CFR 478.125a; 

or 

(6) who, as a former licensee (or 

responsible person acting on behalf of a 

former licensee) sells or offers for sale 

firearms that were transferred to a 

personal collection of such former 

licensee or responsible person prior to 

the time the license was terminated, 

unless: (A) the firearms were received 

and transferred without any intent to 

willfully evade the restrictions placed 

on licensees by chapter 44, title 18, of 

the United States Code; and (B) one year 

has passed from the date of transfer to 

the personal collection. 

Any one or a combination of the 

circumstances above gives rise to a 

presumption in civil and administrative 

proceedings that the person is engaged 

in the business of dealing in firearms 

and must be licensed under the GCA. 

The activities set forth in these 

rebuttable presumptions are not 

exhaustive of the conduct that may 

show that, or be considered in 

determining whether, a person is 

engaged in the business of dealing in 

firearms. Further, as noted above, while 

the criteria may be useful to courts in 

criminal cases when instructing juries 

regarding permissible inferences, the 

presumptions outlined above shall not 

apply to criminal cases. 

At the same time, the Department 

recognizes that certain transactions are 

not likely to be sufficient to support a 

presumption that a person is engaging 

in the business of dealing in firearms. 

For this reason, the proposed rule also 

includes examples of when a person is 

not presumed to be engaged in the 

business of dealing in firearms. 

Specifically, under this proposed rule, a 

person would not be presumed to be 

engaged in the business requiring a 

license as a dealer when the person 

transfers firearms only as bona fide 


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62002 Federal Register / Vol. 88, No. 173 / Friday, September 8, 2023 / Proposed Rules 

73The Department interprets the term ‘‘bona fide 

gift’’ to mean a firearm given in good faith to 

another person without expecting any item, service, 

or anything of value in return. See Form 4473, at 

4, Instructions to Question 21.a. (Actual Transferee/ 

Buyer) (‘‘A gift is not bona fide if another person 

offered or gave the person . . . money, service(s), 

or item(s) of value to acquire the firearm for him/ 

her, or if the other person is prohibited by law from 

receiving or possessing the firearm.’’); ATF FFL 

Newsletter, June 2021, at 2 (same). 

74While the GCA does not define the term 

‘‘occasional,’’ that term is commonly understood to 

mean ‘‘of irregular occurrence; happening now and 

then, infrequent.’’ Letter for Borderview LLC, from 

Chief, Firearms Industry Programs Branch, ATF 

(Oct. 14, 2015) (citing Collins American English 

Dictionary (2015)) (addressing persons engaged in 

the business of importing firearms). 

75See the discussion at the beginning of Section 

II.D of this preamble. ‘‘Presumptions that a Person 

is ‘Engaged in the Business.’ ’’ 

76Webster’s Online Dictionary defines the term 

‘‘livelihood’’ as ‘‘means of support or subsistence.’’ 

Livelihood, Merriam-Webster.com, https://

www.merriam-webster.com/dictionary/livelihood 

(last visited Aug. 25, 2023). 

77See footnotes 65 and 6666, supra; Abramski, 

573 U.S. at 180 (‘‘[C]onsider what happens in a 

typical straw purchase. A felon or other person who 

cannot buy or own a gun still wants to obtain one. 

(Or, alternatively, a person who could legally buy 

a firearm wants to conceal his purchase, maybe so 

he can use the gun for criminal purposes without 

fear that police officers will later trace it to him.)’’). 

78See footnote 68, supra; Twitty, 72 F.3d at 234 

n.2 (defendant resold firearms with obliterated 

serial numbers, which was ‘‘probably designed in 

part to increase the selling price of the weapons’’); 

United States v. Hannah, No. CRIM.A.05–86, 2005 

WL 1532534, at *3 (E.D. Pa. 2005) (defendant told 

buyers to obliterate the serial numbers on the 

firearms so he would not ‘‘get in trouble’’). 

79The National Firearms Act of 1934, 26 U.S.C. 

7801 et seq., restricts certain firearms that Congress 

determined were particularly dangerous ‘‘gangstertype’’ weapons, to include short-barreled rifles and 

shotguns, machineguns, silencers, and destructive 

devices. NFA provisions still refer to the ‘‘Secretary 

of the Treasury.’’ See generally 26 U.S.C. ch. 53. 

However, the Homeland Security Act of 2002, 

Public Law 107–296, 116 Stat. 2135, transferred the 

functions of ATF from the Department of the 

Treasury to the Department of Justice, under the 

general authority of the Attorney General. 26 U.S.C. 

7801(a)(2); 28 U.S.C. 599A(c)(1). Thus, for ease of 

reference, this final rule refers to the Attorney 

General throughout. 

gifts,73 or occasionally 74 sells firearms 

only to obtain more valuable, desirable, 

or useful firearms for their personal 

collection or hobby, unless their 

conduct also demonstrates a 

predominant intent to earn a profit. 

The rebuttable presumptions set forth 

above are supported by the 

Department’s investigative and 

regulatory enforcement experience,75 as 

well as conduct that the courts have 

found to require a license even before 

the BSCA expanded the definition of 

‘‘engaged in the business.’’ Moreover, 

these presumptions are consistent with 

the case-by-case analytical framework 

long applied by the courts in 

determining whether a person has 

violated 18 U.S.C. 922(a)(1)(A) and 

923(a) by engaging in the business of 

dealing in firearms without a license 

even under the pre-BSCA definition. 

The fundamental purpose of the GCA 

would be severely undermined if 

persons were allowed to repetitively 

purchase and resell firearms to 

predominantly earn a profit without 

conducting background checks, keeping 

records, and otherwise complying with 

the license requirements of the GCA 

simply because the effort needed to 

conduct commerce in general has 

dramatically diminished. The 

Department is therefore providing 

objectively reasonable standards for 

when a person is presumed to be 

‘‘engaged in the business’’ to strike an 

appropriate balance that captures 

persons who should be licensed, 

without limiting or regulating activity 

truly for the purposes of a hobby or 

enhancing a personal collection. 

The first presumption stated above— 

that a person will be presumed to be 

engaged in the business when the 

person sells or offers for sale firearms, 

and also represents to potential buyers 

or otherwise demonstrates a willingness 

and ability to purchase and sell 

additional firearms—reflects that the 

definition of ‘‘engaged in the business’’ 

in 18 U.S.C. 921(a)(21)(C) does not 

require that a firearm actually to be sold 

by a person so long as the person is 

holding themself out as a dealer. This is 

because, under the definition of 

‘‘engaged in the business’’ in 18 U.S.C. 

921(a)(21)(C), the ‘‘repetitive purchase 

and resale of firearms’’ is the means 

through which the person intends to 

engage in the business even if those 

firearms are not actually repetitively 

purchased and resold. 

The second presumption above—that 

a person is engaged in the business 

when spending more money or its 

equivalent on purchases of firearms for 

the purpose of resale than the person’s 

reported taxable gross income during 

the applicable period of time—reflects 

that persons who spend more money or 

its equivalent on purchases of firearms 

for resale than their reported gross 

income are likely to be earning 

livelihood from those sales, which is 

even stronger evidence of an intent to 

profit than merely supplementing one’s 

income.76 Alternatively, the funds the 

person used to purchase the firearms 

may have been derived from criminal 

activities, for example, if they were 

provided by a co-conspirator to 

repetitively purchase and resell the 

firearms without a license or for other 

criminal purposes, or the funds were 

laundered from past illicit firearms 

transactions. Such illicit and repetitive 

firearm purchase and sale activities do 

not require proof of profit to prove the 

requisite intent under 18 U.S.C. 

921(a)(22), which states that proof of 

profit is not required as to a person who 

engages in the regular and repetitive 

purchase and disposition of firearms for 

criminal purposes or terrorism. 

The first presumption underlying the 

third category listed above—that a 

person is engaged in the business when 

repetitively purchasing, reselling, or 

offering to sell firearms through straw or 

sham businesses or individual straw 

purchasers or sellers—reflects that 

persons who willfully engage in the 

business of dealing without a license 

often do so to conceal their transactions 

by setting up straw or sham businesses 

or hiring ‘‘middlemen’’ to conduct 

transactions on their behalf.77 The 

second presumption under that 

category—that a person is engaged in 

the business when repetitively 

purchasing, reselling, or offering to sell 

firearms that cannot lawfully be 

possessed—reflects that such firearms 

are actively sought by criminals and 

earn higher profits for the illicit dealer. 

Such dealers will often buy and sell 

stolen firearms and firearms with 

obliterated serial numbers because such 

firearms are preferred by both sellers 

and buyers to avoid background checks 

and crime gun tracing.78 They 

sometimes sell unregistered National 

Firearms Act (‘‘NFA’’) weapons 79 and 

unlawfully imported firearms because 

those firearms are more difficult to 

obtain, cannot be traced through the 

National Firearms Registration and 

Transfer Record, and may sell for a 

substantial profit. Although these 

presumptions do not directly address an 

individual’s intent to profit, they are 

supported by 18 U.S.C. 921(a)(22), 

which does not require the government 

to prove an intent to profit where a 

person repetitively purchases and 

disposes of firearms for criminal 

purposes. This includes willfully 

engaging in the business of dealing in 

contraband firearms. These 

presumptions are also implicitly 

supported by 18 U.S.C. 923(c), which 

deems any firearm acquired or disposed 

of with the purpose of willfully evading 

the restrictions placed on licensed 

dealers under the GCA to be business 

inventory, not part of a personal 

collection. Indeed, concealing the 

identity of the seller or buyer of a 

firearm, or the identification of the 

firearm, undermines the requirements 

imposed on legitimate dealers to 

conduct background checks on actual 

purchasers (18 U.S.C. 922(t)) and 

maintain transaction records (18 U.S.C. 


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80Further support for this 30-day presumption 

comes from the fact that, while many retailers do 

not allow firearm returns, some retailers and 

manufacturers do allow a 30-day period within 

which a customer who is dissatisfied with a firearm 

purchased for a personal collection or hobby can 

return or exchange the firearm. Dissatisfied 

personal collectors and hobbyists—persons not 

intending to engage in the business—are more 

likely to return new firearms rather than incurring 

the time, effort, and expense to resell them within 

that period of time. See, e.g., Cabela’s Return Policy: 

Here’s How it Actually Works, rather-beshopping.com, https://www.rather-beshopping.com/blog/cabelas-return-policy/ (Jan. 31, 

2023) (‘‘[I]f they sell you a fully functioning gun, 

and you take it to the range, and it will not eject 

a shell or casing or will not perform basic functions, 

THEY TYPICALLY WILL exchange it. . . . Make 

sure you fully test the firearm within 30 days of 

purchase as it will be MUCH more difficult to 

exchange the gun after 30 days.’’); LEARN ABOUT 

THE 30 DAY MONEY BACK GUARANTEE! HOW 

TO RETURN YOUR FIREARM!, Waltherarms.com, 

https://waltherarms.com/guarantee#:∼:

text=Walther%20understands%20

this%20and%20that,

it%20is%20right%20for%20you/(last visited Aug. 

10, 2023); Retail Policies, centertargetsports.com, 

https://centertargetsports.com/retail-range/ (last 

visited Aug. 10, 2023) (‘‘When you purchase any 

gun from Center Target Sports, we guarantee your 

satisfaction. Use your gun for up to 30 days and if 

for any reason you’re not happy with your 

purchase, return it to us within 30 days and receive 

a store credit for the FULL purchase price.’’); 

Warranty & Return Policy, Century Arms (Mar. 6, 

2019), https://www.centuryarms.com/media/ 

wysiwyg/Warranty_and_Return_v02162021.pdf 

(‘‘Customer has 30 days to return surplus firearms, 

ammunition, parts, and accessories for repair/ 

replacement if the firearm does not meet the 

advertised condition.’’); I Love You PEW 30 Day 

Firearm Guarantee, Alphadog Firearms, https://

alphadogfirearms.com/i-love-you-pew/ (last visited 

Aug. 10. 2023) (‘‘Original purchaser has 30 calendar 

days to return any new firearm purchased for store 

credit.’’); Return Exceptions Policy, Big 5 Sporting 

Goods, https://www.big5sportinggoods.com/static/ 

big5/pdfs/Customer-Service-RETURNEXCEPTIONS-POLICY-d.pdf (last visited Aug. 10, 

2023) (‘‘Firearm purchases must be returned to the 

same store at which they were purchased. No 

refunds or exchanges unless returned in the original 

condition within thirty (30) days from the date of 

release.’’). 

81The Department is aware of non-binding dicta 

in United States v. Shumann, 861 F.2d 1234, 1238 

(11th Cir. 1988), in which the court expressed its 

view that had the FOPA definition of ‘‘engaged in 

the business’’ been applicable (which the court 

ruled it was not) it would have absolved the 

petitioner of liability in a forfeiture action if, as he 

claimed, he was merely closing out his gun 

business and liquidating his inventory, saying 

‘‘[w]hile the government presented evidence of 

firearms sales by Schumann to undercover BATF 

agents . . . there was no proof of firearms 

purchases, much less a proven pattern of ‘repetitive 

purchase and resale.’ ’’ However, none of the 

amendments to the GCA made by FOPA defined the 

terms ‘‘collection’’ or ‘‘personal collection.’’ The 

fact remains that the firearms to be liquidated were 

repetitively purchased for resale by the same person 

while licensed. And whether a person is ‘‘engaged 

in the business’’ under post-BSCA section 

921(a)(21)(C) is not dependent on the license status 

of the person so engaged. 

82Even if one year has passed from the date of 

transfer, business inventory transferred to a 

personal collection of a former licensee (or 

responsible person acting on behalf of that licensee) 

prior to termination of the license cannot be treated 

as part of a personal collection if the licensee 

received or transferred those firearms with the 

intent to willfully evade the restrictions placed 

upon licensees by the GCA (e.g., willful violations 

as cited in a notice of license revocation or denial 

of renewal). This is because, under section 923(c), 

any firearm acquired or disposed of with intent to 

willfully evade the restrictions placed upon 

licensees by the GCA is automatically business 

inventory. Therefore, because the firearms are 

statutorily deemed to be business inventory under 

either of these circumstances, a former licensee (or 

responsible person acting on behalf of such 

licensee) who sells such firearms is presumed to be 

engaged in the business, requiring a license. 

83An example of an administrative proceeding 

where rebuttable evidence might be introduced 

would be where ATF denied a firearms license 

application, pursuant to 18 U.S.C. 923(d)(1)(C) and 

(f)(2), on the basis that the applicant was presumed 

under this rulemaking to have willfully engaged in 

the business of dealing in firearms without a 

license. An example of a civil case would be an 

asset forfeiture proceeding, pursuant to 18 U.S.C. 

924(d)(1), on the basis that the seized firearms were 

intended to be involved in willful conduct 

presumed to be engaging the business without a 

license under this rulemaking. 

84See, e.g., Clark v. Scouffas, No. 99–C–4863, 

2000 WL 91411 (N.D. Ill. 2000) (license applicant 

was not a ‘‘dealer’’ who was ‘‘engaged in the 

business’’ as defined under section 921(a)(21)(C) 

where he only sold a total of three .38 Special 

pistols—two to himself, and one to his wife, 

without any intent to profit). 

923(g)(1)–(2)) through which firearms 

involved in crime can be traced. 

The first presumption under the 

fourth category listed above—repetitive 

sales or offers for sale of firearms within 

30 days from purchase—reflect that 

firearms for a personal collection are not 

likely to be repetitively sold within such 

a short period of time from purchase.80

Likewise, under the second and third 

presumptions under this category, 

persons who repetitively sell firearms in 

new condition or in like-new condition 

in their original packaging, or firearms 

of the same kind and type, are not likely 

to be selling such firearms from a 

personal collection. Individuals who are 

bona fide collectors are less likely to 

amass firearms of the same kind and 

type than amass older, unique, or less 

common firearms that hold special 

interest. In contrast, persons engaged in 

the business can earn the greatest profit 

by selling firearms in the best (i.e., in a 

new) condition, or by selling the 

particular makes and models of firearms 

(i.e., of the same kind and type) that 

their customers want the most and 

would generate the greatest profit. 

The presumption under the fifth 

category listed above—that a former 

licensee, or responsible person acting on 

behalf of such former licensee, is 

engaged in the business when they sell 

or offer for sale firearms that were in the 

business inventory upon license 

termination—recognizes the fact that the 

licensee likely intended to 

predominantly earn a profit from the 

repetitive purchase and resale of those 

firearms, not to acquire the firearms as 

a ‘‘personal collection.’’ Consistent with 

the GCA’s plain language under section 

921(a)(21)(C), this presumption 

recognizes that former licensees who 

thereafter intend to predominantly earn 

a profit from selling firearms that they 

had previously purchased for resale can 

still be considered to be ‘‘engaging in 

the business’’ after termination of their 

license. The GCA does not provide 

exceptions to the definition of ‘‘engaged 

in the business’’ based on one’s prior 

license status, even if the firearms were 

purchased while the person had that 

license.81

The final presumption above—that 

the personal inventory of a former 

licensee (or responsible person acting 

on behalf of the former licensee) 

remains business inventory until one 

year has passed from license 

termination or transfer to their personal 

collection—is consistent with 18 U.S.C. 

923(c) of the GCA, which deems 

firearms transferred from a licensee’s 

business inventory to their personal 

collection as business inventory until 

one year after the transfer.82

The Department notes that these 

presumptions may be rebutted in an 

administrative or civil proceeding with 

reliable evidence demonstrating that a 

person is not ‘‘engaged in the business’’ 

of dealing in firearms.83 If, for example, 

where there is reliable evidence that a 

few collectible firearms were purchased 

from a licensed dealer where ‘‘all sales 

are final’’ and resold back to the 

licensee within 30 days because the 

purchaser was not satisfied, the 

presumption that the unlicensed reseller 

is engaged in the business may be 

rebutted. Similarly, the presumption 

may be rebutted based on evidence that 

a collector occasionally sells one 

specific kind and type of curio or relic 

firearm to buy another one of the same 

kind and type that is in better condition 

to ‘‘trade-up’’ or enhance the seller’s 

personal collection. Another example in 

which evidence may rebut the 

presumption would be the occasional 

sale, loan, or trade of an almost-new 

firearm in its original packaging to an 

immediate family member, such as for 

their use in hunting, without the intent 

to earn a profit or to circumvent the 

requirements placed on licensees.84

E. Definition of ‘‘Personal Collection,’’ 

‘‘Personal Collection of Firearms,’’ and 

‘‘Personal Firearms Collection’’ 

The statutory definition of ‘‘engaged 

in the business’’ excludes ‘‘a person 

who makes occasional sales, exchanges, 

or purchases of firearms for the 

enhancement of a personal collection or 


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85See Webster’s Third New International 

Dictionary 444, 1075, 1686 (1971) (defining the 

term ‘‘personal’’ to include ‘‘of or relating to a 

particular person,’’ ‘‘collection’’ to include ‘‘an 

assembly of objects or specimens for the purposes 

of education, research, or interest’’ and ‘‘hobby’’ as 

‘‘a specialized pursuit . . . that is outside one’s 

regular occupation and that one finds particularly 

interesting and enjoys doing’’); Webster’s Online 

Dictionary (2023) (defining the term ‘‘personal’’ to 

include ‘‘of, relating to, or affecting a particular 

person,’’ ‘‘collection’’ to include ‘‘an accumulation 

of objects gathered for study, comparison, or 

exhibition or as a hobby’’, and ‘‘hobby’’ as a 

‘‘pursuit outside one’s regular occupation engaged 

in especially for relaxation’’); see also United States 

v. Idarecis, 164 F.3d 620 (2d Cir. 1998) (Table) 

(‘‘There is no case authority to suggest that there is 

a distinction between the definition of a collector 

and of a [personal] collection in the statute.’’). 

86The GCA, 18 U.S.C. 923(c), and implementing 

regulations, also require that all firearms disposed 

of from a licensee’s personal collection, including 

firearms acquired before the licensee became 

licensed, that are held for at least one year and that 

are sold or otherwise disposed of, must be recorded 

as a disposition in a personal bound book. See 18 

U.S.C. 923(c); 27 CFR 478.125a(a)(4). 

87See ATF Q&A, May a licensee create a personal 

collection to avoid the recordkeeping and NICS 

background check requirements of the GCA?, 

https://www.atf.gov/firearms/qa/may-licenseecreate-personal-collection-avoid-recordkeepingand-nics-background-check (July 15, 2020). 

88See ATF Q&A, Does a licensee have to record 

firearms acquired prior to obtaining the license in 

their acquisition and disposition record?, https://

www.atf.gov/firearms/qa/does-licensee-have-recordfirearms-acquired-prior-obtaining-license-theiracquisition (July 15, 2020); ATF Federal Firearms 

Regulations Reference Guide, ATF P 5300.4, Q&A 

(F2) at 201 (2014) (‘‘All firearms acquired after 

obtaining a firearms license must be recorded as an 

acquisition in the acquisition and disposition 

record as business inventory.’’); ATF FFL 

Newsletter, Feb. 2011, at 7 (‘‘There may be 

occasions where a firearms dealer utilizes his 

license to acquire firearms for his personal 

collection. Such firearms must be entered in his 

permanent acquisition records and subsequently be 

recorded as a disposition to himself in his private 

capacity.’’); ATF FFL Newsletter, Mar. 2006, at 7 

(‘‘[E]ven if a dealer acquires a firearm from a 

licensee by completing an ATF Form 4473, the 

firearm must be entered in the transferee dealer’s 

records as an acquisition.’’). 

89See ATF Q&A, May a licensee store personal 

firearms at the business premises?, https://

www.atf.gov/firearms/qa/may-licensee-storepersonal-firearms-business-premises (July 15, 

2020); ATF FFL Newsletter, Feb. 2011, at 7; ATF 

FFL Newsletter, Mar. 2006, at 6; ATF Industry 

Circular 72–30, Identification of Personal Firearms 

on Licensed Premises Not Offered for Sale (Oct. 10, 

1972). 

90See ATF Q&A, May a licensee maintain a 

personal collection of firearms? How can they do 

so?, https://www.atf.gov/firearms/qa/may-licenseemaintain-personal-collection-firearms-how-canthey-do-so (July 15, 2020). 

91The existing regulations, 27 CFR 478.125(e) 

and 478.125a, which require licensees to record the 

purchase of all firearms in their business bound 

books, record the transfer of firearms to their 

personal collection, and demonstrate that personal 

firearms obtained before licensing have been held 

at least one year prior to their disposition as 

personal firearms were upheld by the Fourth Circuit 

in National Rifle Ass’n v. Brady, 914 F.2d 475, 482– 

83 (4th Cir. 1990) (‘‘The regulations ensure that 

firearms kept in the personal collection are bona 

fide personal firearms, and they minimize the 

opportunity for licensees to evade the statute’s 

recordkeeping requirements for business firearms 

by simply designating those firearms ‘personal 

firearms’ immediately prior to their 

disposition. . . . In addition, the record-keeping 

requirements contained in the regulations provide 

a means for the [Attorney General] to verify that 

personal firearms were actually held for a year by 

a licensee prior to sale. Thus, we think the 

regulations at issue here are both ‘rational and 

consistent with the statute.’ ’’). See also United 

States v. Twelve Firearms, 16 F. Supp. 2d 738, 742 

n.4 (S.D. Tex. 1998) (‘‘[T]he United States appears 

to be correct that Claimant was required to keep 

records of the firearms no matter whether they were 

part of his business inventory, under § 923(g)(1)(A), 

or whether they were his own personal property, 

under § 923(c).).’’ 

92See 18 U.S.C. 841(s); Application for Federal 

Firearms License, ATF Form 7, Instructions at 6 

(5300.12); Gilbert v. ATF, 306 F. Supp. 3d 776, 781 

(D. Md. 2018); Gossard v. Fronczak, 206 F. Supp. 

3d 1053, 1065 (D. Md. 2016), aff’d, 701 F. App’x 

for a hobby, or who sells all or part of 

his personal collection of firearms.’’ 18 

U.S.C. 921(a)(21)(C). To clarify this 

definitional exclusion, this proposed 

rule would: (1) add a single definition 

for the terms ‘‘personal collection,’’ 

‘‘personal collection of firearms,’’ and 

‘‘personal firearms collection’’; (2) 

explain how those terms apply to 

licensees; and (3) make clear that 

licensees must follow the verification 

and recordkeeping procedures in 27 

CFR 478.94 and subpart H, rather than 

using ATF Form 4473, when they 

acquire firearms from other licensees, 

including a sole proprietor who 

transfers a firearm to their personal 

collection in accordance with 27 CFR 

478.125a. 

Specifically, this rule proposes to 

define ‘‘personal collection,’’ ‘‘personal 

collection of firearms,’’ and ‘‘personal 

firearms collection’’ as ‘‘personal 

firearms that a person accumulates for 

study, comparison, exhibition, or for a 

hobby (e.g., noncommercial, 

recreational activities for personal 

enjoyment such as hunting, or skeet, 

target, or competition shooting).’’ This 

reflects a common definition of the 

terms ‘‘collection’’ and ‘‘hobby.’’ 85 The 

phrase ‘‘or for a hobby’’ was adopted 

from 18 U.S.C. 921(a)(21)(C), which 

excludes from the definition of 

‘‘engaged in the business’’ firearms 

acquired ‘‘for’’ a hobby. Also expressly 

excluded from the definition of 

‘‘personal collection’’ is ‘‘any firearm 

purchased for resale or made with the 

predominant intent to earn a profit’’ 

because of their inherently commercial 

nature. 18 U.S.C. 921(a)(21)(C). 

Under the GCA, 18 U.S.C. 923(c), and 

implementing regulations, 27 CFR 

478.125(e) and 478.125a, a licensee who 

acquires firearms for a personal 

collection is subject to certain 

additional requirements before the 

firearms can become part of such a 

‘‘personal collection.’’ 86 Accordingly, 

the proposed rule further explains how 

that term would apply to firearms 

acquired by a licensee (i.e., a person 

engaged in the business as a licensed 

manufacturer, licensed importer, or 

licensed dealer under the GCA), by 

defining ‘‘personal collection,’’ 

‘‘personal collection of firearms,’’ or 

‘‘personal firearms collection,’’ when 

applied to licensees, to include only 

firearms that were: (1) acquired or 

transferred without the intent to 

willfully evade the restrictions placed 

upon licensees by chapter 44, title 18, 

United States Code; 87 (2) recorded by 

the licensee as an acquisition in the 

licensee’s acquisition and disposition 

record in accordance with 27 CFR 

478.122(a), 478.123(a), or 478.125(e) 

(unless acquired prior to licensure and 

not intended for sale); 88 (3) recorded as 

a disposition from the licensee’s 

business inventory to the person’s 

personal collection in accordance with 

27 CFR 478.122(a), 478.123(a), or 

478.125(e); (4) stored separately from, 

and not commingled with the business 

inventory, and appropriately identified 

as ‘‘not for sale’’ (e.g., by attaching a 

tag), if on the business premises; 89 and 

(5) maintained in such personal 

collection (whether on or off the 

business premises) for at least one year 

from the date the firearm was so 

transferred, in accordance with 18 

U.S.C. 923(c) and 27 CFR 478.125a.90

These proposed parameters to define the 

term ‘‘personal collection’’ as applied to 

licensees reflect the statutory and 

regulatory requirements for personal 

collections in 18 U.S.C. 923(c) and 27 

CFR 478.122(a), 478.123(a), 478.125(e), 

and 478.125a.91 To implement these 

changes, the rule also would make 

conforming changes by adding 

references in 27 CFR 478.125a to the 

provisions that relate to the acquisition 

and disposition recordkeeping 

requirements for importers and 

manufacturers. 

F. Definition of ‘‘Responsible Person’’ 

To accompany these changes, this 

rule also proposes to add a regulatory 

definition of the term ‘‘responsible 

person’’ in 27 CFR 478.11, to mean 

‘‘[a]ny individual possessing, directly or 

indirectly, the power to direct or cause 

the direction of the management, 

policies, and business practices of a 

corporation, partnership, or association, 

insofar as they pertain to firearms.’’ This 

definition comes from 18 U.S.C. 

923(d)(1)(B), and has long been reflected 

on the application for license (Form 7) 

and other ATF publications since 

enactment of a similar definition in the 

Safe Explosives Act in 2002.92 As 


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266 (4th Cir. 2017); ATF FFL Newsletter, Sept. 

2011, at 6; ATF Letter to Dunham’s Sports (May 30, 

2003). 

93See also Valdes, 681 F. App’x at 877 (the 

government does not need to show that the 

defendant ‘‘necessarily made a profit from dealing’’) 

(citing United States v. Wilmoth, 636 F.2d 123, 125 

(5th Cir. 1981)); King, 735 F.3d at 1107 n.8 (Section 

922(a)(1)(A) does not require an actual sale of 

firearms); Allah, 130 F.3d at 43–44 (upholding jury 

instruction that selling firearms need not ‘‘be a 

significant source of income’’); United States v. 

Mastro, 570 F.Supp. 1388 (E.D. Pa. 1983) (the 

government need not show that defendant made or 

expected to make a profit) (citing cases); United 

States v. Shirling, 572 F.2d 532, 534 (5th Cir. 1978) 

(‘‘The statute is not aimed narrowly at those who 

profit from the sale of firearms, but rather broadly 

at those who hold themselves out as a source of 

firearms.’’). 

94See, e.g., United States v. Caldwell, 790 F. 

App’x 797, 799 (7th Cir. 2019) (defendant placed 

192 advertisements on a website devoted to gun 

sales); Valdes, 681 F. App’x at 878 (defendant 

handed out business card); United States v. Pegg, 

542 F. App’x 328 (5th Cir. 2013) (defendant 

sometimes advertised firearms for sale in the local 

newspaper); United States v. Crudgington, 469 F. 

App’x 823, 824 (11th Cir. 2012) (defendant 

advertised firearms for sale in local papers, and 

tagged them with prices); United States v. Dettra, 

238 F.3d 424, at *2 (6th Cir. 2000) (Table) (‘‘Dettra’s 

use of printed business cards and his acceptance of 

credit payment provide further reason to infer that 

he was conducting his firearms activity as a 

profitable trade or business, and not merely as a 

hobby.’’); United States v. Norman, No. 4– 

10CR00059–JLH, 2011 WL 2678821, at *3 (E.D. Ark. 

2011) (defendant placed advertisements in local 

newspaper and on a website). 

95See, e.g., United States v. Wilkening, 485 F.2d 

234, 235 (8th Cir. 1973) (defendant set up a glass 

display case and displayed for sale numerous 

ordinary long guns and handguns that were not 

curios or relics); United States v. Jackson, 352 F. 

Supp. 672, 676 (S.D. Ohio 1972), aff’d, 480 F.2d 927 

(6th Cir. 1973) (defendant set up glass display case, 

displaying numerous long guns and handguns for 

sale which were not curios or relics); Press Release 

USAO, Asheville Man Sentenced For Dealing 

Firearms Without A License, (Jan. 20, 2017), https:// 

www.justice.gov/usao-wdnc/pr/asheville-mansentenced-dealing-firearms-without-license-0 

(defendant sold firearms without a license from his 

military surplus store). 

96See, e.g., United States v. White, 175 F. App’x 

941, 942 (9th Cir. 2006) (‘‘Appellant also created a 

list of all the firearms he remembers selling and the 

person to whom he sold the firearm.’’); Dettra, 238 

F.3d 424, at *2 (‘‘Dettra carefully recorded the cost 

of each firearm he acquired, enabling him to later 

determine the amount needed to sell the item in a 

profitable manner.’’); United States v. Angelini, 607 

F.2d 1305, 1307 (9th Cir. 1979) (defendant kept 

sales slips or invoices). 

97See, e.g., King, 735 F.3d at 1106–07 (defendant 

incorporated and funded firearms business ‘‘on 

behalf’’ of friend whose American citizenship 

enabled business to obtain Federal firearms license. 

He then misappropriated company’s business 

account, using falsified documentation to set up 

credit accounts); Dettra, 238 F.3d 424, at *2 

(defendant accepted credit card payments). 

98Numerous jurisdictions require all persons 

with alarms or security systems designed to seek a 

police response to be registered with or obtain a 

permit from local police and pay the requisite fee. 

See, e.g., Albemarle County (Virginia) Code § 12– 

102(A); Arlington County (Virginia) Code § 33–10; 

Cincinnati (Ohio) City Ord. Ch. 807–1–A4 (2); City 

of Coronado (California) Code § 40.42.050)(A); 

Irvine (California) Code § 4–19–105; Kansas City 

(Missouri) Code § 50–333(a); Larimer County 

(Colorado) Ord. § 3(A); Lincoln (Nebraska) Mun. 

Code § 5.56.030(a); Los Angeles (California) Mun. 

Code § 103.206(b); Loudoun County (Virginia) Code 

§ 655.03(a); Mobile (Alabama) Code § 39–62(g)(1); 

Montgomery County (Maryland) Code § 3A–3; 

Prince William County (Virginia) Code § 2.5.25(a); 

Rio Rancho (New Mexico) Mun. Code § 97.04(A); 

Scottsdale (Arizona) Code § 3–10(a); Tempe 

(Arizona) Code § 22–76; Washington County 

(Oregon) Code § 8.12.040; West Palm Beach 

(Florida) Code § 46–32(a); Wilmington (Delaware) 

Code § 10–38(c); Woburn (Massachusetts) Code 

Title 11 § 8–18. Due to the value of the inventory 

and assets they protect, for profit businesses are 

more likely to maintain, register, and pay for these 

types of alarms rather than individuals seeking to 

protect personal property. See generally What is a 

Central Station Alarm Monitoring System?, 

agmonitoring.com (July 10, 2019), https://

www.agmonitoring.com/blog/industry-news/whatis-a-central-station-monitoring-system; Central 

Station Service Certification, UL.com, https://

www.ul.com/resources/central-station-servicecertification#:∼:

text=Station%20Service%20Certification-,

Overview,and%20initiates%20

the%20appropriate%20response. 99See, e.g., United States v. De La Paz-Rentas, 

613 F.3d 18, 22–23 (1st Cir. 2010) (defendant hired 

Continued 

examples, this definition would not 

include store clerks or cashiers who 

cannot make management or policy 

decisions with respect to firearms (e.g., 

what company or store-wide policies 

and controls to adopt, which firearms 

are bought and sold by the business, and 

who is hired to buy and sell the 

firearms), even if their clerical duties 

include buying or selling firearms for 

the business. 

G. Definition of ‘‘Predominantly Earn a 

Profit’’ 

The BSCA broadened the definition of 

‘‘engaged in the business’’ as a dealer by 

substituting ‘‘to predominantly earn a 

profit’’ for ‘‘with the principal objective 

of livelihood or profit.’’ 18 U.S.C. 

921(a)(21)(C). It also defined the term 

‘‘to predominantly earn a profit.’’ 18 

U.S.C. 921(a)(22). This rule is proposing 

to incorporate those statutory changes, 

as discussed above. 

This rule proposes to further 

implement these amendments by: (1) 

clarifying that the ‘‘proof of profit’’ 

proviso also excludes ‘‘the intent to 

profit,’’ thus making clear that it is not 

necessary for the Federal Government to 

prove that a person intended to make a 

profit if the person was dealing in 

firearms for criminal purposes or 

terrorism; (2) clarifying that a person 

may have the predominant intent to 

profit even if the person does not 

actually obtain pecuniary gain from 

selling or disposing of firearms; and (3) 

establishing a presumption in civil and 

administrative proceedings that certain 

conduct demonstrates the requisite 

intent to ‘‘predominantly earn a profit,’’ 

absent reliable evidence to the contrary. 

These proposed regulatory 

amendments are consistent with the 

plain language of the GCA. Neither the 

pre-BSCA definition of ‘‘with the 

principal objective of livelihood and 

profit’’ nor the post-BSCA definition of 

‘‘to predominantly earn a profit’’ require 

the government to prove that the 

defendant actually profited from 

firearms transactions. See 18 U.S.C. 

921(a)(22), (a)(23) (referring to ‘‘the 

intent underlying the sale or disposition 

of firearms’’); Focia, 869 F.3d at 1282 

(‘‘The exact percentage of income 

obtained through the sales is not the 

test; rather, . . . the statute focuses on 

the defendant’s motivation in engaging 

in the sales.’’).93

ATF’s experience also establishes that 

certain conduct related to the sale or 

disposition of firearms presumptively 

demonstrates that primary motivation. 

In addition to conducting criminal 

investigations of unlicensed firearms 

businesses under 18 U.S.C. 922(a)(1)(A), 

ATF has for many decades observed 

through qualification and compliance 

inspections how dealers who sell or 

dispose of firearms demonstrate a 

predominant intent to obtain pecuniary 

gain, as opposed to other intents, such 

as improving or liquidating a personal 

collection. 

Based on this decades-long body of 

experience, the proposed rule provides 

that, absent reliable evidence to the 

contrary, a person is presumed to have 

the intent to ‘‘predominantly earn a 

profit’’ when the person: (1) advertises, 

markets, or otherwise promotes a 

firearms business (e.g., advertises or 

posts firearms for sale, including on any 

website, establishes a website for selling 

or offering for sale their firearms, makes 

available business cards, or tags firearms 

with sales prices), regardless of whether 

the person incurs expenses or only 

promotes the business informally; 94 (2) 

purchases, rents, or otherwise secures or 

sets aside permanent or temporary 

physical space to display or store 

firearms they offer for sale, including 

part or all of a business premises, table 

or space at a gun show, or display 

case; 95 (3) makes or maintains records, 

in any form, to document, track, or 

calculate profits and losses from 

firearms purchases and sales; 96 (4) 

purchases or otherwise secures 

merchant services as a business (e.g., 

credit card transaction services, digital 

wallet for business) through which the 

person makes or offers to make 

payments for firearms transactions; 97

(5) formally or informally purchases, 

hires, or otherwise secures business 

security services (e.g., a central stationmonitored security system registered to 

a business,98 or guards for security 99) to 


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as bodyguard for protection in an unlawful firearms 

transaction). 

100See, e.g., United States v. Gray, 470 F. App’x 

at 469 (defendant sold firearms through his sporting 

goods store, advertised his business using signs and 

flyers, and displayed guns for sale, some with tags). 

101See, e.g., United States v. Kish, 424 F. App’x 

398, 404 (6th Cir. 2011) (defendant could only have 

200 firearms on display because of insurance policy 

limitations). 

102The problem of licensees liquidating a former 

licensee’s business firearms as firearms from their 

‘‘personal collections’’ without background checks 

or recordkeeping has been referred to by some 

advocacy groups and members of Congress as the 

‘‘fire-sale loophole.’’ See Dan McCue, Booker Bill 

Takes Aim at Gun Fire Sale Loophole, The Well 

News (Sept. 9, 2022), https://

www.thewellnews.com/guns/booker-bill-takes-aimat-gun-fire-sale-loophole/; Shira Toeplitz, 

Ackerman proposes gun-control bill to close 

‘firesale loophole’, Politico (Jan. 12, 2011), https:// 

www.politico.com/blogs/on-congress/2011/01/ 

ackerman-proposes-gun-control-bill-to-closefiresale-loophole-032289; Annie Linskey, Closed 

store is a source of guns, The Baltimore Sun (Apr. 

15, 2008), https://www.baltimoresun.com/news/bsxpm-2008-04-15-0804150118-story.html (after 

revocation of license, a dealer transferred around 

700 guns to his ‘‘personal collection’’ and 

continued to sell them without recordkeeping). 

103See, e.g., Dettra, 238 F.3d 424, at *2 

(defendant continued to deal in firearms after 

license revocation); Press Release OPA, Gunsmoke 

Gun Shop Owner and Former Discovery Channel 

Star Indicted and Arrested for Conspiracy, Dealing 

in Firearms without a License and Tax Related 

Charges (Feb. 11, 2016), https://www.justice.gov/ 

opa/pr/gunsmoke-gun-shop-owner-and-formerdiscovery-channel-star-indicted-and-arrestedconspiracy (defendant continued to deal in firearms 

at a different address after he surrendered his FFL 

due to his violations of the Federal firearms laws 

and regulations); Kish, 424 F. App’x at 405 

(defendant continued to sell firearms after 

revocation of license); Gilbert v. Bangs, 813 F. 

Supp. 2d 669, 672 (D. Md. 2011), aff’d 481 F. App’x 

52 (4th Cir. 2012) (license denied to applicant who 

willfully engaged in the business after license 

revocation); ATF Letter to AUSA (Mar. 13, 1998) 

(advising that seized firearms offered for sale were 

not deemed to be part of a ‘‘personal collection’’ 

after surrender of license). 

protect business assets or transactions 

that include firearms; (6) formally or 

informally establishes a business entity, 

trade name, or online business account, 

including an account using a business 

name on a social media or other 

website, through which the person 

makes or offers to make firearms 

transactions; 100 (7) secures or applies 

for a State or local business license to 

purchase for resale or to sell 

merchandise that includes firearms; or 

(8) purchases a business insurance 

policy, including any riders that cover 

firearms inventory.101 Any of these 

nonexclusive, firearms-business-related 

activities justifies a rebuttable 

presumption that the person has the 

requisite intent to predominantly earn a 

profit from reselling or disposing of 

firearms. 

This set of rebuttable presumptions 

that establishes an intent ‘‘to 

predominantly earn a profit’’—one of 

the elements of the definition of 

‘‘engaged in the business’’—is separate 

from the set of presumptions that 

establishes a person meets the definition 

of ‘‘engaged in the business.’’ This 

second set of presumptions that 

addresses only intent ‘‘to predominantly 

earn a profit’’ may be used to 

independently establish the requisite 

intent to profit in a particular 

proceeding. As with the ‘‘engaged in the 

business’’ presumptions, the activities 

set forth in these intent presumptions 

are not exhaustive of the conduct that 

may show that, or be considered in 

determining whether, a person actually 

has the requisite intent ‘‘to 

predominantly earn a profit.’’ There are 

many other fact patterns that do not fall 

within the specific conduct that 

presumptively requires a license under 

this proposed rule (e.g., firearms that 

were repetitively resold after 30 days 

from purchase, or that were not in a 

like-new condition), but that reveal one 

or more preparatory steps that 

presumptively demonstrate a 

predominant intent to earn a profit from 

firearms transactions. Again, none of 

these presumptions apply to criminal 

cases, but could be useful to courts in 

criminal cases, for example, to inform 

appropriate jury instructions regarding 

permissible inferences. These 

presumptions are supported by the 

Department’s investigative and 

regulatory efforts and experience as well 

as conduct that the courts have relied 

upon in determining whether a person 

was required to be licensed as a dealer 

in firearms even before the BSCA 

expanded the definition. 

H. Disposition of Business Inventory 

After Termination of License 

One public safety issue that ATF has 

encountered over the years relates to 

former licensees who have improperly 

liquidated their business inventory of 

firearms without performing required 

background checks or maintaining 

required records after the license was 

revoked, denied renewal, or otherwise 

terminated (e.g., license expiration or 

surrender of license).102 Sometimes 

former licensees even continue to 

acquire more firearms for resale 

(‘‘restocking’’) after license termination, 

a practice that is clearly inconsistent 

with the concept of ‘‘liquidation.’’ These 

activities, in turn, have resulted in 

numerous firearms being sold by former 

licensees (including those whose 

licenses have been revoked or denied 

due to willful GCA violations) to 

potentially prohibited persons without 

any ability to trace those firearms if later 

used in crime.103

For this reason, the proposed rule also 

would revise the regulation’s sections 

on discontinuing business, 27 CFR 

478.57 and 478.78, to clarify statutory 

requirements regarding firearms that 

remain in the possession of a former 

licensee (or a responsible person of the 

former licensee) at the time the license 

is terminated. Again, firearms that were 

in the business inventory of a former 

licensee at the time the license was 

terminated (i.e., license revocation, 

denial of license renewal, license 

expiration, or surrender of license) and 

that remain in the possession of the 

licensee (or a responsible person acting 

on behalf of the former licensee), are not 

part of a ‘‘personal collection.’’ While 18 

U.S.C. 921(a)(21)(C) allows an 

unlicensed person to ‘‘sell all or part of 

his personal collection’’ without being 

considered ‘‘engaged in the business,’’ 

in this context, these firearms were 

purchased by the former licensee as 

business inventory and were not 

accumulated by that person for study, 

comparison, exhibition, or for a hobby. 

Also, firearms that were transferred by 

a former licensee to a personal 

collection prior to the time the license 

was terminated cannot be considered 

part of a personal collection unless one 

year has passed from the date the 

firearm was transferred into the 

personal collection before the license 

was terminated. This gives effect to 18 

U.S.C. 923(c), which requires that all 

firearms acquired by a licensee be 

maintained as part of a personal 

collection for a period of at least one 

year before they lose their status as 

business firearms. 

Under amended 27 CFR 478.57 

(discontinuance of business) and 27 

CFR 478.78 (operations by licensee after 

notice), as proposed, once a license has 

been terminated (i.e., license revocation, 

denial of license renewal, license 

expiration, or surrender of license), the 

former licensee will have 30 days, or 

such additional period designated by 

the Director for good cause, to either: (1) 

liquidate any remaining business 

inventory by selling or otherwise 

disposing of the firearms to a licensed 

importer, licensed manufacturer, or 

licensed dealer for sale, auction, or 

pawn redemption in accordance with 

this part; or (2) transfer the remaining 

business inventory to a personal 

collection of the former licensee (or a 

responsible person of the former 

licensee), provided the recipient is not 

prohibited by law from receiving or 

possessing firearms. Except for the sale 

of remaining inventory to a licensee 

within the 30-day period (or designated 

additional period), a former licensee (or 

responsible person of such licensee) 


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Federal Register / Vol. 88, No. 173 / Friday, September 8, 2023 / Proposed Rules 62007 

104See also 27 CFR 478.57 (requiring the owner 

of a discontinued or succeeded business to notify 

ATF of such discontinuance or succession within 

30 days), and 478.127 (requiring discontinued 

businesses to turn in records within 30 days). 

105See ATF FFL Newsletter, Mar. 2006, at 7 (‘‘A 

dealer who purchases a firearm from another 

licensee should advise the transferor licensee of his 

or her licensed status so the transferor licensee’s 

records may accurately reflect that this is a 

transaction between licensees. An ATF Form 4473 

should not be completed for such a transaction, 

because this form is used only for a disposition to 

a nonlicensee.’’). 

106See ATF Ruling 2010–1 (permanently 

assigning a firearm to a specific employee for 

personal use is considered a ‘‘transfer’’ that would 

trigger the recordkeeping and NICS background 

check requirements). 

107See ATF Q&A, Does an officer or employee of 

an entity that holds a federal firearms license, such 

as a corporation, have to undergo a NICS check 

when acquiring a firearm for their own personal 

collection?, https://ww.atf.gov/firearms/qa/doesofficer-or-employee-entity-holds-federal-firearmslicense-such-cororation-have (May 22, 2020); 2 ATF 

FFL Newsletter, Sept. 2013, at 4. 

who resells any such inventory, 

including business inventory transferred 

to a personal collection, would be 

subject to the same presumptions in 27 

CFR 478.11 (definition of ‘‘engaged in 

the business’’ as a dealer other than a 

gunsmith or pawnbroker) that apply to 

a person who repetitively purchased 

those firearms for the purpose of resale. 

The 30-day period from license 

termination for a former licensee to 

transfer the firearms to either another 

licensee or to a personal collection is 

derived from the disposition of records 

requirement in the GCA, 18 U.S.C. 

923(g)(4), which is a reasonable period 

for that person to wind down operations 

after discontinuance of business without 

acquiring new firearms.104 That period 

of liquidation may be extended by the 

Director for good cause, such as to allow 

pawn redemptions if required by State, 

local, or Tribal law. However, former 

licensees (or responsible persons of 

such licensees) who choose not to sell 

the remaining business inventory to a 

licensee within the 30-day period (or 

designated additional period), and who 

continue to sell those firearms, are not 

permitted under the GCA to engage in 

the business of dealing in firearms 

without a license. Former licensees (or 

responsible person) who sell business 

inventory after that period (or within 

that period to unlicensed persons), or 

within one year from transfer to a 

personal collection, have no special 

legal exemptions that give them greater 

privileges to conduct business than a 

licensee. 

Moreover, a former licensee is not 

permitted to continue to engage in the 

business of importing, manufacturing, 

or dealing in firearms by importing or 

manufacturing additional firearms for 

purposes of sale or distribution, or 

purchasing additional firearms for resale 

(i.e., ‘‘restocking’’) without a license. 

Therefore, a former licensee (or 

responsible person) is subject to the 

same presumptions in 27 CFR 478.11 

(definition of ‘‘engaged in the business’’ 

as a dealer other than a gunsmith or 

pawnbroker) that apply to persons who 

sell firearms that were repetitively 

purchased with the predominant intent 

to earn a profit and any sales by such 

a person will be closely scrutinized by 

ATF on a case-by-case basis. 

I. Transfer of Firearms Between FFLs 

and Form 4473 

Finally, to ensure the traceability of 

all firearms acquired by licensees from 

other licensees, the proposed rule 

would make clear that licensees cannot 

satisfy their obligations under 18 U.S.C. 

923(g)(1)(A) by completing a Form 4473 

when selling or otherwise disposing of 

firearms to another licensed importer, 

licensed manufacturer, or licensed 

dealer, or a curio or relic to a licensed 

collector, including a sole proprietor 

licensee who transfers the firearm to 

their personal collection in accordance 

with 27 CFR 478.125a.105 Form 4473 

was not intended for use by licensees 

when transferring firearms to other 

licensees or by a sole proprietor 

transferring to their personal collection. 

Pursuant to 18 U.S.C. 926(a)(1) and 27 

CFR 478.94, when a licensee transfers a 

firearm to another licensee, the 

transferor must first verify the 

recipient’s identity and license status by 

examining a certified copy of the 

recipient’s license and recording the 

transfer as a disposition to that licensee 

in the bound book record. In turn, the 

recipient licensee must record the 

receipt as an acquisition in their bound 

book record. See 27 CFR 478, subpart H. 

If a recipient licensee were to complete 

a Form 4473 for the purchase of a 

firearm, but not record that receipt in 

their bound book record asserting it is 

a ‘‘personal firearm,’’ then tracing efforts 

pursuant to the GCA could be hampered 

if the firearm was later used in a crime. 

However, this clarification that FFLs 

may not satisfy their obligations by 

completing a Form 4473 to transfer 

firearms between themselves would not 

include dispositions by a licensed legal 

entity such as a corporation, LLC, or 

partnership, to the personal collection 

of a responsible person of such an 

entity. This is because when an 

individual responsible person does not 

acquire a firearm as an employee on 

behalf of the business entity, it results 

in a change in dominion or control, or 

‘‘transfer,’’ subject to all GCA 

requirements.106 Such an entity, 

including a corporation or partnership, 

must therefore use a Form 4473, NICS 

check, and disposition record entry 

when transferring a firearm to one of its 

individual officers (or partners, in the 

case of a partnership) for their personal 

use.107

III. Statutory and Executive Order 

Review 

A. Executive Orders 12866, 13563, and 

14094 

Executive Order 12866 (‘‘Regulatory 

Planning and Review’’) directs agencies 

to assess the costs and benefits of 

available regulatory alternatives and, if 

regulation is necessary, to select 

regulatory approaches that maximize 

net benefits (including potential 

economic, environmental, public health 

and safety effects, distributive impacts, 

and equity). Executive Order 13563 

(‘‘Improving Regulation and Regulatory 

Review’’) emphasizes the importance of 

quantifying both costs and benefits, of 

reducing costs, of harmonizing rules, 

and of promoting flexibility. Executive 

Order 14094 (‘‘Modernizing Regulatory 

Review’’) amends section 3(f) of 

Executive Order 12866. 

The Office of Management and Budget 

(‘‘OMB’’) has determined that this 

proposed rule is a ‘‘significant 

regulatory action’’ under Executive 

Order 12866, as amended by Executive 

Order 14094, though it is not a section 

3(f)(1) significant action. Accordingly, 

the proposed rule has been reviewed by 

OMB. While portions of this proposed 

rule merely incorporate the BSCA’s 

statutory definitions into ATF’s 

regulations, this rulemaking, if 

finalized, may result in additional 

unlicensed persons becoming FFLs if 

the unlicensed persons intend to 

regularly purchase and resell firearms to 

predominantly earn a profit. 

1. Need for Federal Regulation 

This proposed rule would implement 

the BSCA by incorporating statutory 

definitions into ATF’s regulations and 

clarifying the criteria for determining 

when a person is ‘‘engaged in the 

business’’ requiring a license to deal in 

firearms. The rulemaking is necessary to 

implement a new statutory provision on 

being engaged in the business as a 

wholesale or retail dealer; to clarify 

prior regulatory provisions that relate to 

that topic; and to codify practices and 

policies on that issue. In addition to 

establishing specific, easy-to-follow 

standards regarding when buying and 

selling firearms presumptively crosses 

the threshold into being ‘‘engaged in the 


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62008 Federal Register / Vol. 88, No. 173 / Friday, September 8, 2023 / Proposed Rules 

108 18 U.S.C. 926(a). 

109See www.Armslist.com. 

110Colin Lecher & Sean Campbell, The Craigslist 

of Guns: Inside Armslist, the online ‘gun show that 

never ends’, The Verge (Jan. 16, 2020), https://

www.theverge.com/2020/1/16/21067793/gunsonline-armslist-marketplace-craigslist-sales-buycrime-investigation (‘‘Over the years, [Armslist] has 

become a major destination for firearm buyers and 

sellers.’’); Tasneem Raja, Semi-Automatics Without 

A Background Check Can Be A Click Away, NPR 

(June 17, 2016), https://www.npr.org/sections/ 

alltechconsidered/2016/06/17/482483537/semiautomatic-weapons-without-a-background-checkcan-be-just-a-click-away (‘‘Armslist isn’t the only 

site of its kind, though it is considered to be the 

biggest and most popular.’’). 

111A sample of 379 listings from an estimated 

population of 30,806 listings (viewed between Mar. 

1 and 2, 2023), using a 95 percent confidence level 

and a confidence interval of 5. See Sample Size 

Calculator- Confidence Level, Confidence Interval, 

Sample Size, Population Size, Relevant Population, 

https://www.surveysystem.com/sscalc.htm. 

112 12,270 unlicensed individuals = 30,806 

‘‘private party’’ unlicensed listings on ArmsList/ 

2.51 average listings per user. 

113See footnote 110, supra. 

114Similar web profile and market share lists are 

available at https://www.similarweb.com/website/ 

armslist.com/#overview. 

115The online estimate of 24,540 = at least 25 

percent of national firearms market. So, 100 percent 

of the firearms market would be 4 * 24,540 = 

98,160. 

116Azrael, D., Hepburn, L., Hemenway, D., & 

Miller, M. (2017). The stock and flow of U.S. 

firearms: Results from the 2015 National Firearms 

Survey. The Russell Sage Foundation Journal of the 

Social Sciences, 3(5), pp 38–57 (pp. 39 and 51). 

https://www.jstor.org/stable/10.7758/

rsf.2017.3.5.02?seq=1. 

117U.S. Census, Stella U. Ogunwole, et al., U.S. 

Adult Population Grew Faster Than Nation’s Total 

Population From 2010 to 2020, U.S. Census (Aug. 

12, 2021), https://www.census.gov/library/stories/ 

2021/08/united-states-adult-population-grew-fasterthan-nations-total-population-from-2010-to2020.html. 

118Azrael, D., Hepburn, L., Hemenway, D., & 

Miller, M. (2017). The stock and flow of U.S. 

firearms: Results from the 2015 National Firearms 

Survey. The Russell Sage Foundation Journal of the 

Social Sciences, 3(5), pp 38–57 (pp. 39 and 51). 

https://www.jstor.org/stable/10.7758/

rsf.2017.3.5.02?seq=1. 

119The Russell Sage Foundation Survey did not 

divide those who sold to family or friends on a 

recurring basis from those who made an occasional 

sale, or between those who did so with intent to 

earn a profit and those who did not. As noted 

business,’’ the rule also would recognize 

that individuals are allowed by law to 

occasionally buy and sell firearms for 

the enhancement of a personal 

collection or a legitimate hobby without 

the need to obtain a license. 

2. Population 

This proposed rule implements a 

statutory requirement that affects 

persons who repetitively purchase and 

resell (including bartering) firearms and 

are required to be, but are not currently, 

licensed. As described in the preamble 

of this NPRM, these may be persons 

who purchase, sell, or transfer firearms 

from places other than traditional brickand-mortar stores, such as at a gun show 

or event, flea market, auction house, or 

gun range or club; at one’s home; by 

mail order, or over the internet; through 

the use of other electronic means (e.g., 

an online broker, online auction, text 

messaging service, social media raffle, 

or website); or at any other domestic or 

international public or private 

marketplace or premises. A person may 

be required to have a license to deal in 

firearms regardless of where, or the 

medium through which, they purchase 

or sell (or barter) firearms, including 

locations other than a traditional brick 

and mortar store. 

The GCA prohibits ATF from 

prescribing regulations that establish 

any ‘‘system of registration’’ of firearms, 

firearms owners, or firearms 

transactions or dispositions.108

Furthermore, because those willfully 

engaged in the business of dealing in 

firearms without a license are violating 

Federal law, these individuals often take 

steps to avoid detection by law 

enforcement, making it additionally 

difficult for ATF to precisely estimate 

the population. Therefore, for purposes 

of this analysis, ATF used information 

gleaned from ArmsList, an online broker 

website that facilitates the sales or 

bartering of firearms, as a means of 

estimating a population of unlicensed 

persons selling firearms using online 

resources.109 ATF focused its efforts on 

estimating an affected population using 

ArmsList since that website is 

considered to be the largest source for 

unlicensed persons to sell firearms on 

the internet.110 Out of a total listing of 

30,806 entries in the ‘‘private party’’ 

category (unlicensed users) on 

ArmsList, ATF viewed a sample of 379 

listings, and found that a given seller on 

ArmsList had an average of three 

listings per seller.111 Based on 

approximately 30,806 ‘‘private party’’ 

(unlicensed) sales listings on ArmsList, 

ATF estimates that there are 

approximately 12,270 unlicensed 

persons who sell on that website alone, 

selling an average of three firearms per 

user.112 ATF estimates that ArmsList 

may hold approximately 50 percent of 

the market share among websites that 

unlicensed sellers may frequent. This 

means the 12,270 estimated unlicensed 

persons on ArmsList would be about 

half, and the estimated number of 

unlicensed sellers on all such websites 

would be approximately 24,540 

nationwide. The estimate of ArmsList’s 

market share is based on ATF Firearms 

Industry Programs Branch (‘‘FIPB’’) 

subject matter expert (‘‘SME’’) opinion, 

news reports,113 and public web traffic 

lists.114

To better estimate both online and 

offline sales, ATF assumed, based on 

best professional judgment of FIPB 

SMEs and with limited available 

information, that the national online 

marketplace estimate above may 

represent 25 percent of the total national 

firearms market, which would also 

include in-person, local, or other offline 

transactions like flea markets, Statewide exchanges, or websites within 

each of the 50 States. 

While this would bring the total 

estimated market to approximately 

98,160 unlicensed sellers,115 this figure 

would need to be reduced by the 

estimated subset of this population of 

persons who occasionally sell their 

firearms without needing to obtain a 

license (e.g., as part of their hobby or 

enhancement of their personal 

collection). Also, based on limited 

available information, ATF’s best, very 

conservative assessment from FIPB 

SMEs is that at least 25 percent of the 

estimated total number of unlicensed 

sellers may be considered engaged in 

the business and would subsequently 

need to become an FFL in order to 

continue making their repetitive sales of 

firearms. The actual number may be 

higher, but ATF does not have data to 

support a higher number. Using the 

information gleaned from ArmsList, this 

means that 24,540 is the estimated 

number of unlicensed persons that may 

be considered engaged in the business 

and affected by this proposed rule. 

Because there is no definitive 

information, the actual number of total 

unlicensed sellers may be higher. 

Therefore, ATF also calculated a second 

possible estimate using information 

from a published survey by the Russell 

Sage Foundation regarding a similar, but 

differently sourced estimated 

population of private sellers of 

firearms.116 Based on the 2020 U.S. 

Census, there are 258.3 million adults 

(over 18).117 ATF used the U.S. Census 

as a basis for the population and also 

percentages from ‘‘The Stock and Flow 

of U.S. Firearms: Results from the 2015 

National Firearms Survey,’’ published 

by the Russell Sage Foundation.118 This 

survey showed that 22 percent of the 

U.S. adult population owns at least one 

firearm (56.84 million adults), and of 

this, five percent transferred firearms 

(2.84 million). Of the five percent that 

transferred, 71 percent sold a firearm 

(2.02 million). Of those that sold a 

firearm, 51 percent (1.03 million) sold 

through various mediums (e.g., online, 

pawnshop, gun shop) other than 

through or to a family member or friend 

(which likely would not be affected by 

this rulemaking).119 Of the five percent 


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earlier in the preamble, a person who makes only 

occasional firearms transfers, such as gifts, to 

immediate family (without the intent to earn a 

profit or circumvent requirements placed on 

licensees), generally does not qualify as a dealer 

engaged in the business. Although it is possible that 

some portion of the Russell Sage set of family and 

friend transferors might qualify as dealers if they 

engage in actions such as recurring transfers, 

transfers to others in addition to immediate family, 

or transfers with intent to profit, ATF was not in 

a position to make that determination from the 

Survey. Therefore, ATF erred on the side of 

assuming, for the purpose of this analysis, that the 

Russell Sage Foundation data on transfers to family 

and friends would likely not be affected by this 

rulemaking, since, in general, such transfers are less 

likely to be recurring or for profit. 

120 Department of Transportation, The Value of 

Travel Time Savings: Departmental Guidance for 

Conducting Economic Evaluations Revision 2 (2016 

Update), https://www.transportation.gov/sites/ 

dot.gov/files/docs/2016%20

Revised%20Value%20of%20Travel%20Time%20

Guidance.pdf. 

121U.S. Census, Income and Poverty in the 

United States: 2020, https://www.census.gov/ 

library/publications/2021/demo/p60-273.html. 

that transferred a firearm, ten percent 

traded or bartered (284,178). Thus, 

taking the 51 percent that sold (1.03 

million) and the ten percent (284,178) 

that transferred by trading or bartering, 

the total number of unlicensed persons 

that may transfer a firearm, based on 

this survey, in any given timeframe is 

1.31 million. Of the 1.31 million 

unlicensed persons selling, trading, or 

bartering firearms, ATF continues to 

assume, based on the best, very 

conservative assessment from SME 

experts, that 25 percent (or 328,296 

unlicensed individuals) may be engaged 

in the business with an intent to profit. 

In sum, based on these limited sources 

of information, ATF estimates either 

24,540 or 328,296 could represent an 

estimate of unlicensed persons that may 

be engaged in the business and affected 

by this proposed rule. 

ATF requests public comments on 

what sources ATF should look to for 

accurate estimates of the percentage of 

the population that would need to 

obtain a license because they are 

‘‘engaged in the business’’ of dealing in 

firearms, compared to those who make 

occasional sales of firearms (e.g., 

enhancement of a personal collection or 

for a hobby) and would not need to 

obtain a license. 

3. Costs for Unlicensed Persons 

Becoming FFLs 

As stated earlier, consistent with the 

statutory changes in the BSCA, this 

proposed rule implements a new 

statutory provision that requires 

individuals to become licensed dealers 

if they intend predominantly to earn a 

profit through the repetitive purchase 

and resale of firearms (which includes 

benefits from bartering). Costs to 

become an FFL include an initial 

application on a Form 7, along with 

fingerprints and photographs, and a 

qualification inspection. This 

application would require fingerprints 

and photographs, not only from the 

person applying, but also, in the case of 

a corporation, partnership, or 

association, from any other individual 

who is a responsible person of that 

business entity. 

For purposes of this analysis, ATF 

assumes that most, if not all unlicensed 

persons may be operating alone as sole 

proprietors because this new 

requirement would likely affect persons 

who have other sources of income and 

do not currently view licensing as a 

requirement. Besides the initial cost of 

becoming an FFL, there are recurring 

costs to maintain a license. These costs 

include renewing the license on a 

Federal Firearms License Renewal 

Application, ATF Form 8 (5310.11) 

(‘‘Form 8’’) every three years, 

maintaining acquisition and disposition 

(‘‘A&D’’) records, maintaining ATF 

Forms 4473, and undergoing periodic 

compliance inspections. 

The proposed rule, which further 

implements the statutory changes in the 

BSCA, would affect unlicensed persons 

who purchase and resell firearms with 

the intent to predominantly earn a profit 

(as defined), not those who are already 

licensed. Because affected unlicensed 

persons would now need a license to 

continue to purchase and resell 

firearms, ATF estimates that the 

opportunity costs of acquiring a license 

would be based on their free time or 

‘‘leisure time.’’ Based on the Department 

of Transportation’s (‘‘DOT’s’’) guidance 

on the costs for leisure time, ATF 

attempted to update the leisure wage 

below based on the methodology 

outlined in the guidance.120 The DOT 

uses median household income as the 

base for income from the U.S. Census. 

ATF used the latest median income of 

a household from the U.S. Census, 

published September 2021.121 Table 1 

outlines the leisure wage. 

TABLE 1—LEISURE WAGE RATE FOR

INDIVIDUALS

Inputs for leisure wage rate Numerical 

inputs 

Median Household Income ...... $67,521. 

DOT Travel Time ...................... 2080. 

DOT’s Value of Travel Time 

Savings.

50 percent. 

Leisure Wage Rate .................. $16.23. 

Rounded Leisure Wage Rate ... $16. 

Based on DOT’s methodology for 

leisure time, ATF attributes a rounded 

value of $16 per hour for time spent 

buying and reselling (including 

bartering) firearms on a repetitive basis. 

The same hourly cost applies to persons 

who would now become licensed as a 

firearms dealer who would not have 

become licensed without the 

clarifications provided by this proposed 

rule. This could include persons who 

begin selling firearms after the final 

rule’s effective date and understand 

from the rule that they qualify as 

firearms dealers (as defined by the 

statute and regulations), or persons who 

were previously selling without a 

license and now realize they must 

acquire one to continue selling because 

their firearms transactions qualify them 

as dealers. 

In addition to the cost of time, there 

are other costs associated with applying 

to become an FFL. To become an FFL, 

persons need to apply on a Form 7 and 

submit payment to ATF for fees 

associated with the Form 7 application. 

Furthermore, these unlicensed persons 

would need to obtain documentation, 

including fingerprints and photographs, 

undergo a background investigation, 

and submit all paperwork via mail. 

While not a cost attributed towards their 

first-year application to become an FFL, 

an FFL will need to reapply to renew 

their license every three years on a Form 

8 renewal application to ensure that that 

they can continue to sell firearms 

thereafter. Table 2 outlines the costs to 

become an FFL and costs to maintain a 

license. 


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122The cost for a Type 01 Dealer is used because 

this license is used to purchase and resell firearms 

at wholesale or retail. 

TABLE 2—COST INPUTS TO BECOME AN FFL AND MAINTAIN A LICENSE

Item Cost item Source 

Form 7 Application Accompanying Licensing Fees ................... $200.00 Application for Federal Firearms License, ATF, https://

www.atf.gov/firearms/docs/form/form-7-7-cr-application-federal-firearms-license-atf-form-531012531016/download. 

Fingerprint Cards ........................................................................ 0.00 Distribution Center Order Form, ATF, https://www.atf.gov/distribution-center-order-form (Apr. 20, 2023). 

Fingerprint Cards (Commercial) ................................................. 23.70 Various Sources. 

Average Cost for Fingerprint Cards ............................................ 12 See above. 

Postage ....................................................................................... 0.63 Mailing and Shipping Prices, USPS, https://www.usps.com/ 

business/prices.htm (last visited Aug. 17, 2023). 

Photograph .................................................................................. 16.99 Passport Photos, CVS, https://www.cvs.com/photo/passportphotos (last visited Aug. 17, 2023). 

FFL Renewal Application Licensing Fees (Form 8) every three 

years.

90.00 Federal Firearms Licensing Center (‘‘FFLC’’). 

For purposes of this proposed rule, 

ATF assumes that unlicensed persons 

applying for a license as a result of this 

rulemaking are likely to file for a Type 

01 Dealer license.122 This license costs 

$200 and uses a Form 7 application (and 

every three years thereafter, costs $90 to 

renew the license using Form 8). 

Applicants also need to obtain and 

submit fingerprints in paper format. The 

unlicensed person can obtain 

fingerprint cards for free from ATF and 

travel to select law enforcement offices 

that perform fingerprinting services 

(usually also for free). Or the unlicensed 

person may pay a fee to various market 

entities that offer fingerprinting services 

in paper format. The average cost found 

for market services for fingerprinting on 

paper cards is $24 (rounded). 

Because it is not clear whether an 

unlicensed person would choose to 

obtain fingerprint cards from ATF and 

go to a local law enforcement office that 

provides fingerprinting services or use 

commercial services both to obtain 

cards and fingerprinting services, an 

average cost of $12 was used. In 

addition to paper fingerprint cards, the 

unlicensed person must also submit a 

photograph appropriate for obtaining 

passports. The cost for a passport photo 

is $17 (rounded). Once they complete 

the application and gather the 

documentation, unlicensed persons 

must submit the Form 7 package by 

mail. ATF rounds the first-class stamp 

rate of $0.63 to $1 for calculating the 

estimated mailing cost. 

In addition to costs associated with 

compiling documentation for a Form 7 

application, ATF estimates time 

burdens related to obtaining and 

maintaining a Federal firearms license. 

Table 3 outlines the hourly burdens to 

apply, obtain, and maintain a license. 

TABLE 3—HOURLY BURDENS TO APPLY, OBTAIN, AND MAINTAIN A LICENSE

Activity type Hourly burden Source 

Form 7 Application ...................................................................... 1 Application for Federal Firearms License, ATF, https://

www.atf.gov/firearms/docs/form/form-7-7-cr-application-federal-firearms-license-atf-form-531012531016/download. 

Time to Travel to and Obtain Photograph .................................. 0.5 N/A. 

Time to Travel to and Obtain Fingerprints ................................. 1 N/A. 

A&D Records .............................................................................. 0.05 OMB 1140–0032. 

Form 4473 ................................................................................... 0.5 OMB 1140–0020. 

Inspection Times (Qualification or Compliance) ......................... 3 Field Operations and OMB 1140–0032. 

As stated above, hourly burdens 

include one hour to complete a Form 7 

license application and the time spent 

to obtain the required documentation. 

For purposes of this analysis, ATF 

assumes that places that offer passport 

photograph services are more readily 

available than places that provide 

fingerprinting services; therefore, ATF 

estimates that it may take 30 minutes 

(0.5 hours) to travel to and obtain a 

passport photograph and estimates up to 

one hour to travel to and obtain 

fingerprinting services. Other time 

burdens may range from 0.05 hours 

(three minutes) to enter and maintain 

A&D records for each firearm 

transaction and 0.5 hours for 

maintaining a Form 4473, to three hours 

for an inspection (qualification or 

compliance). 

ATF then multiplied the hourly 

burdens by the $16 leisure wage rate to 

account for the value of time spent 

applying for and obtaining a license 

using a Form 7 (including any other 

actions related to obtaining a license), 

then added the cost per item to 

determine a cost per action taken. Table 

4 outlines the first-year costs to apply 

for an FFL. 


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123ATF notes that the high $175 may be higher 

than actual costs since this high cost assumes that 

an FFL would simultaneously renew their license 

(which occurs every three years) in the same year 

that they perform a compliance inspection, which 

occurs periodically. 

TABLE 4—FIRST-YEAR COSTS TO OBTAIN A TYPE 01 FFL 

Cost item Hourly 

burden 

Hourly 

wage rate 

Hourly 

cost Cost item 

Rounded cost 

for each 

activity 

Form 7 .................................................................................. 1 $16 $16 $200 $216 

Fingerprints .......................................................................... 1 16 16 12 28 

Passport Photograph ........................................................... 0.5 16 8 17 25 

Postage ................................................................................ N/A 16 N/A 0.63 1 

Qualification Inspection ........................................................ 3 16 48 N/A 48 

Initial Cost ..................................................................... ........................ ........................ ........................ ........................ 318 

Overall, ATF estimates that it would 

cost an unlicensed person $318 in terms 

of time spent and fees paid to apply 

under a Form 7 to become a Type 01 

FFL. ATF considers the $318 as an 

unlicensed person’s initial cost. In 

addition to their initial cost, the newly 

created FFL would need to maintain a 

Form 4473 (for each firearm sale), A&D 

records (two entries per firearm: one 

entry to purchase and one entry to sell) 

for every firearms transaction, undergo 

periodic compliance inspections, and 

renew their license every three years 

(ATF Form 8 application). Table 5 

outlines the cost per recurring activity 

to maintain an FFL. 

TABLE 5—RECURRING COSTS TO MAINTAIN AN FFL 

Item Number of entries or applications Hourly 

burden 

Hourly 

wage rate 

Hourly 

cost per 

activity 

Cost item 

Rounded 

cost for 

each 

activity 

Form 8 Renewal Application ............. 1 (every three years) ......................... 0.5 $16.00 $8.00 $90 $98 

Form 4473 ......................................... 3 (firearm sales every year) .............. 0.5 16.00 24.00 N/A 24 

A&D Records ..................................... 6 (two entries per firearm every year) 0.05 16.00 4.80 N/A 5 

Compliance Inspections ..................... 1 (periodically) ................................... 3 16.00 48.00 N/A 48 

While renewing a license under a 

Form 8 application occurs every three 

years, there are additional costs 

associated with Form 4473 and A&D 

records that may occur more often. 

There are also costs from compliance 

inspections that may occur periodically. 

ATF notes that the actual number of 

firearms sales may range from zero sales 

to more than three per year, but for 

purposes of this economic analysis only, 

ATF uses three firearms (six A&D 

entries) per year to illustrate the 

potential costs that a person may incur 

based on information gleaned from 

ArmsList. Although a person might not 

resell a given firearm in the same year 

they purchase it, for the purposes of 

these estimates, this analysis includes 

both ends of the firearm transaction 

because they could buy and sell the 

same firearm or buy one and sell a 

different one in a given year. 

As for compliance inspections, based 

on information gathered from ATF’s 

Office of Field Operations, the 

frequency of such inspections varies 

depending on the size of the area of 

operations and the number of FFLs per 

area of operations. Overall, ATF 

estimates that it inspects approximately 

eight percent of all existing FFLs in any 

given year. ATF has indicated the cost 

of an inspection, which would normally 

not occur more than once in a given 

year per FFL. ATF performs compliance 

inspections annually, so while the FFL 

would not necessarily incur a 

compliance inspection every year, this 

analysis includes an annual cost for 

inspections to account for a subset of 

the total number of affected FFLs that 

would be inspected in any given year. 

In summary, ATF estimates that it 

would cost an individual $318 in the 

first year to become licensed. 

Furthermore, this individual would 

incur annually recurring costs that 

could range from $29 a year to complete 

Forms 4473 and maintain A&D records 

to $175 to include Form 8 renewal costs 

and compliance inspections.123 In 

addition, ATF estimates that annual 

costs would range from $805,884 to $7.8 

million, with the $7.8 million being the 

highest annual cost, occurring in the 

first year, using the SME estimates. 

Using the alternative inputs from the 

Russell Sage Foundation Survey results 

in annual costs ranging from $10.8 

million to $104.4 million. Tables 6 and 

7 illustrate the 10-year period of 

analysis. 

TABLE 6—10-YEAR PRIVATE COSTS TO THE PROPOSED RULE USING SME ESTIMATE

Year Undiscounted Discounted at 

3 percent 

Discounted at 

7 percent 

1 ....................................................................................................................................... $7,803,720 $7,576,427 $7,293,196 

2 ....................................................................................................................................... 805,884 759,623 703,890 

3 ....................................................................................................................................... 805,884 737,498 657,841 

4 ....................................................................................................................................... 3,210,804 2,852,758 2,449,507 

5 ....................................................................................................................................... 805,884 695,163 574,584 

6 ....................................................................................................................................... 805,884 674,915 536,995 


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TABLE 6—10-YEAR PRIVATE COSTS TO THE PROPOSED RULE USING SME ESTIMATE—Continued 

Year Undiscounted Discounted at 

3 percent 

Discounted at 

7 percent 

7 ....................................................................................................................................... 3,210,804 2,610,677 1,999,527 

8 ....................................................................................................................................... 805,884 636,172 469,032 

9 ....................................................................................................................................... 805,884 617,643 438,348 

10 ..................................................................................................................................... 3,210,804 2,389,140 1,632,210 

Total .......................................................................................................................... 22,271,436 19,550,016 16,755,130 

Annualized ................................................................................................................ ............................ 2,291,858 2,385,554 

Overall, the annualized private cost of 

this proposed rule using SME estimates 

is $2.3 million at three percent and $2.4 

million at seven percent. 

TABLE 7—10-YEAR PRIVATE COSTS TO THE PROPOSED RULE USING THE RUSSELL SAGE FOUNDATION SURVEY

Year Undiscounted Discounted at 

3 percent 

Discounted at 

7 percent 

1 ....................................................................................................................................... $104,398,128 $101,357,406 $97,568,344 

2 ....................................................................................................................................... 10,781,256 10,162,368 9,416,767 

3 ....................................................................................................................................... 10,781,256 9,866,377 8,800,716 

4 ....................................................................................................................................... 42,954,264 38,164,307 32,769,602 

5 ....................................................................................................................................... 10,781,256 9,300,006 7,686,887 

6 ....................................................................................................................................... 10,781,256 9,029,132 7,184,006 

7 ....................................................................................................................................... 42,954,264 34,925,747 26,749,757 

8 ....................................................................................................................................... 10,781,256 8,510,823 6,274,789 

9 ....................................................................................................................................... 10,781,256 8,262,935 5,864,289 

10 ..................................................................................................................................... 42,954,264 31,962,006 21,835,770 

Total .......................................................................................................................... 297,948,456 261,541,108 224,150,926 

Annualized ................................................................................................................ ............................ 30,660,597 31,914,049 

Overall, the annualized private cost of 

this proposed rule, based on alternate 

inputs from the Russell Sage 

Foundation Survey, is $30.7 million at 

three percent and $31.9 million at seven 

percent. 

4. Costs for FFLs After Termination of 

License 

The proposed rule is also designed to 

enhance compliance by former FFLs 

who no longer hold their licenses due 

to license revocation, denial of license 

renewal, license expiration, or surrender 

of license but nonetheless engage in the 

business of dealing in firearms. Such 

persons sometimes, under existing 

standards, transfer their inventory to 

their personal collections instead of 

selling or otherwise disposing of the 

firearms to a licensed importer, licensed 

manufacturer, or licensed dealer for 

sale, auction, or pawn redemption. The 

proposed rule would clarify that such 

former licensees must sell to other 

licenses or transfer their personal 

collection within 30 days, but they may 

not treat a business firearm that they 

have transferred to their personal 

collection as a personal firearm until the 

firearm has been in their personal 

collection for a period of one year. 

Former FFLs who sell any such firearm 

within one year of the transfer date as 

a personal firearm may be in violation 

of existing statutory and regulatory 

restrictions (18 U.S.C. 922(a)(1)(A) and 

923(a),(c)) on unlicensed dealers, and 

may be deemed to be ‘‘engaged in the 

business.’’ 

ATF license revocation, denial of 

license renewal, license expiration, or 

surrender of license realistically present 

two categories of affected populations. 

Group 1, comprising license revocations 

and denial of license renewals, could be 

described as former FFLs who have 

failed to comply with existing 

regulations and requirements to a degree 

which resulted in the revocation or 

denial of their licenses. The proposed 

rule is likely to have a qualitative 

impact on this group because a 

revocation or denial may not provide 

ample opportunity for an orderly and 

planned liquidation or transfer of 

inventory before losing the license, 

which may therefore be disruptive. 

Based on data from the FFLC, the 

number of such FFL license revocations 

are rare, with an average of 37 licenses 

revoked by ATF over the past 5 years 

(with a range between 8 and 79), or a de 

minimis percentage of 0.05 percent of 

all active FFLs. Furthermore, the 

economic impact of transferring 

inventory to another FFL instead of the 

former FFL holder retaining the 

inventory is unclear, as the underlying 

market value of the inventory is 

unchanged by this proposed rule’s 

requirements. Additional factors 

surrounding the potential cost of no 

longer being able to transfer one’s 

inventory to oneself are also unknown 

and presumed to similarly be de 

minimis. Therefore, ATF believes there 

are no quantitative impacts associated 

with this population. However, ATF 

welcomes public comments on these 

assumptions in general and on the 

potential impacts on former FFLs with 

revoked licenses. 

Group 2, comprising license 

expiration or surrender of license, 

captures those who no longer have a 

license for discretionary or lawful 

reasons. This group comprises former 

FFLs that choose to close or to sell the 

business to another party. They are 

similarly excluded from expected 

impacts attributable to the proposed 

rule because of the likelihood that, 

because the closure is planned, the FFL 

will include reasonable considerations 

for orderly, lawful liquidation or 

inventory transfer as part of closing or 

selling their enterprise. Such 

considerations are also likely to occur 

ahead of, rather than subsequent to, the 

expiration or surrender of their license. 

As a result, ATF assumes that the 


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124ATF notes that because the contracting salary 

is a loaded wage rate, a base wage rate (not 

including benefits) was not included in table 8 

below. 125Office of Personnel Management, Salary Table 

2023–DCB, https://www.opm.gov/policy-dataoversight/pay-leave/salaries-wages/salary-tables/ 

pdf/2023/DCB_h.pdf. 

126Congressional Budget Office, Comparing the 

Compensation of Federal and Private-Sector 

Employees, 2011 to 2015, https://www.cbo.gov/ 

system/files/115th-congress-2017-2018/reports/ 

52637-federalprivatepay.pdf. 

127 1.66 Federal load rate = 1.419 private industry 

load rate * 1.17 multiplier factor. BLS Series ID 

CMU2010000000000D,CMU2010000000000P 

(Private Industry Compensation = $39.34)/BLS 

Series ID 

CMU2020000000000D,CMU2020000000000P 

(Private Industry Wages and Salaries = $27.73) = 

1.419. BLS average 2022. U.S. Bureau of Labor 

Statistics, Database for Employee Compensation, 

https://data.bls.gov/cgi-bin/srgate. 

options of transfer to the licensee’s 

personal collection or sale to another 

FFL that exist under current standards 

would similarly be freely available to 

Group 2 FFLs over their expected course 

of action under the proposed rule. As a 

result, we are excluding both groups 

from the affected population. 

5. Government Costs 

In addition to the private costs to 

unlicensed persons, ATF would incur 

additional work due to the increase in 

Form 7 and Form 8 applications for 

unlicensed persons who become an FFL 

which would be offset by the fees 

incurred with FFL applications ($200) 

and renewals ($90). Based on 

information gathered from FFLC, which 

processes and collects the fees for FFL 

applications, various contractors and 

Federal Government employees process 

Form 7 and 8 applications, verify and 

correct applications, and further process 

them for background checks and 

approval. 

Based on information provided by 

FFLC, the average hourly rate for 

contracting staff, to include benefits, is 

$13.29.124 To determine the wage rates 

for Federal employees, ATF used the 

wage rates according to the General 

Schedule (‘‘GS’’) level, step 5 as an 

average wage rate per activity. 

Government processing activities range 

from an entry level Federal employee 

between a GS–5/7, upwards to a GS– 

13.125 To account for fringe benefits 

such as insurance, ATF estimated a 

Federal load rate. ATF estimated the 

Federal load rate using the methodology 

outlined in the Congressional Budget 

Office’s report comparing Federal 

benefits to private sector benefits. It 

states that Federal benefits are 17 

percent more than private sector 

benefits (or a multiplier factor of 

1.17).126 ATF calculated private sector 

benefits from the Bureau of Labor 

Statistics (in 2022) and determined that 

the overall private sector benefits are 

41.9 percent in addition to an hourly 

wage, or a load rate of 1.419. This makes 

the Federal load rate 1.66 above the 

hourly wage rate (after applying the 1.17 

multiplier).127 Table 8 outlines the 

government costs to process a Form 7 

application to become an FFL. 

TABLE 8—HOURLY BURDEN AND COST TO PROCESS A NEW APPLICATION FOR AN FFL 

Government cost to process new FFL applications Hourly 

burden Staffing level Hourly wage 

Loaded 

hourly 

wage 

Rounded 

cost 

Average Contracting Time to Prepare and Enter Application ............. 0.5 Contracting Staff .... $13.29 $13.29 $7 

Processing Time for New Applications ............................................... 1 GS 10 .................... 38.85 64.49 64 

Processing Time for Fingerprint Cards ............................................... 2 GS 12 .................... 51.15 84.91 170 

Qualification Inspection Time (Includes Travel) .................................. 5 GS 5/7 to GS 13 .... 37.65 62.50 312 

Subtotal ........................................................................................ .................. ................................ .................. .................. 553 

Fees Incurred from New Application ............................................ .................. ................................ .................. .................. ¥200 

Total ...................................................................................... .................. ................................ .................. .................. 353 

Based on the hourly burdens and the 

hourly wage rates for various contract 

and Federal employees, ATF estimates 

that it would take on average 8.5 hours 

to process a Form 7 application, at a 

cost of $553 per application, offset by 

the new application fee (Form 7) of 

$200, for an overall net cost to the 

government for this rulemaking of $353. 

Form 8 application renewals are 

estimated to cost $71 every three years 

(or $553 less the $312 inspection time 

and the $170 fingerprint costs). 

However, the cost to review a Form 8 

application ($71) is offset by the 

renewal fee of $90, making the net cost 

or overall savings to government for this 

rulemaking ¥$19 per FFL renewal. 

In addition to processing Form 7 

applications, ATF Industry Operations 

Investigators (‘‘IOIs’’) would need to 

perform qualification and compliance 

inspections. The qualification 

inspection occurs once during the 

application process and is accounted for 

in table 7 above. But, as discussed 

above, there is a recurring compliance 

inspection after the person becomes a 

licensee. For either the qualification or 

compliance inspection, ATF notes that 

the estimated five-hour inspection time 

for the government is more than the 

inspection time for the private sector, as 

discussed above, because ATF is 

including travel time for an IOI to travel 

to the person’s location. Table 9 outlines 

the recurring government cost to inspect 

an FFL. 

TABLE 9—RECURRING GOVERNMENT COSTS TO INSPECT AN FFL 

Activity Hourly 

burden Staffing level Hourly wage 

Loaded 

hourly 

wage 

Rounded 

cost 

Compliance Inspection (Includes Travel) ............................................ 5 GS 5/7 to GS 13 .... $37.65 $62.50 $312 

Based on the hourly burdens and 

wage rates of IOIs, ATF anticipates that 

it costs ATF $312 to perform a 

compliance inspection. To summarize 

the overall government costs, table 10 

outlines the government costs to process 


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128The ‘‘Undiscounted’’ column represents totals 

from the underlying private and government cost 

tables. Consistent with guidance provided by OMB 

in Circular A–4, the ‘‘3 Percent Discount Rate’’ and 

‘‘7 Percent Discount Rate’’ columns result from 

applying an economic formula to the number in 

each row of this ‘‘Undiscounted’’ column to show 

how these future costs over time would be valued 

today; they do not contain totals from other tables. 

Form 7 applications, process Form 8 renewal applications, and conduct FFL 

compliance inspections. 

TABLE 10—SUMMARY OF GOVERNMENT COST PER LISTED ACTION

Government cost per unlicensed person Cost 

Per Application Cost (including qualification inspection) ..................................................................................................................... $353 

Per Renewal Cost ................................................................................................................................................................................ ¥19 

Per Compliance Inspection Cost ......................................................................................................................................................... 312 

ATF estimates that the government 

costs of this proposed rule include the 

initial application cost that occurs in the 

first year (including the qualification 

inspection), renewal costs that occur 

every three years after the first year, and 

the cost for the government to conduct 

a compliance inspection of an FFL in a 

given year (the government currently 

conducts compliance inspections of 

approximately eight percent of FFLs per 

year). Table 11 illustrates the 10-year 

government costs this proposed rule. 

TABLE 11—TOTAL GOVERNMENT COSTS OF PROPOSED RULE

Year Undiscounted 3 Percent 

discount rate 

7 Percent 

discount rate 

Year Undiscounted 3% 7% 

1 ....................................................................................................................................... $8,662,620 $8,662,620 $8,662,620 

2 ....................................................................................................................................... 612,456 612,456 612,456 

3 ....................................................................................................................................... 612,456 612,456 612,456 

4 ....................................................................................................................................... 146,196 146,196 146,196 

5 ....................................................................................................................................... 612,456 612,456 612,456 

6 ....................................................................................................................................... 612,456 612,456 612,456 

7 ....................................................................................................................................... 146,196 146,196 146,196 

8 ....................................................................................................................................... 612,456 612,456 612,456 

9 ....................................................................................................................................... 612,456 612,456 612,456 

10 ..................................................................................................................................... 146,196 146,196 146,196 

Total .......................................................................................................................... 12,775,944 12,775,944 12,775,944 

Annualized ................................................................................................................ ............................ 1,497,730 1,819,007 

Overall, the annualized government 

cost of this proposed rule is $1.5 million 

at three percent and $1.8 million at 

seven percent. 

6. Total Cost 

The total costs, therefore, take into 

account the private and government 

costs of the proposed rule, as described 

in sections 3 and 5 above. ATF 

estimates that the initial application 

cost (Form 7 and initial inspection) 

occurs in the first year, renewal costs 

(Form 8 renewals) occur every three 

years after the first year, and completion 

and maintenance of Forms 4473 and 

A&D records, and compliance 

inspection costs (for a subset of FFLs 

affected by this rulemaking), occur 

annually. Tables 12 and 13 illustrate the 

10-year private and government costs of 

this proposed rule. 

TABLE 12—TOTAL PRIVATE AND GOVERNMENT COSTS OF PROPOSED RULE BASED ON SME ESTIMATES 128

Year Undiscounted 3 Percent 

discount rate 

7 Percent 

discount rate 

1 ....................................................................................................................................... $16,466,340 $15,986,738 $15,389,103 

2 ....................................................................................................................................... 1,418,340 1,336,921 1,238,833 

3 ....................................................................................................................................... 1,418,340 1,297,982 1,157,788 

4 ....................................................................................................................................... 3,357,000 2,982,651 2,561,039 

5 ....................................................................................................................................... 1,418,340 1,223,473 1,011,257 

6 ....................................................................................................................................... 1,418,340 1,187,837 945,100 

7 ....................................................................................................................................... 3,357,000 2,729,548 2,090,571 

8 ....................................................................................................................................... 1,418,340 1,119,651 825,487 

9 ....................................................................................................................................... 1,418,340 1,087,040 771,483 

10 ..................................................................................................................................... 3,357,000 2,497,923 1,706,529 

Total .......................................................................................................................... 35,047,380 31,449,764 27,697,189 

Annualized ................................................................................................................ ............................ 3,686,872 3,943,457 


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129The ‘‘Undiscounted’’ column represents totals 

from the underlying private and government cost 

tables. Consistent with guidance provided by OMB 

in Circular A–4, the ‘‘3 Percent Discount Rate’’ and 

‘‘7 Percent Discount Rate’’ columns result from 

applying an economic formula to the number in 

each row of this ‘‘Undiscounted’’ column to show 

how these future costs over time would be valued 

today; they do not contain totals from other tables. 

130Section 2K2.1 provides sentencing guidelines 

for ‘‘Unlawful Receipt, Possessions, or 

Transportation of Firearms or Ammunition; 

Prohibited Transactions Involving Firearms or 

Ammunition.’’ 

131What do Federal Firearms Offenses Really 

Look Like?, United States Sentencing Commission 

Report at 2 (July 14, 2022), https://www.ussc.gov/ 

research/research-reports/what-do-federal-firearmsoffenses-really-look. 

132 Id. 

133 Federal Armed Career Criminals: Prevalence, 

Patterns, and Pathways, United States Sentencing 

Commission, at 9 (March 2021), https://

www.ussc.gov/sites/default/files/pdf/research-andpublications/research-publications/2021/20210303_

ACCA-Report.pdf. 

Overall, the total annualized cost of 

this proposed rule is $3.7 million at 

three percent and $3.9 million at seven 

percent using information based off of 

SME estimates. 

TABLE 13—TOTAL PRIVATE AND GOVERNMENT COSTS OF PROPOSED RULE BASED ON RUSSELL SAGE FOUNDATION

SURVEY AND SME ESTIMATES 129

Year Undiscounted Discounted at 

3 percent 

Discounted at 

7 percent 

1 ....................................................................................................................................... $113,060,748 $109,767,717 $105,664,250 

2 ....................................................................................................................................... 11,393,712 10,739,666 9,951,709 

3 ....................................................................................................................................... 11,393,712 10,426,861 9,300,663 

4 ....................................................................................................................................... 43,100,460 38,294,200 32,881,135 

5 ....................................................................................................................................... 11,393,712 9,828,316 8,123,559 

6 ....................................................................................................................................... 11,393,712 9,542,054 7,592,111 

7 ....................................................................................................................................... 43,100,460 35,044,618 26,840,800 

8 ....................................................................................................................................... 11,393,712 8,994,301 6,631,244 

9 ....................................................................................................................................... 11,393,712 8,732,332 6,197,424 

10 ..................................................................................................................................... 43,100,460 32,070,790 21,910,088 

Total .......................................................................................................................... 310,724,400 273,440,855 235,092,985 

Annualized ................................................................................................................ ............................ 32,055,610 33,471,952 

Overall, using the information from 

the Russell Sage Foundation Survey and 

FIPB SME estimates, table 13 represents 

the upper bound estimate in which the 

total annualized cost of this proposed 

rule is $32 million at three percent and 

$33.4 million at seven percent. 

7. Benefits 

These proposed revisions will have 

significant public safety benefits by 

ensuring that ATF’s regulatory 

definitions conform to the BSCA’s 

statutory changes and can be relied 

upon by the public, and by clarifying 

that persons who intend to 

predominantly earn a profit from the 

repetitive purchase and resale of 

firearms are engaged in the business of 

dealing in firearms and must be 

licensed, even if they make few or no 

sales, or if they are conducting such 

transactions on the internet or through 

other mediums or forums. As part of the 

license application, those dealers will 

undergo a background check. This 

increases the ability to ensure that 

persons purchasing and selling 

(including bartering) firearms with the 

intent to earn a profit are lawfully able 

to do so and reduces the risk that they 

could pose a danger to others by 

trafficking in illicit firearm sales or 

otherwise engaging in criminal 

activities. Additionally, these licensed 

dealers must take steps to help 

determine that they are not selling 

firearms to persons prohibited from 

receiving or possessing such firearms 

under Federal, State, local, or Tribal 

law. 

The U.S. Sentencing Commission 

reports that ‘‘88.8 percent of firearm 

offenders sentenced under § 2K2.1 130

[of the United States Sentencing 

Commission Guidelines Manual (Nov. 

2021)] were [already] prohibited from 

possessing a firearm’’ under 18 U.S.C. 

922(g). These individuals would thus 

have been flagged in a background 

check, would have therefore been 

prohibited from buying a firearm from a 

licensed dealer after their first offense, 

and would not have been able to 

commit the subsequent firearms 

offense(s) if their seller had been 

licensed. In addition, the Commission 

reports that such offenders ‘‘have 

criminal histories that are more 

extensive and more serious than other 

offenders’’ 131 and that they are ‘‘more 

than twice as likely to have a prior 

conviction for a violent offense 

compared to all other offenders.’’ 132

In another report, on ‘‘armed career 

criminals’’ (those who have three or 

more convictions for violent offenses, 

serious drug offenses, or both), the 

Commission reports that a substantial 

share of ‘‘armed career criminals’’ (83 

percent in fiscal year 2019) had prior 

convictions for at least one violent 

offense (as opposed to solely serious 

drug offense convictions). This includes 

‘‘57.7 percent who had three or more 

[prior violent] convictions.’’ 133 In other 

words, persons who prohibited by law 

from possessing firearms, as well as the 

more serious ‘‘armed career criminals’’ 

who are also prohibited, were able to 

obtain guns and continued to commit 

more violent offenses after they would 

have been flagged by a background 

check and denied a firearm if 

purchasing from a licensed dealer. 

Such violence has a significant 

adverse effect on public safety. Because 

licensed dealers are required to conduct 

background checks on unlicensed 

transferees, another benefit of this 

rulemaking is to aid in preventing 

firearms being sold to felons or other 

prohibited persons, who may commit 

crimes and acts of violence or 

themselves become sources of firearms 

trafficking. Furthermore, these licensed 

dealers must also maintain firearms 

transaction records, which will help 

with criminal investigations and tracing 

firearms subsequently used in crimes. 

In 2016, ATF distributed and 

discussed the above-mentioned 

‘‘engaged in the business’’ guidance at 

gun shows to ensure that unlicensed 

dealers operating at gun shows became 

licensed, and portions of that previous 

guidance are incorporated in this 

proposed rule. This guidance was 

particularly directed at unlicensed 

persons who sell firearms as a 

secondary source of income to allow 


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134See discussion supra under Section I.A. 

‘‘Advance Notice of Proposed Rulemaking (1979)’’ 

and in more detail in Section II.D. ‘‘Presumptions 

that a Person is ‘‘Engaged in the Business.’’ 135 88 FR at 16528. 

them to continue to sell firearms, but as 

licensed dealers. Based on the FFLC, 

ATF found that there was an increase of 

approximately 567 ATF Form 7 

applications to account for these 

unlicensed persons selling at gun 

shows. This prior outcome demonstrates 

the market response to clarifying 

licensing requirements and that such a 

response both increases the likelihood 

that persons engaged in the business 

comply with Federal licensing 

requirements and enhance public safety 

by denying persons prohibited from 

purchasing firearms through completion 

of ATF Forms 4473 and running 

background checks on prospective 

purchasers. 

Finally, providing a clear option for 

FFLs to transfer their business inventory 

to another FFL when their license is 

terminated helps to ensure that these 

business inventories of firearms are 

traceable and do not become sources of 

trafficked firearms. 

8. Alternatives 

In addition to the requirements 

outlined in this proposed rule, ATF 

considered the following alternative 

approaches: 

Alternative 1. A rulemaking that 

focuses on a bright-line numerical 

threshold of what constitutes being 

engaged in the business as a dealer in 

firearms. As discussed above, in the 

past, it has been proposed to ATF that 

a rulemaking should set a specific 

threshold or number of sales per year to 

define ‘‘engaged in the business.’’ ATF 

considered this alternative in the past 

and again as part of developing this 

proposed rulemaking.134 However, ATF 

chose not to adopt this alternative for a 

number of reasons stated in detail 

above. In summary: courts have held 

even before the passage of the BCSA 

that the sale of or attempt to sell even 

one firearm is sufficient to show that a 

person is ‘‘engaged in the business’’ if 

that person represents to others that 

they are willing and able to purchase 

more firearms for resale; a person could 

structure their transactions to avoid the 

minimum threshold by spreading out 

sales over time; and firearms could be 

sold by unlicensed persons below the 

threshold number without records, 

making those firearms unable to be 

traced when they are subsequently used 

in a crime. Finally, the Department does 

not believe there is a sufficient 

evidentiary basis, without consideration 

of additional factors, to support a 

specific minimum number of firearms 

bought or sold for a person to be 

considered ‘‘engaged in the business.’’ 

The costs of implementing a specific 

threshold would be lower than in the 

primary analysis proposed in this rule. 

However, the Department believes it 

would not appropriately address the 

language regarding the requisite intent 

predominantly to earn a profit (which 

can include bartering) and would have 

unintended effects such as those 

summarized in the previous paragraph 

that would impact personal firearms 

transactions and decrease public safety 

and law enforcement’s ability to trace 

firearms used in crimes. 

Alternative 2. Publishing guidance 

instead of revising the regulations. 

Under this alternative, rather than 

publishing regulations further defining 

‘‘engaged in the business,’’ ATF would 

publish only guidance documents to 

clarify the topics included in this 

proposed rule. Although ATF has 

determined that in addition to revising 

its regulations, it will also update 

existing guidance documents to answer 

any questions that the firearms industry 

may have, the Department has 

determined that issuing only guidance 

would be insufficient to address the 

issues discussed above. ATF did not 

select the alternative to publish only 

guidance documents in lieu of 

regulations because guidance would be 

insufficient as a means to inform the 

public in general, rather than solely the 

currently regulated community; 

guidance would not have the same legal 

effect and applicability as a regulation; 

it would not benefit from the input of 

public review and comment to aid in 

accounting for possible unintended 

impacts or interpretations; and it would 

not be able to change existing regulatory 

provisions on the subject of ‘‘engaged in 

the business’’ or impact intersecting 

regulatory provisions. In addition, ATF 

can incorporate existing guidance in a 

proposed rule based on its experience or 

in response to comments. When an 

agency establishes or revises legally 

binding requirements, it must do so 

through a regulation issued under the 

Administrative Procedure Act and 

Executive order provisions flowing from 

it. Guidance does not meet these 

requirements. Therefore, although the 

Department considered this alternative, 

it determined it was not in the best 

interest of the public. 

Alternative 3. No action. Rather than 

promulgating a regulation, ATF could 

instead take no action to further clarify 

the BSCA’s amendments to the GCA. 

However, the Department considered 

this alternative and decided against it 

for a number of reasons. First, as the 

various enforcement actions and court 

decisions cited above demonstrate, ATF 

has observed a significant level of 

noncompliance with the GCA’s 

licensing requirements even prior to the 

BSCA. Second, on March 14, 2023, 

President Biden issued Executive Order 

14092, requiring the Attorney General to 

report on agency efforts to implement 

the BSCA, develop and implement a 

plan to clarify the definition of who is 

engaged in the business of dealing in 

firearms, ‘‘including by considering a 

rulemaking,’’ and prevent former FFLs 

whose licenses have been revoked or 

surrendered from continuing to engage 

in the business of dealing in firearms.135

Third, Congress, through the BSCA, 

determined that there was a need to 

revise the definition of ‘‘engaged in the 

business’’ for the first time in almost 40 

years. While that by itself does not 

preclude ATF from using its discretion 

not to promulgate a formal rule, it 

indicates an important change to the 

landscape of who must have a license to 

deal in firearms and warrants 

consideration of what that means to 

persons who have been operating under 

the previous definition. It has potential 

effects on those who have not 

considered themselves to fall under the 

definition before and now would have 

to have a license. The change to the 

definition removed any intent to obtain 

‘‘livelihood,’’ and it is reasonable to 

expect that those who transact in 

firearms would have questions about 

how to interpret and apply this change. 

This would include how it affects other 

aspects of existing laws and regulatory 

provisions that govern such 

transactions, as well as how other BSCA 

amendments, such as the new 

international trafficking provisions, 

might apply to the dealer requirements. 

For these reasons, the Department 

determined this was not a viable 

alternative. 

Although the Department considered 

this alternative, it does not generate 

direct monetary costs because it leaves 

the regulatory situation as it is. Because 

the costs and benefits of this alternative 

arise from the statute itself, ATF did not 

include an assessment of them in this 

proposed rulemaking. 

B. Executive Order 13132 

This regulation will not have 

substantial direct effects on the States, 

the relationship between the Federal 

Government and the States, or the 

distribution of power and 

responsibilities among the various 

levels of government. Therefore, in 

accordance with section 6 of Executive 


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Order 13132 (‘‘Federalism’’), the 

Attorney General has determined that 

this regulation does not have sufficient 

federalism implications to warrant the 

preparation of a federalism summary 

impact statement. 

C. Executive Order 12988 

This regulation meets the applicable 

standards set forth in sections 3(a) and 

3(b)(2) of Executive Order 12988 (‘‘Civil 

Justice Reform’’). 

D. Regulatory Flexibility Act (‘‘RFA’’) 

ATF performed an initial regulatory 

flexibility analysis of the impacts on 

small businesses and other entities on 

this proposed rule. Based on the 

information from this analysis, ATF has 

determined that this proposed rule 

would impact unlicensed persons who 

would now have to become licensed 

dealers to lawfully operate as a small 

business. Because some of these 

unlicensed persons may transact in lowvolume firearms sales to predominantly 

earn a profit, the costs to become an FFL 

could have an impact on their overall 

profit from firearms transactions. 

Initial Regulatory Flexibility Analysis 

The RFA establishes ‘‘as a principle of 

regulatory issuance that agencies shall 

endeavor, consistent with the objectives 

of the rule and of applicable statutes, to 

fit regulatory and informational 

requirements to the scale of the 

businesses, organizations, and 

governmental jurisdictions subject to 

regulation. To achieve this principle, 

agencies are required to solicit and 

consider flexible regulatory proposals 

and to explain the rationale for their 

actions to assure that such proposals are 

given serious consideration.’’ Public 

Law 96–354, section 2(b), 94 Stat. 1164, 

1165 (1980) (codified at 5 U.S.C. 601, et 

seq.). 

Under the RFA, the agency is required 

to consider whether this rule would 

have a significant economic impact on 

a substantial number of small entities. 

Agencies must perform a review to 

determine whether a rule would have 

such an impact. If the agency 

determines that it would, the agency 

must prepare a regulatory flexibility 

analysis as described in the RFA. 

The RFA covers a wide range of small 

entities. The term ‘‘small entities’’ 

comprises small businesses, not-forprofit organizations that are 

independently owned and operated and 

are not dominant in their fields, and 

governmental jurisdictions with 

populations of less than 50,000. 5 U.S.C. 

601(3)–(6). ATF determined that the 

rulemaking affects a variety of large and 

small businesses (see the ‘‘Description 

of the Potential Number of Small 

Entities’’ section below). Based on the 

requirements above, ATF prepared the 

following initial regulatory flexibility 

analysis assessing the impact on small 

entities from the rulemaking. 

1. A description of the reasons why 

action by the agency is being 

considered. 

Congress passed the BSCA, which 

amended the definition of engaged in 

the business from a person seeking to 

transact in firearms for livelihood and 

profit to a person intending 

predominantly to earn a profit. 

Moreover, on March 14, 2023, the 

President ordered the Attorney General 

to report on efforts to implement the 

BSCA and to develop and implement a 

plan to clarify the definition of 

‘‘engaged in the business’’ of dealing in 

firearms and prevent FFLs from 

continuing to deal after license 

revocation or surrender. 

2. A succinct statement of the 

objectives of, and legal basis for, the 

proposed rule. 

The Attorney General is responsible 

for enforcing, among other statutes, the 

GCA, as amended. The BSCA redefined 

who is a regulated dealer under the 

GCA. This proposed rule updates the 

regulations to ensure the language 

conforms with the amended statutory 

provisions, and clarifies for the public 

how to understand and implement the 

statutory change and also implements 

Executive Order 14092. 

3. A description of and, where 

feasible, an estimate of the number of 

small entities to which the proposed 

rule will apply. 

This proposed rule implements a 

statutory requirement that affects 

unlicensed persons who purchase and 

sell firearms, with the intent to profit 

(including barter), on a recurring basis. 

As persons who engage in higherfrequency firearms transactions meeting 

these requirements are typically already 

licensed as dealers, the persons 

impacted by this proposed rule will 

primarily be those who transact in low 

volume repetitive firearms sales. These 

persons likely either already are, or 

would become, small entities. 

4. A description of the projected 

reporting, recordkeeping and other 

compliance requirements of the 

proposed rule, including an estimate of 

the classes of small entities which will 

be subject to the requirement and the 

type of professional skills necessary for 

preparation of the report or record. 

ATF estimates that this proposed rule 

would affect at least 24,540 unlicensed 

persons who, as a result of changes 

enacted in the BSCA, are now required 

to obtain a Federal firearms license. 

Such persons would need to file a Form 

7 application, pay a licensing fee, 

undergo a qualification inspection, 

maintain Form 4473 and A&D records 

for every firearm transaction, and 

undergo periodic compliance 

inspections. If they continue in business 

after three years, they would need to file 

a Form 8 renewal application and pay 

a renewal licensing fee. No professional 

skills are necessary to prepare or 

perform application or recordkeeping 

activities. 

5. An identification, to the extent 

practicable, of all relevant Federal rules 

which may duplicate, overlap or 

conflict with the proposed rule. 

This proposed rule does not duplicate 

or conflict with other Federal rules. 

6. Descriptions of any significant 

alternatives to the proposed rule which 

accomplish the stated objectives of 

applicable statutes and which minimize 

any significant economic impact of the 

proposed rule on small entities. 

ATF did not find any suitable 

alternatives that would meet the 

objectives of this proposed rule that 

would minimize the economic impact 

that this rulemaking would have on 

small entities. 

E. Small Business Regulatory 

Enforcement Fairness Act of 1996 

This rulemaking is likely to have a 

significant economic impact on a 

substantial number of small entities 

under the Small Business Regulatory 

Enforcement Fairness Act of 1996, 5 

U.S.C. 601 et seq. Accordingly, the 

Department prepared an initial 

regulatory flexibility analysis. 

F. Unfunded Mandates Reform Act of 

1995 

This rulemaking would not result in 

the expenditure by State, local, and 

Tribal governments, in the aggregate, or 

by the private sector, of $100 million or 

more in any one year, and it will not 

significantly or uniquely affect small 

governments. Therefore, no actions were 

deemed necessary under the provisions 

of the Unfunded Mandates Reform Act 

of 1995, Public Law 104–4, 109 Stat. 48. 

See 2 U.S.C. 1532(a). 

G. Paperwork Reduction Act of 1995 

Under the Paperwork Reduction Act 

of 1995 (‘‘PRA’’), 44 U.S.C. 3501–21, 

and its implementing regulations, 5 CFR 

part 1320, agencies are required to 

submit to OMB, for review and 

approval, any reporting requirements 

inherent in a rule. The collections of 

information contained in this proposed 

rule are collections of information 

which have been reviewed and 

approved by OMB in accordance with 


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the requirements of the PRA and have 

been assigned an OMB Control Number. 

As defined in 5 CFR 1320.3(c), 

‘‘collection of information’’ comprises 

reporting, recordkeeping, monitoring, 

posting, labeling, and other similar 

actions. The collections of information 

in this rulemaking are mandatory. The 

title and description of the information 

collection, a description of those who 

must collect the information, and an 

estimate of the total annual burden 

follow. The estimate covers the time for 

reviewing instructions, searching 

existing sources of data, gathering, and 

maintaining the data needed, and 

completing and reviewing the 

collection. 

Title: Application for a Federal 

Firearms License—ATF Form 

7(5310.12)/7CR (5310.16)3. 

OMB Control Number: OMB 1140– 

0018. 

Summary of the Collection of 

Information: 18 U.S.C. 922 specifies a 

number of unlawful activities involving 

firearms in interstate and foreign 

commerce. Some of these activities 

cease to be unlawful when persons are 

licensed under the provisions of 18 

U.S.C. 923. Some examples of activities 

that are no longer unlawful once a 

person becomes licensed include: 

engaging in the business of selling, 

shipping, receiving, and transporting 

firearms in interstate or foreign 

commerce, including the acquisition of 

curio or relic firearms acquired by 

collectors from out-of-state for personal 

collections. This collection of 

information is necessary to ensure that 

anyone who wishes to be licensed as 

required by 18 U.S.C. 923 meets the 

requirements to obtain the desired 

license. 

Need for Information: Less frequent 

collection of this information would 

pose a threat to public safety. Without 

this information collection, ATF would 

not be able to issue licenses to persons 

required by law to have a license to 

engage in the business of dealing in 

firearms or shipping or transporting 

firearms in interstate or foreign 

commerce in support of that business, 

or acquire curio and relic firearms from 

out of state. 

Proposed Use of Information: ATF 

personnel will analyze the submitted 

application to determine the applicant’s 

eligibility to receive the requested 

license. 

Description of the Respondents: 

Individuals or entities wishing to engage 

in the business of selling, shipping, 

receiving, and transporting firearms in 

interstate or foreign commerce, as well 

as acquiring firearms classified as curios 

and relics for personal collections. 

Number of Respondents: 13,000 

existing. New respondents due to the 

rule 24,540. 

Frequency of Response: one time. 

Burden of Response: one hour. 

Estimate of Total Annual Burden: 

24,540 hours (incremental change). 

Title: Application for a Federal 

Firearms License—Renewal Application 

ATF Form 8 (5310.11). 

OMB Control Number: OMB 1140– 

0019. 

Summary of the Collection of 

Information: 18 U.S.C. Chapter 44 

provides that no person may engage in 

the business of importing, 

manufacturing, or dealing in either 

firearms, or ammunition, without first 

obtaining a license to do so. These 

activities are licensed for a specific 

period. The benefit of a collector’s 

license is also provided for in the 

statute. In order to continue to engage in 

the aforementioned firearms activities 

without interruption, licensees must 

renew their FFL by filing Federal 

Firearms License (‘‘FFL’’) RENEWAL 

Application-ATF F 8 (5310.11) Part II, 

prior to its expiration. 

Need for Information: Less frequent 

use of this information collection would 

pose a threat to public safety, since the 

collected information helps ATF to 

ensure that the applicants remain 

eligible to renew their licenses. 

Proposed Use of Information: ATF F 

8 (5310.11) Part II, is used to identify 

the applicant and determine their 

eligibility to retain the license. 

Description of the Respondents: 

Respondents desiring to update the 

responsible person (RP) information on 

an existing license must submit a letter 

in this regard, along with the completed 

FFL renewal application to ATF. 

Number of Respondents: 34,000 

existing. New respondents due to the 

rule 24,540. 

Frequency of Response: every three 

years and periodically. 

Burden of Response: 0.5 hours. 

Estimate of Total Annual Burden: 

12,270 hours (incremental change). 

Title: Firearms Transaction Record— 

ATF Form 4473 (5300.9) and Firearms 

Transaction Record Continuation Sheet. 

OMB Control Number: OMB 1140– 

0020. 

Summary of the Collection of 

Information: The subject form is 

required under the authority of 18 

U.S.C. 922 and 923 and 27 CFR 478.124. 

These sections of the GCA prohibit 

certain persons from shipping, 

transporting, receiving, or possessing 

firearms. All persons, including FFLs, 

are prohibited from transferring firearms 

to such persons. FFLs are also subject to 

additional restrictions regarding the 

disposition of a firearm to an unlicensed 

person under the GCA. For example, age 

and State of residence also determine 

whether a person may lawfully receive 

a firearm. The information and 

certification on the Form 4473 are 

designed so that a person licensed 

under 18 U.S.C. 923 may determine if 

the licensee may lawfully sell or deliver 

a firearm to the person identified in 

Section B, and to alert the transferee/ 

buyer of certain restrictions on the 

receipt and possession of firearms. The 

Form 4473 should only be used for sales 

or transfers of firearms where the seller 

is licensed under 18 U.S.C. 923. The 

seller of a firearm must determine the 

lawfulness of the transaction and 

maintain proper records of the 

transaction. 

Need for Information: The 

consequences of not conducting this 

collection of information, or conducting 

it less frequently, are that the licensee 

might transfer a firearm to a person who 

is prohibited from possessing firearms 

under Federal law. The collection of 

this information is necessary for 

compliance with the statutory 

requirements to verify the eligibility of 

a person receiving or possessing 

firearms under the GCA. There is no 

discretionary authority on the part of 

ATF to waive these requirements. 

Respondents are required to supply this 

information as often as necessary to 

comply with statutory provisions. The 

form is critical to the prevention of 

criminal diversion of firearms and 

enhances law enforcement’s ability to 

trace firearms that are recovered in 

crimes. 

Proposed Use of Information: A 

person purchasing a firearm from an 

FFL must complete Section B of the 

Form 4473. The buyer’s answers to the 

questions determine if the potential 

transferee is eligible to receive the 

firearm. If those answers indicate that 

the buyer is not prohibited from 

receiving a firearm, the licensee 

completes Section C of the Form 4473 

and contacts the FBI’s NICS system or 

the State point of contact to determine 

if the firearm can legally be transferred 

to the purchaser. 

Description of the Respondents: 

Unlicensed persons wishing to purchase 

a firearm. 

Number of Respondents: 17,189,101 

existing. New respondents due to the 

rule 24,540. 

Frequency of Response: periodically. 

Burden of Response: 0.5 hours. 

Estimate of Total Annual Burden: 

12,270 hours (incremental change). 

Title: Records of Acquisition and 

Disposition, Dealers of Type 01/02 

Firearms, and Collectors of Type 03 


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Firearms [Records of Acquisition and 

Disposition, Collectors of Firearms]. 

OMB Control Number: OMB 1140– 

0032. 

Summary of the Collection of 

Information: The recordkeeping 

requirements as authorized by the GCA, 

18 U.S.C. 923, are for the purpose of 

allowing ATF to inquire into the 

disposition of any firearm received by a 

licensee in the course of a criminal 

investigation. 

Need for Information: Less frequent 

collection of this information would 

pose a threat to public safety as the 

information is routinely used to assist 

law enforcement by allowing them to 

trace firearms in criminal investigations. 

Proposed Use of Information: This 

collection of information grants ATF 

Officers the authority to examine a 

collector’s records for firearms traces or 

compliance inspections, per 27 CFR 

478.23(c)(1), (2). 

Description of the Respondents: 

Federal Firearms Licensees. 

Number of Respondents: 60,790 

existing. New respondents due to the 

rule 24,540. 

Frequency of Response: annually 

recurring. 

Burden of Response: three minutes to 

maintain A&D records and one hour to 

perform an inspection. 

Estimate of Total Annual Burden: 

24,540 hours in inspection time 

(incremental change) and 3,681 hours 

maintaining in A&D records 

(incremental change). 

ATF asks for public comment on the 

proposed collection of information to 

help determine how useful the 

information is; whether the public can 

help perform ATF’s functions better; 

whether the information is readily 

available elsewhere; how accurate 

ATF’s estimate of the burden of 

collection is; how valid the methods for 

determining burden are; how to improve 

the quality, usefulness, and clarity of 

the information; and how to minimize 

the burden of collection. 

If you submit comments on the 

collection of information, submit them 

following the ‘‘Public Participation’’ 

section under the SUPPLEMENTARY

INFORMATION heading. You need not 

respond to a collection of information 

unless it displays a currently valid 

control number from OMB. Before the 

requirements for this collection of 

information become effective, ATF will 

publish a notice in the Federal Register 

of OMB’s decision to approve, modify, 

or disapprove the proposed collection. 

IV. Public Participation 

A. Comments Sought 

ATF requests comments on the 

proposed rule from all interested 

persons. ATF specifically requests 

comments on: 

(1) The clarity of this proposed rule, 

and how easy it is to understand; 

(2) The various definitions and 

rebuttable presumptions relevant to 

determining when a person is ‘‘engaged 

in the business’’ of dealing in firearms 

at wholesale or retail, as described in 

Section II.D of this preamble, and when 

a person acts with the intent to 

‘‘predominantly earn a profit’’ from the 

sale or disposition of firearms, as 

described in Section II.G of this 

preamble. 

(3) Whether the rule should use 

inferences, factors, or some other 

method of determining when a person is 

‘‘engaged in the business’’ of dealing in 

firearms or acting with the intent to 

‘‘predominantly earn a profit’’, instead 

of, or in addition to, using presumptions 

of any kind, including (a) whether the 

criteria should function as rebuttable 

presumptions or permissive inferences 

in the administrative and civil contexts, 

and (b) whether and how the criteria 

should function differently in different 

types of proceedings; 

(4) Whether there is additional 

specific conduct that would provide 

indicia of whether or when a person is 

or is not ‘‘engaged in the business’’ of 

dealing in firearms, or acts with the 

intent to ‘‘predominantly to earn a 

profit’’ from the sale or disposition of 

firearms; 

(5) When and how any presumptions, 

inferences, or factors can or should be 

rebutted; 

(6) Whether the rule should define 

‘‘occasional’’ as that term is used in the 

definition of ‘‘engaged in the business’’ 

under 18 U.S.C. 921(a)(21)(C), and if so, 

how the term should be defined; and 

(7) The costs or benefits of the 

proposed rule, and appropriate 

methodology and data for calculating 

those costs and benefits, including what 

sources ATF should look to, beyond 

ATF’s own expertise, for accurate 

estimates of the percentage of this 

population that would need to obtain a 

license because they are ‘‘engaged in the 

business’’ of dealing in firearms 

compared to those who make occasional 

sales of firearms (e.g., enhancement of a 

personal collection or for a hobby) and 

would not need to obtain a license. 

All comments must reference this 

document’s docket number, ATF 

2022R–17, and be legible. Commenters 

must also include the commenter’s 

complete first and last name and contact 

information. If submitting a comment 

through the Federal eRulemaking portal, 

as described in Section IV.C of this 

preamble, commenters should carefully 

review and follow the website’s 

instructions on submitting comments. If 

submitting as an individual, any 

information provided for city, state, zip 

code, and phone will not be publicly 

viewable when ATF publishes the 

comment on regulations.gov. If 

submitting a comment by mail, 

commenters should review Section IV.B 

of this preamble regarding proper 

submission of PII. ATF may not 

consider, or respond to, comments that 

do not meet these requirements or 

comments containing profanity or 

threatening or abusive language. ATF 

will retain anonymous comments and 

those containing excessive profanity as 

part of this rulemaking’s administrative 

record but will not publish such 

documents on www.regulations.gov. 

ATF will treat all comments as originals 

and will not acknowledge receipt of 

comments. In addition, if your comment 

cannot be read due to technical 

difficulties and ATF cannot contact you 

for clarification, ATF may not be able to 

consider your comment. 

ATF will carefully consider all 

comments, as appropriate, received on 

or before the closing date, and will give 

comments after that date the same 

consideration if practical to do so, but 

assurance of consideration cannot be 

given except as to comments received 

on or before the closing date. 

B. Confidentiality 

ATF will make all comments meeting 

the requirements of this section, 

whether submitted electronically or on 

paper, available for public viewing at 

www.ATF.gov, on the internet through 

the Federal eRulemaking Portal, and 

through the Freedom of Information Act 

(5 U.S.C. 552). Commenters who submit 

by mail and who do not want their 

name or other PII posted on the internet 

should submit their comments by mail 

along with a separate cover sheet 

containing their PII. Both the cover 

sheet and comment must reference this 

docket number (ATF 2022R–17). For 

comments submitted by mail, 

information contained on the cover 

sheet will not appear when posted on 

the internet, but any PII that appears 

within the body of a comment will not 

be redacted by ATF and it will appear 

on the internet. Commenters who 

submit through the Federal 

eRulemaking portal and who do not 

want any of their PII posted on the 

internet should omit such PII from the 

body of their comment or in any 

uploaded attachments. 


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A commenter may submit to ATF 

information identified as proprietary or 

confidential business information. The 

commenter must place any portion of a 

comment that is proprietary or 

confidential business information under 

law on pages that are separated from the 

balance of the comment, with each page 

prominently marked ‘‘PROPRIETARY 

OR CONFIDENTIAL BUSINESS 

INFORMATION’’ at the top of each 

page. 

ATF will not make proprietary or 

confidential business information 

submitted in compliance with these 

instructions available when disclosing 

the comments that it received, but will 

disclose that the commenter provided 

proprietary or confidential business 

information that ATF is holding in a 

separate file to which the public does 

not have access. If ATF receives a 

request to examine or copy this 

information, it will treat it as any other 

request under the Freedom of 

Information Act (5 U.S.C. 552). In 

addition, ATF will disclose such 

proprietary or confidential business 

information to the extent required by 

other legal process. 

C. Submitting Comments 

Submit comments using either of the 

two methods described below (but do 

not submit the same comment multiple 

times or by more than one method). 

Hand-delivered comments will not be 

accepted. 

• Federal eRulemaking Portal: ATF 

recommends that you submit your 

comments to ATF via the Federal 

eRulemaking portal at 

www.regulations.gov and follow the 

instructions. Comments will be posted 

within a few days of being submitted. 

However, if large volumes of comments 

are being processed simultaneously, 

your comment may not be viewable for 

up to several weeks. Please keep the 

comment tracking number that is 

provided after you have successfully 

uploaded your comment. 

• Mail: Send written comments to the 

address listed in the ADDRESSES section 

of this document. Written comments 

must appear in minimum 12-point font 

size (.17 inches), include the 

commenter’s first and last name and full 

mailing address, be signed, and may be 

of any length. See also Section IV.B of 

this preamble. 

D. Request for Hearing 

In accordance with 18 U.S.C. 926(b), 

any interested person who desires an 

opportunity to comment orally at a 

public hearing should submit a request, 

in writing, to the Director of ATF within 

the notice period. The Director, 

however, reserves the right to 

determine, in light of all circumstances, 

whether a public hearing is necessary. 

Disclosure 

Copies of this proposed rule and the 

comments received in response to it will 

be available through the Federal 

eRulemaking portal, at 

www.regulations.gov (search for RIN 

1140–58), and for public inspection by 

appointment during normal business 

hours at: ATF Reading Room, Room 1E– 

063, 99 New York Ave. NE, Washington, 

DC 20226; telephone: (202) 648–8740. 

Severability 

Consistent with the Administrative 

Procedure Act, the issues raised in this 

proposed rule may be finalized, or not, 

independently of each other, after 

consideration of comments received. 

The Department intends separate 

aspects of any final rule that results 

from this proposed rule to be severable 

from each other, as demonstrated by the 

rule’s structure. In the event any 

provision of this rule as finalized is held 

to be invalid or unenforceable by its 

terms, the remainder shall not be 

affected and shall be construed so as to 

give remaining provisions the maximum 

effect permitted by law. 

List of Subjects in 27 CFR Part 478 

Administrative practice and 

procedure, Arms and munitions, 

Exports, Freight, Imports, 

Intergovernmental relations, Law 

enforcement officers, Military 

personnel, Penalties, Reporting and 

recordkeeping requirements, Research, 

Seizures and forfeitures, Transportation. 

Authority and Issuance 

For the reasons discussed in the 

preamble, the Department proposes to 

amend 27 CFR part 478 as follows: 

PART 478—COMMERCE IN FIREARMS 

AND AMMUNITION 

■ 1. The authority citation for 27 CFR 

part 478 continues to read as follows: 

Authority: 5 U.S.C. 552(a); 18 U.S.C. 847, 

921–931; 44 U.S.C. 3504(h). 

■ 2. Amend § 478.11 by: 

■ a. Revising the definition of ‘‘Dealer’’; 

■ b. Revising paragraph (c) of the 

definition of ‘‘Engaged in the business’’; 

■ c. Adding the definitions of ‘‘Personal 

collection, personal collection of 

firearms, or personal firearms 

collection’’ and ‘‘Predominantly earn a 

profit’’ in alphabetical order; 

■ d. Revising the definition of 

‘‘Principal objective of livelihood and 

profit’’; and 

■ f. Adding the definitions of 

‘‘Responsible person’’ and ‘‘Terrorism’’ 

in alphabetical order. 

The revisions and additions read as 

follows: 

§ 478.11 Meaning of terms. 

* * * * * 

Dealer. Any person engaged in the 

business of selling firearms at wholesale 

or retail; any person engaged in the 

business of repairing firearms or of 

making or fitting special barrels, stocks, 

or trigger mechanisms to firearms; or 

any person who is a pawnbroker. The 

term shall include any person who 

engages in such business or occupation 

on a part-time basis. The term shall 

include such activities wherever, or 

through whatever medium, they may be 

conducted, such as at a gun show or 

event, flea market, auction house, or gun 

range or club; at one’s home; by mail 

order; over the internet; through the use 

of other electronic means (e.g., an online 

broker, online auction, text messaging 

service, social media raffle, or website); 

or at any other domestic or international 

public or private marketplace or 

premises. 

* * * * * 

Engaged in the business— 

* * * * * 

(c) Dealer in firearms other than a 

gunsmith or a pawnbroker. (1) A person 

who devotes time, attention, and labor 

to dealing in firearms as a regular course 

of trade or business to predominantly 

earn a profit through the repetitive 

purchase and resale of firearms, but 

such term shall not include a person 

who makes occasional sales, exchanges, 

or purchases of firearms for the 

enhancement of a personal collection or 

for a hobby, or who sells all or part of 

the person’s personal collection of 

firearms. The term shall not include an 

auctioneer who provides only auction 

services on commission by assisting in 

liquidating a personal collection of 

firearms at an estate-type auction, 

provided the auctioneer does not 

purchase the firearms, take possession 

of the firearms prior to the auction, or 

consign the firearms for sale. 

(2) For purposes of this definition— 

(i) The term ‘‘purchase’’ (and 

derivative terms thereof) means the act 

of obtaining a firearm in exchange for 

something of value; 

(ii) The term ‘‘sale’’ (and derivative 

terms thereof, including ‘‘resale’’) means 

the act of providing a firearm in 

exchange for something of value; and 

(iii) The term ‘‘something of value’’ 

includes money, credit, personal 

property (e.g., another firearm or 

ammunition), a service, a controlled 


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substance, or any other medium of 

exchange or valuable consideration. 

(3) Whether a person is engaged in the 

business of dealing in firearms requiring 

a license is a fact-specific inquiry. 

Selling large numbers of firearms or 

engaging or offering to engage in 

frequent transactions may be highly 

indicative of business activity. However, 

there is no minimum threshold number 

of firearms purchased or sold that 

triggers the licensing requirement. 

Similarly, there is no minimum number 

of transactions that determines whether 

a person is ‘‘engaged in the business’’ of 

dealing in firearms. For example, even 

a single firearm transaction or offer to 

engage in a transaction, when combined 

with other evidence (e.g., where a 

person represents to others a 

willingness to acquire more firearms for 

resale or offers more firearms for sale), 

may require a license. A person shall be 

presumed to be engaged in the business 

of dealing in firearms in civil and 

administrative proceedings, absent 

reliable evidence to the contrary, when 

the person— 

(i) Sells or offers for sale firearms, and 

also represents to potential buyers or 

otherwise demonstrates a willingness 

and ability to purchase and sell 

additional firearms; 

(ii) Spends more money or its 

equivalent on purchases of firearms for 

the purpose of resale than the person’s 

reported gross taxable income during 

the applicable period of time; 

(iii) Repetitively purchases for the 

purpose of resale, or sells or offers for 

sale, firearms— 

(A) Through straw or sham 

businesses, or individual straw 

purchasers or sellers; or 

(B) That cannot lawfully be purchased 

or possessed, including: 

(1) Stolen firearms (18 U.S.C. 922(j)); 

(2) Firearms with the licensee’s serial 

number removed, obliterated, or altered 

(18 U.S.C. 922(k), 26 U.S.C. 5861(i)); 

(3) Firearms imported in violation of 

law (18 U.S.C. 922(l), 22 U.S.C. 2778, or 

26 U.S.C. 5844, 5861(k)); or 

(4) Machineguns or other weapons 

defined as firearms under 26 U.S.C. 

5845(b) that were not properly 

registered in the National Firearms 

Registration and Transfer Record (18 

U.S.C. 922(o); 26 U.S.C. 5861(d)); 

(iv) Repetitively sells or offers for sale 

firearms— 

(A) Within 30 days after the person 

purchased the firearms; 

(B) That are new, or like new in their 

original packaging; or 

(C) Of the same or similar kind (i.e., 

make/manufacturer, model, caliber/ 

gauge, and action) and type (i.e., rifle, 

shotgun, revolver, pistol, frame, 

receiver, machinegun, silencer, 

destructive device, or ‘other’ firearm); 

(v) Who, as a former licensee (or 

responsible person acting on behalf of 

the former licensee) sells or offers for 

sale firearms that were in the business 

inventory of such licensee at the time 

the license was terminated (i.e., license 

revocation, denial of license renewal, 

license expiration, or surrender of 

license), and were not transferred to a 

personal inventory in accordance with 

18 U.S.C. 923(c) and 27 CFR 478.125a; 

or 

(vi) Who, as a former licensee (or 

responsible person acting on behalf of 

the former licensee) sells or offers for 

sale firearms that were transferred to the 

personal inventory of such former 

licensee or responsible person prior to 

the time the license was terminated, 

unless: 

(A) The firearms were received and 

transferred without any intent to 

willfully evade the restrictions placed 

on licensees by chapter 44, title 18, 

United States Code; and 

(B) One year has passed from the date 

of transfer to the personal collection. 

(4) Where a person’s conduct does not 

otherwise demonstrate a predominant 

intent to earn a profit, the person shall 

not be presumed to be engaged in the 

business of dealing in firearms when the 

person transfers firearms only as bona 

fide gifts, or occasionally sells firearms 

only to obtain more valuable, desirable, 

or useful firearms for the person’s 

personal collection or hobby. 

(5) The activities set forth in the 

rebuttable presumptions in paragraphs 

(c)(3)(i) through (vi) of this definition 

are not exhaustive of the conduct that 

may show that, or be considered in 

determining whether, a person is 

engaged in the business of dealing in 

firearms. 

(6) The rebuttable presumptions in 

paragraphs (c)(3)(i) through (vi) of this 

definition shall not apply to any 

criminal case, although they may be 

useful to courts in criminal cases, for 

example, when instructing juries 

regarding permissible inferences. 

* * * * * 

Personal collection, personal 

collection of firearms, or personal 

firearms collection. (1) Personal firearms 

that a person accumulates for study, 

comparison, exhibition, or for a hobby 

(e.g., noncommercial, recreational 

activities for personal enjoyment, such 

as hunting, or skeet, target, or 

competition shooting). The term shall 

not include any firearm purchased for 

the purpose of resale or made with the 

predominant intent to earn a profit. 

(2) In the case of a firearm imported, 

manufactured, or otherwise acquired by 

a licensed manufacturer, licensed 

importer, or licensed dealer, the term 

shall include only a firearm described in 

paragraph (1) of this definition that 

was— 

(i) Acquired or transferred without the 

intent to willfully evade the restrictions 

placed upon licensees under chapter 44, 

title 18, United States Code; 

(ii) Recorded by the licensee as an 

acquisition in the licensee’s acquisition 

and disposition record in accordance 

with § 478.122(a), 478.123(a), or 

478.125(e) (unless acquired prior to 

licensure and not intended for sale); 

(iii) Recorded as a disposition from 

the licensee’s business inventory to the 

individual’s personal collection in 

accordance with § 478.122(a), 

478.123(a), or 478.125(e); 

(iv) Stored separately from, and not 

commingled with the business 

inventory, and appropriately identified 

as ‘‘not for sale’’ (e.g., by attaching a 

tag), if on the business premises; and 

(v) Maintained in such personal 

collection (whether on or off the 

business premises) for at least one year 

from the date the firearm was so 

transferred, in accordance with 18 

U.S.C. 923(c) and 27 CFR 478.125a. 

* * * * * 

Predominantly earn a profit. (1) The 

intent underlying the sale or disposition 

of firearms is predominantly one of 

obtaining pecuniary gain, as opposed to 

other intents, such as improving or 

liquidating a personal firearms 

collection: Provided, that proof of profit, 

including the intent to profit, shall not 

be required as to a person who engages 

in the regular and repetitive purchase 

and disposition of firearms for criminal 

purposes or terrorism. For purposes of 

this definition, a person may have the 

intent to profit even if the person does 

not actually obtain pecuniary gain from 

the sale or disposition of firearms. 

(2) The intent to predominantly earn 

a profit is a fact-specific inquiry. A 

person shall be presumed to have the 

intent to predominantly earn a profit 

from the sale or disposition of firearms 

in civil and administrative proceedings, 

absent reliable evidence to the contrary, 

when the person— 

(i) Advertises, markets, or otherwise 

promotes a firearms business (e.g., 

advertises or posts firearms for sale, 

including on any website, establishes a 

website for offering their firearms for 

sale, makes available business cards, or 

tags firearms with sales prices), 

regardless of whether the person incurs 

expenses or only promotes the business 

informally; 

(ii) Purchases, rents, or otherwise 

secures or sets aside permanent or 


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temporary physical space to display or 

store firearms they offer for sale, 

including part or all of a business 

premises, table or space at a gun show, 

or display case; 

(iii) Makes or maintains records, in 

any form, to document, track, or 

calculate profits and losses from 

firearms purchases and sales; 

(iv) Purchases or otherwise secures 

merchant services as a business (e.g., 

credit card transaction services, digital 

wallet for business) through which the 

person makes or offers to make 

payments for firearms transactions; 

(v) Formally or informally purchases, 

hires, or otherwise secures business 

security services (e.g., a central stationmonitored security system registered to 

a business, or guards for security) to 

protect business assets or transactions 

that include firearms; 

(vi) Formally or informally establishes 

a business entity, trade name, or online 

business account, including an account 

using a business name on a social media 

or other website, through which the 

person makes or offers to make firearms 

transactions; 

(vii) Secures or applies for a State or 

local business license to purchase for 

resale or to sell merchandise that 

includes firearms; or 

(viii) Purchases a business insurance 

policy, including any riders that cover 

firearms inventory. 

(3) The activities set forth in the 

rebuttable presumptions in paragraphs 

(2)(i) through (viii) of this definition are 

not exhaustive of the conduct that may 

show that, or be considered in 

determining whether, a person has the 

intent to predominantly earn a profit 

from the sale or disposition of firearms. 

(4) The rebuttable presumptions in 

paragraphs (2)(i) through (viii) of this 

definition shall not apply to any 

criminal case, although they may be 

useful to courts in criminal cases, for 

example, when instructing juries 

regarding permissible inferences. 

* * * * * 

Responsible person. Any individual 

possessing, directly or indirectly, the 

power to direct or cause the direction of 

the management, policies, and business 

practices of a corporation, partnership, 

or association, insofar as they pertain to 

firearms. 

* * * * * 

Terrorism. For purposes of the 

definitions ‘‘predominantly earn a 

profit,’’ and ‘‘principal objective of 

livelihood and profit,’’ the term 

‘‘terrorism’’ means activity, directed 

against United States persons, which— 

(1) Is committed by an individual who 

is not a national or permanent resident 

alien of the United States; 

(2) Involves violent acts or acts 

dangerous to human life which would 

be a criminal violation if committed 

within the jurisdiction of the United 

States; and 

(3) Is intended— 

(i) To intimidate or coerce a civilian 

population; 

(ii) To influence the policy of a 

government by intimidation or coercion; 

or 

(iii) To affect the conduct of a 

government by assassination or 

kidnapping. 

■ 3. In § 478.57, designate the 

introductory text as paragraph (a) and 

add paragraph (b) to read as follows: 

§ 478.57 Discontinuance of business. 

* * * * * 

(b) Upon termination of a license (i.e., 

license revocation, denial of license 

renewal, license expiration, or surrender 

of license), the former licensee shall 

within 30 days, or such additional 

period designated by the Director for 

good cause: 

(1) Liquidate the remaining business 

inventory by selling or otherwise 

disposing of the firearms to a licensed 

importer, licensed manufacturer, or 

licensed dealer for sale, auction, or 

pawn redemption in accordance with 

this part; or 

(2) Transfer the remaining business 

inventory to a personal inventory of the 

former licensee, or a responsible person 

of the former licensee, provided the 

recipient is not prohibited by law from 

receiving or possessing firearms. Except 

for the sale of remaining inventory to a 

licensee within the 30-day period (or 

designated additional period), a former 

licensee or responsible person of such 

licensee who resells any such inventory, 

including business inventory transferred 

to a personal inventory, is subject to the 

presumptions in § 478.11 (definition of 

‘‘engaged in the business’’ as a dealer in 

firearms other than a gunsmith or 

pawnbroker) that apply to a person who 

repetitively purchased those firearms for 

the purpose of resale. In addition, the 

former licensee shall not continue to 

engage in the business of importing, 

manufacturing, or dealing in firearms by 

importing or manufacturing additional 

firearms for purposes of sale or 

distribution, or purchasing additional 

firearms for resale (i.e., ‘‘restocking’’). 

■ 4. In § 478.78, designate the 

introductory text as paragraph (a) and 

add paragraph (b) to read as follows: 

§ 478.78 Operations by licensee after 

notice. 

* * * * * 

(b) Upon final disposition of license 

proceedings to disapprove or terminate 

a license (i.e., by revocation or denial of 

renewal), the former licensee shall 

within 30 days, or such additional 

period designated by the Director for 

good cause, either: 

(1) Liquidate the remaining business 

inventory by selling or otherwise 

disposing of the firearms to a licensed 

importer, licensed manufacturer, or 

licensed dealer for sale, auction, or 

pawn redemption in accordance with 

this part; or 

(2) Transfer the remaining business 

inventory to a personal inventory of the 

former licensee, or a responsible person 

of the former licensee provided the 

recipient is not prohibited by law from 

receiving or possessing firearms. Except 

for the sale of remaining inventory to a 

licensee within the 30-day period (or 

designated additional period), a former 

licensee or responsible person of such 

former licensee, who resells any such 

inventory, including business inventory 

transferred to a personal inventory, is 

subject to the presumptions in § 478.11 

(definition of ‘‘engaged in the business’’ 

as a dealer in firearms other than a 

gunsmith or pawnbroker) that apply to 

a person who repetitively purchased 

those firearms for the purpose of resale. 

In addition, the former licensee shall 

not continue to engage in the business 

of importing, manufacturing, or dealing 

in firearms by importing or 

manufacturing additional firearms for 

purposes of sale or distribution, or 

purchasing additional firearms for resale 

(i.e., ‘‘restocking’’). 

■ 5. In § 478.124, revise paragraph (a) to 

read as follows: 

§ 478.124 Firearms transaction record. 

(a) A licensed importer, licensed 

manufacturer, or licensed dealer shall 

not sell or otherwise dispose, 

temporarily or permanently, of any 

firearm to any person, other than 

another licensee, unless the licensee 

records the transaction on a firearm 

transaction record, Form 4473: 

Provided, that a firearms transaction 

record, Form 4473, shall not be required 

to record the disposition made of a 

firearm delivered to a licensee for the 

sole purpose of repair or customizing 

when such firearm or a replacement 

firearm is returned to the person from 

whom received; provided further, that a 

firearms transaction record, Form 4473, 

shall not be used if the sale or other 

disposition is being made to another 

licensed importer, licensed 

manufacturer, or licensed dealer, or a 

curio or relic to a licensed collector, 

including a sole proprietor who 

transfers a firearm to their personal 

collection in accordance with 

§ 478.125a. When a licensee transfers a 


lotter on DSK11XQN23PROD with PROPOSALS1
Federal Register / Vol. 88, No. 173 / Friday, September 8, 2023 / Proposed Rules 62023 

1Petition of the United States Postal Service for 

the Initiation of a Proceeding to Consider Proposed 

Changes in Analytical Principles (Proposal Two), 

May 26, 2023 (Petition). 

2 Docket No. RM2023–7, Order on Analytical 

Principles Used in Periodic Reporting (Proposal 

Two), Directing the Postal Service’s Participation in 

Further Proceedings, and Providing Notice of Filing 

Attachment Under Seal, August 31, 2023 (Order No. 

6659). 

3Postal Service Reform Act of 2022 (PSRA), 

Public Law. 117–108, 136 Stat. 1127 (2022). 

4Prior to the enactment of the PSRA, the Postal 

Service’s authority for these agreements was 

governed by 39 U.S.C. 411, which authorizes the 

Postal Service to ‘‘furnish property and services’’ to 

‘‘Executive agencies within the meaning of [5 U.S.C. 

105] and the Government Publishing Office. . . .’’ 

39 U.S.C. 411. Section 105 of Title 5 of the United 

States Code specifies that an ‘‘ ‘Executive agency’ 

means an Executive department, a Government 

corporation, and an independent establishment’’ of 

the U.S. Government, as those terms are defined in 

5 U.S.C. chapter 1. 5 U.S.C. 105. 

5 Docket No. ACR2022, Annual Compliance 

Determination Report, FY 2022, March 29, 2023. 

firearm to another licensee, the licensee 

shall comply with the verification and 

recordkeeping requirements in § 478.94 

and subpart H of part 478. 

* * * * * 

■ 6. In § 478.125a, in paragraphs (a)(2) 

and (3), remove the citation 

‘‘§ 478.125(e)’’ and add in its place 

‘‘§§ 478.122(a), 478.123(a), or 

478.125(e)’’. 

Dated: August 30, 2023. 

Merrick B. Garland, 

Attorney General. 

[FR Doc. 2023–19177 Filed 9–7–23; 8:45 am] 

BILLING CODE 4410–FY–P 

POSTAL REGULATORY COMMISSION 

39 CFR Part 3050 

[Docket No. RM2023–7; Order No. 6659] 

Periodic Reporting 

AGENCY: Postal Regulatory Commission. 

ACTION: Notice of proposed rulemaking. 

SUMMARY: The Commission is 

conducting further proceedings and will 

be accepting further comments with 

respect to a rulemaking proceeding to 

consider changes to analytical 

principles relating to periodic reports 

(Proposal Two). This document invites 

further public comment and takes other 

administrative steps. 

DATES: Comments are due: October 16, 

2023. 

ADDRESSES: Submit comments 

electronically via the Commission’s 

Filing Online system at http://

www.prc.gov. Those who cannot submit 

comments electronically should contact 

the person identified in the FOR FURTHER

INFORMATION CONTACT section by 

telephone for advice on filing 

alternatives. 

FOR FURTHER INFORMATION CONTACT: 

David A. Trissell, General Counsel, at 

202–789–6820. 

SUPPLEMENTARY INFORMATION: 

Table of Contents 

I. Introduction 

II. Proposal Two, Order No. 6659, and 

Direction for Further Proceedings 

III. Notice and Comment 

IV. Ordering Paragraphs 

I. Introduction 

On May 26, 2023, the Postal Service 

filed a petition pursuant to 39 CFR 

3050.11 requesting that the Commission 

initiate a rulemaking proceeding to 

consider changes to analytical 

principles relating to periodic reports.1

The Petition identified the proposed 

analytical changes as Proposal Two. In 

Order No. 6659 the Commission 

conditionally approved Proposal Two 

but directed the Postal Service to 

propose further changes to analytical 

principles relating to periodic reports to 

address what the Commission found to 

be outstanding issues with respect to 

cost identification and attribution for 

interagency agreements (IAAs).2

II. Proposal Two, Order No. 6659, and 

Direction for Further Proceedings 

Background. The Postal Service 

Reform Act of 2022 3 modified and 

expanded the Postal Service’s ability to 

enter into IAAs to provide property and 

services to, or on behalf of, other 

government agencies. Specifically, 39 

U.S.C. 3703 for the first time authorizes 

the Postal Service to enter into 

agreements with agencies of any state 

government, local government, or tribal 

government to provide property or 

nonpostal services to the public on 

behalf of such agencies for noncommercial purposes. At the same time, 

with respect to the Postal Service’s preexisting authority under 39 U.S.C. 411 

to provide property and services to 

other Federal agencies, the PSRA 

specifies that ‘‘[t]he Postal Service may 

establish a program to provide property 

and nonpostal services to other 

Government [i.e., federal] agencies 

within the meaning of section 411 4, but 

only if such program provides a net 

contribution to the Postal Service, 

defined as reimbursement that covers at 

least 100 percent of the costs 

attributable . . ..’’ 39 U.S.C. 3704. 

Under the PSRA, the Postal Service 

must submit a report to the Commission 

after the close of each fiscal year that 

‘‘analyzes costs, revenues, rates, and 

quality of service for each agreement or 

substantially similar set of agreements 

for the provision of property or 

nonpostal services under section 3703 

or the program as a whole under section 

3704, . . . using such methodologies as 

the Commission may prescribe, and in 

sufficient detail to demonstrate 

compliance with the requirements of 

[Chapter 37 of Title 39 of the United 

States Code].’’ 39 U.S.C. 3705(a). Upon 

receiving the Postal Service’s report and 

providing an opportunity for public 

comment, the Commission must make a 

written determination of compliance. 39 

U.S.C. 3705(e). 

In the Commission’s FY 2022 Annual 

Compliance Determination,5 the 

Commission directed the Postal Service 

to develop a proposed methodology (or 

methodologies) for calculating and 

attributing costs and revenue to IAAs 

authorized under 39 U.S.C. 3703 and 

3704, and to initiate a rulemaking 

proceeding to establish such 

methodology (or methodologies) in 

accordance with 39 CFR 3050.11 by no 

later than May 31, 2023. Id. at 102. As 

directed, the Postal Service initiated the 

instant proceeding to propose a 

categorical approach to identifying costs 

and revenue for similar types, or 

groupings, of IAAs. Petition, Proposal 

Two at 2–3. 

Order No. 6659 and direction for 

further proceedings. In Order No. 6659 

the Commission conditionally approved 

Proposal Two, but directed the Postal 

Service to propose further changes to 

analytical principles relating to periodic 

reports to address specific issues that 

the Commission found remained 

unaddressed. First, the Commission 

directed the Postal Service to develop a 

proposed change in accepted analytical 

principles to develop a separate line 

item (or line items) in the Cost and 

Revenue Analysis (CRA) and related 

workbooks to enable the attribution of 

costs and related revenue to IAAs. Order 

No. 6659 at 16. Second, for agreements 

with government agencies that involve 

the provision of both postal services and 

property or nonpostal services, the 

Commission directed the Postal Service 

to develop a proposed change in 

analytical principles to separately 

account for the costs and revenue for 

those respective portions. Id. The 

Commission directed the Postal Service 

to file proposals related to these issues 

by September 29, 2023. Id. The 

Commission will then accept comments 

on the Postal Service’s proposals until 

October 16, 2023. Id. at 18. 


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