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[Federal Register Volume 78, Number 174 (Monday, September 9, 2013)]
[Proposed Rules]
[Pages 55014-55029]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-21661]

[[Page 55014]]

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DEPARTMENT OF JUSTICE

Bureau of Alcohol, Tobacco, Firearms, and Explosives

27 CFR Part 479

[Docket No. ATF 41P; AG Order No. 3398-2013]
RIN 1140-AA43

Machine Guns, Destructive Devices and Certain Other Firearms; 
Background Checks for Responsible Persons of a Corporation, Trust or 
Other Legal Entity With Respect To Making or Transferring a Firearm

AGENCY: Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF), 
Department of Justice.

ACTION: Notice of proposed rulemaking.

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SUMMARY: The Department of Justice proposes amending Bureau of Alcohol, 
Tobacco, Firearms, and Explosives (ATF) regulations that concern the 
making or transferring of a firearm under the National Firearms Act 
(NFA). The proposed changes include: Defining the term ``responsible 
person,'' as used in reference to a trust, partnership, association, 
company, or corporation; requiring ``responsible persons'' of such 
legal entities to submit, inter alia, photographs and fingerprints, as 
well as a law enforcement certificate, when the legal entity files an 
application to make an NFA firearm or is listed as the transferee on an 
application to transfer an NFA firearm; modifying the information 
required in a law enforcement certificate, so that the certificate no 
longer requires a statement from the certifying official that he or she 
has no information indicating that the maker or transferee of the NFA 
firearm will use the firearm for other than lawful purposes; and adding 
a new section to ATF's regulations to address the possession and 
transfer of firearms registered to a decedent. The new section would 
clarify that the executor, administrator, personal representative, or 
other person authorized under state law to dispose of property in an 
estate may possess a firearm registered to a decedent during the term 
of probate without such possession being treated as a ``transfer'' 
under the NFA. It also would specify that the transfer of the firearm 
to any beneficiary of the estate may be made on a tax-exempt basis.

DATES: Written comments must be postmarked and electronic comments must 
be submitted on or before December 9, 2013. Commenters should be aware 
that the electronic Federal Docket Management System will not accept 
comments after 11:59 p.m. Eastern Time on the last day of the comment 
period.

ADDRESSES: You may submit comments, identified by docket number (ATF 
41P), by any of the following methods--
     Federal eRulemaking Portal: http://www.regulations.gov. 
Follow the instructions for submitting comments.
     Fax: (202) 648-9741.
     Mail: Brenda Raffath Friend, Mailstop 6N-602, Office of 
Regulatory Affairs, Enforcement Programs and Services, Bureau of 
Alcohol, Tobacco, Firearms, and Explosives, U.S. Department of Justice, 
99 New York Avenue NE., Washington, DC 20226; ATTN: ATF 41P.
    Instructions: All submissions received must include the agency name 
and docket number for this rulemaking. All comments received will be 
posted without change to the Federal eRulemaking portal, http://www.regulations.gov, including any personal information provided. 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: Brenda Raffath Friend, Office of 
Regulatory Affairs, Enforcement Programs and Services, Bureau of 
Alcohol, Tobacco, Firearms, and Explosives, U.S. Department of Justice, 
99 New York Avenue NE., Washington, DC 20226; telephone: (202) 648-
7070.

SUPPLEMENTARY INFORMATION:

I. Background

    The Attorney General is responsible for enforcing the provisions of 
the NFA, 26 U.S.C. Chapter 53.\1\ The Attorney General has delegated 
that responsibility to the Director of ATF, subject to the direction of 
the Attorney General and the Deputy Attorney General. 28 CFR 0.130(a). 
Regulations implementing the provisions of the NFA are set forth in 27 
CFR part 479, which contains the procedural and substantive 
requirements relating to the importation, making, exportation, 
transfer, taxing, identification, registration of, and the dealing in, 
machine guns, destructive devices, and certain other firearms.
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    \1\ Provisions of the NFA discussed below refer to the 
``Secretary'' rather than the ``Attorney General''; however, the 
relevant functions of the Secretary of the Treasury have been 
transferred to the Department of Justice, under the general 
authority of the Attorney General. 28 U.S.C. 599A(c)(1). For ease of 
reference, we will substitute ``Attorney General'' for ``Secretary'' 
when discussing these statutes.
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A. Application To Make a Firearm

    Section 5822 of the NFA, 26 U.S.C. 5822, provides that no person 
shall make a firearm unless the person has: (I) Filed with the Attorney 
General a written application, in duplicate, to make and register the 
firearm; (II) paid any tax payable on the making, and evidenced such 
payment by affixing the proper stamp to the original application form; 
(III) identified the firearm to be made in the application form, in 
such manner as prescribed by regulation; (IV) identified themself in 
the application form, in such manner as prescribed by regulation, 
except that, if such person is an individual, the identification must 
include the individual's fingerprints and photograph; and (V) obtained 
the approval of the Attorney General to make and register the firearm 
and shows such approval on the application form. Applications shall be 
denied if the making or possession of the firearm would place the 
person making the firearm in violation of law. For purposes of title 
26, United States Code, the term ``person'' means ``an individual, a 
trust, estate, partnership, association, company or corporation.'' 26 
U.S.C. 7701(a)(1).
    Regulations implementing section 5822 are set forth in 27 CFR part 
479, subpart E. Section 479.62 provides, in pertinent part, that no 
person may make a firearm unless the person has filed with the Director 
a written application on ATF Form 1 (5320.1), Application to Make and 
Register a Firearm, in duplicate, and has received the approval of the 
Director to make the firearm. Approval of the application will 
effectuate registration of the firearm to the applicant. The 
application must identify the firearm to be made by serial number and 
other specified markings and information. In addition, the applicant 
must be identified on the form by name and address and, if other than a 
natural person (e.g., a corporation or trust), by the name and address 
of the principal officer or authorized representative of the entity, as 
well as the employer identification number of the entity. If an 
individual, the identification must also include certain information 
prescribed in Sec.  479.63.
    Section 479.63 states that if the applicant is an individual, a 
photograph of the applicant, approximately 2 x 2 inches and taken 
within 1 year prior to the date of the application, must be affixed to 
the indicated space on each copy of the Form 1. The regulation also 
provides that a completed Federal Bureau of Investigation (FBI) Form 
FD-

[[Page 55015]]

258 (Fingerprint Card), containing the fingerprints of the applicant, 
must be submitted in duplicate with the application.
    In addition, section 479.63 provides that the law enforcement 
certificate located on Form 1 must be completed and signed by the local 
chief of police or county sheriff, the head of the state police, the 
state or local district attorney or prosecutor, or such other person 
whose certificate may be acceptable to the Director. The certifying 
official must state, inter alia, that he or she has no information 
indicating that possession of the firearm by the maker would be in 
violation of state or local law or that the maker will use the firearm 
for other than lawful purposes. The certifying official must have 
jurisdiction over the area within which the maker resides. The purpose 
of this requirement is to ensure that the official will have access to 
criminal records concerning the maker, and knowledge of the state and 
local laws governing the transfer, receipt, and possession of the 
firearm by the maker.
    Under the current regulations, the requirements for fingerprints, 
photographs, and law enforcement certificate specified in Sec.  479.63 
are not applicable to an applicant who is not an individual, e.g., a 
corporation or other legal entity.
    Section 479.64 sets forth the procedure for approval of an 
application to make a firearm. As specified, the Form 1 application 
must be forwarded, in duplicate, by the maker of the firearm to the 
Director, in accordance with the instructions on the form. If the 
application is approved, the Director will return the original to the 
maker of the firearm and retain the duplicate. Upon receipt of the 
approved application, the maker is authorized to make the firearm 
described therein. The maker of the firearm may not, under any 
circumstances, make the firearm until the application has been 
forwarded to the Director and has been approved and returned by the 
Director with the NFA stamp affixed. If the application is disapproved, 
the original Form 1 and the remittance submitted by the applicant for 
the purchase of the stamp will be returned to the applicant with the 
reason for disapproval stated on the form.

B. Application for Transfer of a Firearm

    Section 5812(a) of the NFA, 26 U.S.C. 5812(a), provides that a 
firearm may not be transferred unless: (I) The transferor of the 
firearm has filed with the Attorney General a written application, in 
duplicate, for the transfer and registration of the firearm to the 
transferee, using the prescribed application form; (II) any tax payable 
on the transfer is paid as evidenced by the proper stamp affixed to the 
original application form; (III) the transferee is identified in the 
application form, in such manner as the Attorney General may prescribe 
by regulation, except that, if such person is an individual, the 
identification must include the individual's fingerprints and 
photograph; (IV) the transferor of the firearm is identified in the 
application form, in such manner as the Attorney General may prescribe 
by regulation; (V) the firearm is identified in the application form, 
in such manner as the Attorney General may prescribe by regulation; and 
(VI) the application form shows that the Attorney General has approved 
the transfer and the registration of the firearm to the transferee. 
Applications shall be denied if the transfer, receipt, or possession of 
the firearm would place the transferee in violation of law. Section 
5812(b) provides that the transferee may not take possession of the 
firearm unless the Attorney General has approved the transfer and 
registration of the firearm to the transferee.
    Regulations implementing section 5812 are set forth in 27 CFR part 
479, subpart F. In general, Sec.  479.84 provides that no firearm may 
be transferred in the United States unless an application, ATF Form 4 
(5320.4), Application for Tax Paid Transfer and Registration of 
Firearm, has been filed in duplicate with, and approved by, the 
Director. Form 4 must be filed by the transferor and must identify the 
firearm to be transferred by type, serial number, and other specified 
markings and information. The application must identify the transferor 
by name and address and must include the transferor's Federal firearms 
license and special (occupational) tax stamp, if any. If the transferor 
is other than a natural person, the title or status of the person 
executing the application must be provided. The application must 
identify the transferee by name and address and, if the transferee is a 
natural person not qualified as a manufacturer, importer, or dealer 
under part 479, the person must be further identified in the manner 
prescribed in Sec.  479.85.
    Section 479.85 states that if the transferee is an individual, such 
person must securely attach to each copy of the Form 4, in the space 
provided on the form, a 2 x 2 inch photograph of the transferee taken 
within 1 year prior to the date of the application. The transferee must 
also attach to the application two properly completed FBI Forms FD-258 
(Fingerprint Card). In addition, a certificate by the local chief of 
police, county sheriff, head of the state police, state or local 
district attorney or prosecutor, or such other person whose certificate 
may in a particular case be acceptable to the Director, must be 
completed on each copy of the Form 4. The certifying official must 
state, inter alia, that he or she has no information indicating that 
the receipt or possession of the firearm would place the transferee in 
violation of state or local law or that the transferee will use the 
firearm for other than lawful purposes. The certifying official must 
have jurisdiction over the area within which the transferee resides. 
The purpose of this requirement is to ensure that the official will 
have access to criminal records concerning the transferee, and 
knowledge of the state and local laws governing the transfer, receipt, 
and possession of the firearm by the transferee.
    Under the current regulations, the requirements for fingerprints, 
photographs, and law enforcement certificate specified in Sec.  479.85 
apply only to natural persons not qualified as a manufacturer, 
importer, or dealer under part 479; they do not apply to transferees 
who are not natural persons, e.g., corporations or other legal 
entities.

C. Transfer Tax Exemption Available

    Section 5852(e) of the NFA, 26 U.S.C. 5852(e), provides that an 
unserviceable firearm may be transferred as a curio or ornament without 
payment of the transfer tax imposed by section 5811, under such 
requirements as the Attorney General may by regulations prescribe.
    Section 5853(a) of the NFA, 26 U.S.C. 5853(a), provides that a 
firearm may be transferred without the payment of the transfer tax 
imposed by section 5811 to any State, possession of the United States, 
any political subdivision thereof, or any official police organization 
of such a government entity engaged in criminal investigations.
    Regulations implementing sections 5852(e) and 5853(a) are set forth 
in 27 CFR 479.90 and 479.91. These sections provide, in pertinent part, 
that the exemption from the transfer tax for the transfer of an 
unserviceable firearm as a curio or ornament or for a transfer to or 
from certain government entities may be obtained by the transferor of 
the firearm by filing with the Director an application, ATF Form 5 
(5320.5), Application for Tax Exempt Transfer and Registration of 
Firearm, in duplicate. The application must: (I) Show the name and 
address of the transferor and of the transferee; (II) identify the 
Federal firearms license and special (occupational) tax stamp, if any,

[[Page 55016]]

of the transferor and of the transferee; (III) show the name and 
address of the manufacturer and the importer of the firearm, if known; 
(IV) show the type, model, overall length (if applicable), length of 
barrel, caliber, gauge or size, serial number, and other marks of 
identification of the firearm; and (V) contain a statement by the 
transferor that the transferor is entitled to the exemption because 
either the transferor or the transferee is a governmental entity coming 
within the purview of Sec.  479.90(a) or the firearm is unserviceable 
and is being transferred as a curio or ornament. In the case of the 
transfer of a firearm by a governmental entity to a transferee who is a 
natural person not qualified as a manufacturer, importer, or dealer 
under part 479, the transferee must be further identified in the manner 
prescribed in Sec.  479.85.

II. Petition

    ATF received a petition for rulemaking, dated December 3, 2009, 
filed on behalf of the National Firearms Act Trade and Collectors 
Association (NFATCA). The petition requests amendments to Sec. Sec.  
479.63 and 479.85, as well as to corresponding ATF Forms 1 and 4. The 
requested amendments are discussed below.

A. Amendment of Sec. Sec.  479.63 and 479.85

    As discussed above, the photograph, fingerprint card, and chief law 
enforcement officer (CLEO) certificate requirements of Sec. Sec.  
479.63 and 479.85 do not apply if the applicant or transferee is a 
partnership, company, association, trust, or corporation. As such, 
persons who possess, directly or indirectly, the power or authority to 
receive, possess, ship, transport, deliver, transfer or otherwise 
dispose of a firearm for, or on behalf of the entity are not subject to 
these requirements, and ATF does not conduct a background check of 
those individuals.
    The NFATCA expressed concern that persons who are prohibited by law 
from possessing or receiving firearms may acquire NFA firearms through 
the establishment of a legal entity such as a corporation, trust, or 
partnership. It contends that the number of applications to acquire NFA 
firearms via a corporation, partnership, trust, or other legal entity 
has increased significantly over the years. ATF has researched the 
issue and has determined that the number of Forms 1, 4, and 5 involving 
legal entities that are not Federal firearms licensees increased from 
approximately 840 in 2000 to 12,600 in 2009 and to 40,700 in 2012. 
There accordingly has been an increase in the number of individuals who 
have access to NFA firearms but who have not undergone a background 
check. The petitioner expressed concern that an NFA firearm could be 
acquired by a prohibited person and used in a violent crime. Therefore, 
for applications for a corporation, trust, partnership, or other legal 
entity to make or receive an NFA firearm, the petitioner has requested 
amendments to Sec. Sec.  479.63 and 479.85 to require photographs and 
fingerprint cards for persons who are responsible for directing the 
management and policies of the entity, so that a background check of 
the individual may be conducted.
    The Department of Justice agrees with the concerns underlying this 
proposal, and believes that such persons should not be excluded from 
background checks and other requirements of the regulations that seek 
to ensure that prohibited persons do not gain access to NFA firearms. 
ATF recently encountered a situation where an application for a 
transfer of a silencer was denied because the transferee was determined 
to be prohibited from possessing an NFA firearm. The transferor 
subsequently applied to transfer the same silencer to a trust whose 
name contained the same last name as the prior transferee. ATF reviewed 
the trust documents and found that the prohibited person was a settlor 
of the trust and, thus, would have access to the firearm. ATF denied 
the transfer. However, if the trust name had been different from that 
of the prior transferee, or if the transferor sought to transfer a 
different firearm, ATF employees may not have realized that the prior 
transferee was a settlor of the trust and so may have approved the 
transfer.

B. Certification of Citizenship

    When filing an ATF Form 1, 4, or 5, the applicant also must submit 
ATF Form 5330.20, Certification of Compliance with 18 U.S.C. 
922(g)(5)(B). Under section 922(g)(5)(B) of the Gun Control Act, 18 
U.S.C. 922(g)(5)(B), it generally is unlawful for any alien admitted 
under a nonimmigrant visa to ship or transport in interstate or foreign 
commerce, or possess in or affecting commerce, any firearm or 
ammunition, or to receive any firearm or ammunition that has been 
shipped or transported in interstate or foreign commerce. Section 
922(y)(2) provides for certain exceptions. 18 U.S.C. 922(y)(2). If an 
alien who was admitted under a nonimmigrant visa falls within one of 
the specified exceptions, or has obtained a waiver from the Attorney 
General under 18 U.S.C. 922(y)(3), appropriate documentation must be 
provided on Form 5330.20.
    The petitioner requests that the information required on Form 
5330.20 be incorporated into the requirements of 27 CFR 479.63 and 
479.85 and the corresponding forms. According to the petitioner, 
``[e]limination of the ATF Form 5330.20 by adding a citizenship 
statement to the transfer [and making] forms would reduce human effort 
for both the public and ATF while reducing funds expenditures for 
printing, copying, and handling the form.''
    The Department supports the elimination of unnecessary forms and is 
committed to reducing the paperwork burden for individuals and 
businesses. Accordingly, the Department proposes amending 27 CFR 479.62 
and 479.84 and the corresponding forms to incorporate information 
currently required in Form 5330.20.

C. Revision of Instructions on Forms 1, 4, and 5

    The NFATCA requests that the instructions on applications to make 
or transfer a firearm be revised so that they are consistent with those 
on ATF Form 7 (5310.12), Application for Federal Firearms License. The 
petitioner appears to be referring to the instruction on Form 7 
regarding the submission of photographs and fingerprint cards for 
responsible persons, namely, in the case of a corporation, partnership, 
or association, any individual possessing, directly or indirectly, the 
power to direct or cause the direction of the management, policies, and 
practices of the legal entity, insofar as they pertain to firearms. The 
Department agrees that proposed changes to regulations will require 
modifications to corresponding Forms 1, 4, and 5, including changes to 
the instructions on the forms.

D. Law Enforcement Certificate

    With respect to an application to make a firearm, 27 CFR 479.63 
provides that if the applicant is an individual, a certificate of the 
local chief of police, county sheriff, head of the state police, state 
or local district attorney or prosecutor, or such other person whose 
certificate may be acceptable to the Director, shall be completed on 
each copy of the Form 1. The certificate must state, inter alia, that 
the certifying official has no information indicating that possession 
of the firearm by the maker would be in violation of state or local law 
or that the maker will use the firearm for other than lawful purposes. 
The law enforcement certificate requirement also applies with respect 
to an application to transfer a firearm if the

[[Page 55017]]

transferee is an individual. 27 CFR 479.85.
    The petitioner requests that the law enforcement certificate 
requirement be eliminated and that ATF ``adopt a CLEO [chief law 
enforcement officer] process that will include a full NICS [National 
Instant Criminal Background Check System] check for principal officers 
of a trust or corporation receiving such firearms for the trust or 
corporation.'' The petitioner articulates several reasons in support of 
its request. For example, it states that the lack of cooperation on the 
part of many CLEOs in recent years has forced larger numbers of 
individuals to acquire NFA firearms via a trust or corporate entity, so 
as to avoid the need for a law enforcement certificate. The petitioner 
also asserts that ATF no longer accepts the CLEO certificate as prima 
facie verification of compliance with state and local law, and that the 
certificate therefore does not alleviate the burden on ATF to verify 
that receipt or possession of a NFA firearm would not place the 
applicant or transferee in violation of state or local law.
    Although ATF agrees in principle with some of petitioner's 
assertions (for example, with the fact that ATF independently verifies 
whether receipt or possession of a NFA firearm would place the 
applicant or transferee in violation of state or local law), ATF does 
not propose to eliminate the CLEO certificate requirement at this time. 
Rather, ATF proposes extending the CLEO certificate requirement to 
responsible persons of a legal entity. ATF also proposes amending the 
language of the certificate to omit the requirement that the certifying 
official state that he has no information that the applicant or 
transferee will use the firearm for other than lawful purposes.
    Sections 5812 and 5822 of the NFA, 26 U.S.C. 5812 and 5822, provide 
that applications shall be denied if the transfer, making, receipt, or 
possession of the firearm would place the applicant or transferee in 
violation of law. When the law enforcement certificate requirement was 
implemented in 1934, local law enforcement officials were generally 
better situated than federal officials to determine whether the 
transfer, making, receipt, or possession of the firearm would place the 
applicant or transferee in violation of state or local law. There were 
not at that time any readily accessible national automated databases, 
such as the National Crime Information Center (NCIC), that could 
facilitate instantaneous comprehensive nationwide criminal background 
checks. Although federal officials would consult available criminal 
history and criminal identification records, the assessment of whether 
an applicant or transferee would use the firearm for other than lawful 
purposes often was based on information in the possession of local 
police. The CLEO certificate requirement thus was intended in part to 
ensure that an individual's authority to make, receive, or possess an 
NFA firearm was consistent with state and local law, and that the 
background of the individual was assessed by those in the best position 
to evaluate it.
    In light of the NCIC's establishment in 1967 and additional 
technological developments, ATF now has direct access to a number of 
criminal history databases, a fact that puts it in a stronger position 
than before to assess the criminal background of applicants and 
transferees. ATF no longer relies exclusively on CLEO certificates to 
assess whether the making, receipt, or possession of a firearm by an 
applicant or transferee would violate state or local law or whether a 
particular applicant or transferee has a record that would warrant 
denying the application. ATF conducts its own background checks of 
individuals applying to make and receive NFA firearms. In addition to 
transmitting fingerprints to the FBI for a criminal history check, ATF 
routinely queries the following databases and indexes:
     National Crime Information Center
     TECS (formerly named the Treasury Enforcement 
Communication System)
     National Law Enforcement Telecommunications System
     Interstate Identification Index
     National Instant Criminal Background Check System
    Although access to these databases provides ATF with a fuller 
picture of any individual than was possible in 1934, the available 
information is not comprehensive in all cases. For a variety of 
reasons, it is still the case that local law enforcement may have 
access to more complete records. For example, according to a 2006 
publication by the Department of Justice, not all state criminal 
history records meet the standard for inclusion in the Interstate 
Identification Index database (the national criminal history record 
depository maintained by the FBI), and only 50 percent of arrest 
records in the database have final dispositions.\2\ To ensure that 
background checks for NFA firearms are as complete as possible, ATF 
proposes to retain the CLEO certificate requirement for individuals, 
and to expand the requirement to responsible persons of a legal entity.
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    \2\ U.S. Department of Justice, The Attorney General's Report on 
Criminal History Background Checks, at 17 (June 2006), available at 
http://www.justice.gov/olp/ag_bgchecks_report.pdf.
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    With respect to the law enforcement officer's statement in the CLEO 
certificate that he or she has no information indicating that the 
transferee will use the firearm described on the Form 4 for other than 
lawful purposes, the petitioner states that ``[s]ome CLEOs express a 
concern of perceived liability; that signing an NFA transfer 
application will link them to any inappropriate use of the firearm.'' 
ATF agrees with the petitioner that state and local law enforcement 
officials may be concerned with the language of the current law 
enforcement certificate, a concern that also applies to Forms 1 and 5. 
ATF has received numerous statements from chiefs of police, sheriffs, 
and other CLEOs expressing discomfort with the portion of the 
certificate that requires them to state that they have no information 
to suggest that the individual will use the firearm for other than 
lawful purposes. ATF is aware that officials in a number of 
jurisdictions refuse to sign the certificate because of concern about 
potential liability for an individual's intentional or accidental 
misuse. Such refusals have resulted in litigation by some applicants 
against ATF. See Lomont v. O'Neill, 285 F.3d 9 (D.C. Cir. 2002); 
Westfall v. Miller, 77 F.3d 868 (5th Cir. 1996). While courts have 
upheld the CLEO certificate requirement, ATF proposes to amend the 
language of the regulations and the corresponding forms to address this 
concern. Sections 479.63 and 479.85 will no longer require the 
certificate to contain a statement regarding information about the use 
of the firearm for other than lawful purposes. ATF requests comments on 
the specific language proposed, and whether this change will address 
the concerns raised by some CLEOs.

III. Proposed Rule

A. Amendment of Sec.  479.11

    The Department proposes amending Sec.  479.11 to add a definition 
for the term ``responsible person.'' The term would include specific 
definitions in the case of a trust, partnership, association, company 
(including a Limited Liability Company (LLC)), or corporation. 
Depending on the context, the term includes any individual, including 
any grantor, trustee, beneficiary, partner, member, officer, director, 
board member, owner, shareholder, or manager, who possesses, directly 
or indirectly, the power or authority under any trust instrument, 
contract, agreement, article, certificate, bylaw, or

[[Page 55018]]

instrument, or under state law, to receive, possess, ship, transport, 
deliver, transfer, or otherwise dispose of a firearm for, or on behalf 
of, the entity.
    To ensure that responsible persons, as so defined, are subject to 
penalties under 26 U.S.C. 5871 for committing prohibited acts under the 
NFA (as defined in 26 U.S.C. 5861) to the same extent as are the legal 
entities with which they are associated, the Department also proposes 
amending the definition of ``person'' in 27 CFR 479.11 to clarify that 
a ``person'' is a partnership, company, association, trust, or 
corporation, including each responsible person associated with such an 
entity; an estate; or an individual.
    Although the definition of ``person'' in section 479.11 includes 
the word ``estate,'' ATF traditionally has treated estates differently 
from business entities, and does not propose defining the term 
``responsible person'' to include estates. Estates are temporary legal 
entities created to dispose of property previously possessed by a 
decedent. The term during which an estate exists typically is defined 
by state law in the State in which the decedent resided. Conversely, 
partnerships, trusts, associations, companies, and corporations are 
formed for a specific purpose and remain in existence until action is 
taken to dissolve them.
    Historically, ATF has treated the transfer of an NFA-registered 
firearm held by an estate differently from other transfers under the 
NFA. ATF allows the registered firearm to be held by the executor, 
administrator, personal representative, or other person authorized 
under state law to dispose of property in an estate (executor) without 
such possession being treated as a transfer under the NFA. Because the 
executor holds the property temporarily, is representing the decedent, 
and is bound by the limits of probate, ATF does not register the 
firearm to the executor and allows the transfer from the estate of the 
decedent directly to the beneficiaries, with the executor signing as 
the transferor. The disposition of the firearm to the beneficiaries of 
the estate is a ``transfer by operation of law,'' because it is an 
involuntary transfer dictated by the terms of a will or by intestacy 
laws in the State where the decedent resided. The transfer to the 
beneficiaries of the estate is treated like any other transfer of 
registered firearms, except that ATF allows such transfers to be made 
on a tax-exempt basis when an ATF Form 5 is submitted and approved in 
accordance with 27 CFR 479.90. The transfer of the firearm to persons 
outside the estate requires the executor to file an ATF Form 4 and to 
pay any transfer tax in accordance with Sec.  479.84.

B. Amendment of Sec. Sec.  479.62 and 479.63

    With respect to an application to make a firearm, the Department 
proposes several amendments to Sec. Sec.  479.62 (Application to make) 
and 479.63 (Identification of applicant).
    The proposed Sec.  479.62:
    1. Provides that if the applicant is a partnership, company, 
association, trust, or corporation, all information on the Form 1 
application must be furnished for each responsible person of the 
applicant;
    2. Specifies that if the applicant is a partnership, company, 
association, trust, or corporation, each responsible person must comply 
with the identification requirements prescribed in Sec.  479.63(b); and
    3. Requires the applicant (including, if other than an individual, 
any responsible person), if an alien admitted under a nonimmigrant 
visa, to provide applicable documentation demonstrating that he or she 
falls within an exception to 18 U.S.C. 922(g)(5)(B) or has obtained a 
waiver of that provision.
    The proposed Sec.  479.63, where the applicant is an individual, 
maintains the CLEO certificate but omits the requirement for a 
statement about the use of a firearm for other than lawful purposes. 
The certificate must state that the official is satisfied that the 
fingerprints and photograph accompanying the application are those of 
the applicant and that the official has no information indicating that 
possession of the firearm by the maker would be in violation of state 
or local law.
    The CLEO's certification that he or she ``is satisfied that the 
fingerprints and photograph accompanying the application are those of 
the applicant,'' is an existing requirement. ATF intends to modify Form 
1 to include certification to that effect by the CLEO for individuals 
(which has always been a requirement but was not reflected on the 
current form). As discussed below, ATF will include the same 
certification on Form 5320.23 for responsible persons of a legal 
entity.
    The proposed Sec.  479.63, where the applicant is a partnership, 
company, association, trust, or corporation:
    1. Provides that the applicant must be identified on the Form 1 
application by the name and exact location of the place of business, 
including the name of the county in which the business is located or, 
in the case of a trust, the address where the firearm is located. In 
the case of two or more locations, the address shown must be the 
principal place of business (or principal office, in the case of a 
corporation) or, in the case of a trust, the principal address at which 
the firearm is located;
    2. Requires the applicant to attach to the application:
     Documentation evidencing the existence and validity of the 
entity, which includes, without limitation, complete and unredacted 
copies of partnership agreements, articles of incorporation, corporate 
registration, declarations of trust with any trust schedules, 
attachments, exhibits, and enclosures; however, if the entity had an 
application approved as a maker or transferee within the preceding 24 
months, and there has been no change to the documentation previously 
provided, the entity may provide a certification that the information 
has not changed since the prior approval and must identify the 
application for which the documentation had been submitted by form 
number, serial number, and date approved;
     A completed ATF Form 5320.23 for each responsible person. 
Form 5320.23 would require certain identifying information for each 
responsible person, including each responsible person's full name, 
position, social security number (optional), home address, date and 
place of birth, and country of citizenship;
     In accordance with the instructions provided on Form 
5320.23, a photograph of each responsible person 2 x 2 inches in size, 
clearly showing a full front view of the features of the responsible 
person with head bare, with the distance from the top of the head to 
the point of the chin approximately 1\1/4\ inches, and which must have 
been taken within 1 year prior to the date of the application;
     Two properly completed FBI Forms FD-258 (Fingerprint Card) 
for each responsible person. The fingerprints must be clear for 
accurate classification and should be taken by someone properly 
equipped to take them; and
     In accordance with the instructions provided on Form 
5320.23, a certificate for each responsible person completed by the 
local chief of police, sheriff of the county, head of the state police, 
state or local district attorney or prosecutor, or such other person 
whose certificate may in a particular case be acceptable to the 
Director. The certificate for each responsible person must be completed 
by the CLEO who has jurisdiction in the area in which the responsible 
person resides. The certificate must state that the official is 
satisfied that the fingerprints and photograph accompanying the 
application are those of the responsible person and that the certifying 
official has no information

[[Page 55019]]

indicating that possession of the firearm by the responsible person 
would be in violation of state or local law.
    ATF seeks public comments regarding whether it is feasible to ask 
CLEOs to certify that they are satisfied that the photographs and 
fingerprints match those of the responsible person. For example, some 
responsible persons may bring their fingerprint cards to the CLEO 
office already stamped, and some legal entities may have the paperwork, 
fingerprint cards, and photographs for each of their responsible 
persons couriered to the CLEO office. In such instances, ATF seeks 
comments on whether CLEOs will have enough information to certify that 
they are satisfied that the photographs and fingerprints match those of 
the responsible persons, or whether changes are needed to this 
proposal.

C. Amendment of Sec. Sec.  479.84 and 479.85

    With respect to an application to transfer a firearm, the 
Department proposes several amendments to Sec. Sec.  479.84 
(Application to transfer) and 479.85 (Identification of transferee).
    The proposed Sec.  479.84:
    1. Provides that the Form 4 application, in duplicate, must be 
filed by the transferor. If the transferee is a partnership, company, 
association, trust, or corporation, all information on the Form 4 
application must be furnished for each responsible person of the 
transferee; and
    2. Provides that the type of firearm being transferred must be 
noted on the Form 4. If the firearm is other than one classified as 
``any other weapon,'' the applicant must submit a remittance in the 
amount of $200 with the application in accordance with the instructions 
on the form. If the firearm is classified as ``any other weapon,'' the 
applicant must submit a remittance in the amount of $5.
    The proposed Sec.  479.85, where the transferee is an individual, 
maintains the certificate but omits the requirement for a statement 
about the use of a firearm for other than lawful purposes. The 
certificate must state that the official is satisfied that the 
fingerprints and photograph accompanying the application are those of 
the applicant and that the certifying official has no information 
indicating that receipt or possession of the firearm by the transferee 
would be in violation of state or local law.
    The CLEO's certification that he or she ``is satisfied that the 
fingerprints and photograph accompanying the application are those of 
the applicant,'' is an existing requirement. ATF intends to modify 
Forms 4 and 5 to include certification to that effect by the CLEO for 
individuals (which has always been a requirement but was not reflected 
on the current forms). As discussed below, ATF will include the same 
certification on Form 5320.23 for responsible persons of a legal 
entity.
    The proposed Sec.  479.85, where the transferee is a partnership, 
company, association, trust, or corporation:
    1. Provides that the transferee must be identified on the Form 4 
application by the name and exact location of the place of business, 
including the name of the county in which the business is located or, 
in the case of a trust, the address where the firearm is to be located. 
In the case of two or more locations, the address shown must be the 
principal place of business (or principal office, in the case of a 
corporation) or, in the case of a trust, the principal address at which 
the firearm is to be located;
    2. Requires the transferee to attach to the application:
     Documentation evidencing the existence and validity of the 
entity, which includes, without limitation, complete and unredacted 
copies of partnership agreements, articles of incorporation, corporate 
registration, declarations of trust with any trust schedules, 
attachments, exhibits, and enclosures; however, if the entity has had 
an application approved as a maker or transferee within the preceding 
24 months, and there has been no change to the documentation previously 
provided, including the responsible person information, the entity may 
provide a certification that the information has not changed since the 
prior approval and must identify the application for which the 
documentation had been submitted by form number, serial number, and 
date approved;
     A completed ATF Form 5320.23 for each responsible person. 
Form 5320.23 would require certain identifying information, including 
the responsible person's full name, position, social security number 
(optional), home address, date and place of birth, and country of 
citizenship;
     In accordance with the instructions provided on Form 
5320.23, a photograph of each responsible person 2 x 2 inches in size, 
clearly showing a full front view of the features of the responsible 
person with head bare, with the distance from the top of the head to 
the point of the chin approximately 1\1/4\ inches, and which must have 
been taken within 1 year prior to the date of the application;
     Two properly completed FBI Forms FD-258 (Fingerprint Card) 
for each responsible person. The fingerprints must be clear for 
accurate classification and should be taken by someone properly 
equipped to take them; and
     In accordance with the instructions provided on Form 
5320.23, a certificate for each responsible person completed by the 
local chief of police, sheriff of the county, head of the state police, 
state or local district attorney or prosecutor, or such other person 
whose certificate may in a particular case be acceptable to the 
Director. The certificate for each responsible person must be completed 
by the CLEO who has jurisdiction in the area in which the responsible 
person resides. The certificate must state that the official is 
satisfied that the fingerprints and photograph accompanying the 
application are those of the responsible person and that the certifying 
official has no information indicating that receipt or possession of 
the firearm by the responsible person would be in violation of state or 
local law.
    ATF seeks public comments regarding whether it is feasible to ask 
CLEOs to certify that they are satisfied that the photographs and 
fingerprints match those of the responsible person. For example, some 
responsible persons may bring their fingerprint cards to the CLEO 
office already stamped, and some legal entities may have the paperwork, 
fingerprint cards, and photographs for each of their responsible 
persons couriered to the CLEO office. In such instances, ATF seeks 
comments on whether CLEOs will have enough information to certify that 
they are satisfied that the photographs and fingerprints match those of 
the responsible persons, or whether changes are needed to this 
proposal.

D. Amendment of Sec.  479.90

    Section 5853(a) of the NFA, 26 U.S.C. 5853(a), provides that a 
firearm may be transferred to any State, possession of the United 
States, any political subdivision thereof, or any official police 
organization of such a government entity engaged in criminal 
investigations, without the payment of the transfer tax. Regulations 
implementing section 5853(a) are set forth in 27 CFR 479.90. That 
section provides, in pertinent part, that the transfer tax exemption 
may be obtained by the transferor of the firearm by filing with the 
Director an application on ATF Form 5 (5320.5), Application for Tax 
Exempt Transfer and Registration of Firearm, in duplicate. The 
application must provide certain information, including the name and 
address of the transferor and the transferee. In the case of a transfer 
of a firearm by a governmental entity to a transferee who is a natural 
person not qualified as a

[[Page 55020]]

manufacturer, importer, or dealer under part 479, the transferee must 
be further identified in the manner prescribed in Sec.  479.85.
    The Department proposes amending Sec.  479.90(b) to remove the word 
``natural.'' Removing the word ``natural'' leaves the term ``person,'' 
which would be defined in Sec.  479.11 to include a partnership, 
company, association, trust, or corporation (including each responsible 
person of such entity), an estate, or an individual. This change would 
mean that in the case of a transfer of a firearm by a governmental 
entity to a transferee that is a partnership, company, association, 
trust, or corporation, and that is not qualified as a manufacturer, 
importer, or dealer under part 479, each responsible person of the 
transferee would be subject to the requirements prescribed in Sec.  
479.85.

E. Addition of Sec.  479.90a, Estates

    The Department proposes adding a new section to part 479 to address 
the possession and transfer of firearms registered to a decedent. The 
new section would specify that the executor, administrator, personal 
representative, or other person authorized under state law to dispose 
of property in an estate (collectively ``executor'') may lawfully 
possess the decedent's NFA firearm during the term of probate without 
such possession being treated as a transfer from the decedent. The new 
section also would clarify that the executor may transfer firearms held 
by the estate on a tax-free basis when the transfer is to a beneficiary 
of the estate; when the transfer is to persons outside the estate, the 
executor must pay the appropriate transfer tax.

F. Transfer of Unserviceable Firearm

    Section 479.91 provides that an unserviceable firearm, defined in 
Sec.  479.11 as a firearm which is incapable of discharging a shot by 
means of an explosive and incapable of being readily restored to a 
firing condition, may be transferred as a curio or ornament without 
payment of the transfer tax. This section also provides that the 
procedures set forth in Sec.  479.90 must be followed for the transfer 
of an unserviceable firearm, with the exception that a statement must 
be entered on the application that the transferor is entitled to the 
exemption because the firearm is unserviceable and is being transferred 
as a curio or ornament. This section will remain unchanged. It 
references the procedures in Sec.  479.90, which itself references 
Sec.  479.85, which would be amended by the proposals herein.

G. Miscellaneous

    ATF recognizes that the composition of the responsible persons 
associated with a trust, partnership, association, company, or 
corporation may change, and is considering a requirement that new 
responsible persons submit Form 5320.23 within 30 days of the change. 
ATF seeks comments on this option and solicits recommendations for 
other approaches.

IV. Statutory and Executive Order Review

A. Executive Order 12866 and 13563--Regulatory Review

    This proposed rule has been drafted in accordance with section 1(b) 
of Executive Order 12866 (``Regulatory Planning and Review'') and with 
section 1(b) of Executive Order 13563 (``Improving Regulation and 
Regulatory Review''). The Department of Justice has determined that 
this proposed rule is a significant regulatory action under section 
3(f) of Executive Order 12866, and accordingly this proposed rule has 
been reviewed by the Office of Management and Budget (OMB).
    The proposed rule complies with the public participation 
requirements of Executive Order 13563. As this rulemaking is in 
response to a petition for rulemaking, ATF seeks the views of those who 
are likely to be affected by the proposed rule (including those who are 
likely to benefit and those who are potentially subject to the proposed 
rule) prior to issuing the final rule.
    This proposed rule will not have an annual effect on the economy of 
$100 million or more; nor will it adversely affect in a material way 
the economy, a sector of the economy, productivity, competition, jobs, 
the environment, public health or safety, or state, local, or tribal 
governments or communities. Accordingly, this proposed rule is not an 
economically significant rulemaking as defined by Executive Order 
12866. The estimated costs and benefits of the proposed rule are 
discussed below.
1. Summary of Costs and Benefits
    This proposed rule would require certain legal entities (trusts, 
partnerships, companies, associations, and corporations) applying to 
make or receive an NFA firearm to submit information for each of its 
responsible persons to ATF in order for ATF to ensure such persons are 
not prohibited from possessing NFA firearms. ATF estimates a total cost 
of $14.9 million annually for: (1) Legal entities to gather, procure, 
and submit such information to ATF; (2) ATF to process the information 
and conduct a background check on responsible persons; and (3) local 
and state agencies possibly to review the information provided on Form 
5320.23 which is submitted as part of a Form 1, 4, or 5 application, 
conduct their own background checks, and determine whether to complete 
the certificate. These proposed provisions will have public safety 
benefits in that they will enable ATF to ensure that the responsible 
persons within legal entities that request to make or receive NFA 
firearms are not prohibited from possessing such firearms under 
federal, state, or local law.
2. Costs and Benefits of Ensuring Responsible Persons Within Legal 
Entities are Not Prohibited From Possessing NFA Firearms
    ATF estimated the cost of the proposed provisions to ensure 
responsible persons within legal entities are not prohibited from 
possessing NFA firearms by: (1) Estimating the time and other resources 
that would be expended by legal entities to complete paperwork, obtain 
photographs and fingerprints, receive CLEO certificates, and send this 
information to ATF; (2) estimating the time and other resources that 
would be expended by ATF to process and review the materials provided 
by the legal entities and to conduct background checks of responsible 
persons; and (3) estimating costs for state and local agencies in the 
event they review the information provided, conduct their own 
background checks; and determine whether to complete the CLEO 
certificate.
    ATF estimated the cost of the time for legal entities to complete 
these tasks using employee compensation data for September 2012 as 
determined by the U.S. Department of Labor, Bureau of Labor Statistics 
(BLS). See http://www.bls.gov/news.release/archives/ecec_12112012.pdf. 
The BLS determined the hourly compensation (which includes wages, 
salaries, and benefits) for civilian workers to be $30.80. In addition, 
ATF estimates that each legal entity has an average of two responsible 
persons, an estimate that is based on ATF's review of 39 recent 
randomly selected paper (hardcopy) applications for corporations, LLCs, 
and trusts. ATF welcomes comments from the industry and other members 
of the public regarding the accuracy of its assumptions and estimates.
    In calendar year (CY) 2012, ATF received 84,435 applications that 
were either ATF Forms 1, 4, or 5. Of these, 40,700 applications were 
for unlicensed legal entities (e.g., corporations, companies, and 
trusts) to make or receive an NFA firearm; 29,448 were for

[[Page 55021]]

individuals to make or receive an NFA firearm; and 14,287 were for 
government agencies or qualified Federal firearms licensees (Gov/FFLs) 
to make or receive an NFA firearm. The numbers of applications, by Form 
and submitting individual or entity, are set forth below.

                                        Table A--Numbers of Applications
----------------------------------------------------------------------------------------------------------------
                     CY 2012                       Legal entity     Individual        Gov/FFL          Total
----------------------------------------------------------------------------------------------------------------
Form 1..........................................            5328            3758             576            9662
Form 4..........................................           35237           25102            4746           65085
Form 5..........................................             135             588            8965            9688
                                                 ---------------------------------------------------------------
    Total.......................................           40700           29448           14287           84435
----------------------------------------------------------------------------------------------------------------

    Under the proposed rule, a legal entity would be required to 
complete the following steps in addition to completing the applicable 
Form 1, 4, or 5 before it is permitted to make or receive an NFA 
firearm:
    1. Complete and submit proposed Form 5320.23 for each responsible 
person;
    2. Submit fingerprints, photographs, and CLEO certificate for each 
responsible person; and
    3. Submit a copy of the documentation that establishes the legal 
existence of the legal entity.
    In addition, under the proposed rule, information required on the 
existing ATF Form 5330.20 would be incorporated into the ATF Forms 1, 
4, and 5.
Cost to Legal Entities
Cost of Completion of a Responsible Person Form
    The proposed rule would require legal entities to complete and 
submit to ATF a new form (Form 5320.23), photographs, fingerprint 
cards, and a CLEO certificate for each responsible person before the 
legal entity is permitted to make or receive an NFA firearm. The 
information required on Form 5320.23 would include the responsible 
person's name, position, home address, social security number 
(optional), date and place of birth, and country of citizenship. The 
identifying information for each responsible person is necessary in 
order for ATF, and possibly state and local law enforcement, to conduct 
a background check on each individual to ensure the individual is not 
prohibited from possessing an NFA firearm under federal, state, or 
local law.
    ATF estimates the time for each responsible person to complete Form 
5320.23 to be 10 minutes. Based on an estimate of 2 responsible persons 
per legal entity and 40,700 entities, the estimated annual cost of 
proposed Form 5320.23 is $417,854 (10 minutes at $30.80 per hour x 
40,700 x 2).
Cost of Photographs
    ATF estimates that:
     The cost of the photographs is $8.00 (cost based on the 
average of the costs determined for seven large retailers); and
     The time needed to procure photographs is 50 minutes.
    Currently, only individuals must obtain and submit photographs to 
ATF. Based on an estimate of 29,448 individuals, the current estimated 
cost is $991,416. (Cost of Photographs = $8.00 x 29,448 = $235,584; 
Cost to Procure Photographs = 50 minutes at $30.80 per hour x 29,448 = 
$755,832). Under the proposed rule, costs for individuals would remain 
the same, but legal entities would incur new costs. Each responsible 
person of a legal entity would be required to obtain and submit 
photographs. Based on an estimate of 2 responsible persons per entity 
and 40,700 entities, the estimated cost for legal entities to obtain 
and submit photographs is $2,740,467. (Cost of Photographs = $8.00 x 
40,700 x 2 = $651,200; Cost to Procure Photographs = 50 minutes at 
$30.80 per hour x 40,700 x 2 = $2,089,267).
Cost of Fingerprints
    ATF has reviewed various fingerprinting services. At the present 
time, ATF is only able to accept fingerprints on hard copy fingerprint 
cards. Thus, the cost estimates are based on the submission of two 
fingerprint hard copy cards for each responsible person.
     The estimated cost of the fingerprints is $24.00 (cost 
based on the average of the costs determined for seven fingerprint 
services); and
     The estimated time needed to procure the fingerprints is 
60 minutes.
    Currently, only individuals must obtain and submit fingerprints. 
Based on an estimate of 29,448 individuals, the current estimated cost 
is $1,613,750. (Cost of Fingerprints = $24.00 x 29,448 = $706,752; Cost 
to Procure Fingerprints = 60 minutes at $30.80 per hour x 29,448 = 
$906,998). Under the proposed rule, costs for individuals would remain 
the same, but legal entities would incur new costs. Each responsible 
person of a legal entity would be required to obtain and submit 
fingerprints to ATF. Based on an estimate of 2 responsible persons per 
entity and 40,700 entities, the estimated cost for legal entities to 
obtain and submit fingerprints is $4,460,720. (Cost of Fingerprints = 
$24.00 x 40,700 x 2 = $1,953,600; Cost to Procure Fingerprints = 60 
minutes at $30.80 per hour x 40,700 x 2 = $2,507,120).
Costs for a Legal Entity To Obtain CLEO Certificate
    ATF estimates that the time needed for a responsible person to 
procure the CLEO certificate is 100 minutes (70 minutes travel time and 
30 minutes review time with the CLEO). Based on an estimate of 2 
responsible persons per legal entity and 40,700 entities, the estimated 
cost for legal entities to obtain CLEO certificate is $4,178,533 (100 
minutes at $30.80 per hour x 40,700 x 2).
Cost of Documents To Establish Existence of Legal Entity
    A legal entity that is applying to make or receive an NFA firearm 
must provide to ATF documentation evidencing the existence and validity 
of the entity--e.g., copies of partnership agreements, articles of 
incorporation, corporate registration, declarations of trust with any 
trust schedules, attachments, exhibits, and enclosures. Currently, 
legal entities may submit this documentation with their application 
package, although they are not required to do so. Therefore, ATF will 
treat the costs for documentation as new costs. ATF accepts, and will 
continue to accept, photocopies of the documents without notarization. 
ATF based the cost estimate by determining the average number of pages 
in the corporate or trust documents for 50 recent randomly selected 
paper (hardcopy) submissions, which was 15 pages.
    ATF estimates that:

[[Page 55022]]

     The cost of the copied documentation is $1.50 ($.10 per 
page at 15 pages); and
     The time needed to copy attachments is 5 minutes.
    Assuming 40,700 entities would provide ATF this documentation each 
year, the estimated annual cost to submit the documentation is 
$165,513. (Cost of documentation = $1.50 x 40,700 = $61,050; Cost to 
copy attachments = 5 minutes at $30.80 per hours x 40,700 = $104,463). 
This cost is not dependent on the number of responsible persons 
associated with a legal entity. ATF notes that the estimated cost is 
likely to be lower if the entity already has filed the documents with 
ATF as part of a recent making or transfer application and the 
information previously provided has not changed. Under these 
circumstances, the entity can certify to ATF that the documentation is 
on file and is unchanged.
Cost of Completing and Mailing Form 1, 4, or 5
    Currently, both individuals and legal entities must complete and 
mail Form 1, 4, or 5. This proposed rule should not change the costs 
associated with this process. Even if there are multiple responsible 
persons associated with a legal entity, the legal entity still would be 
completing and mailing one Form 1, 4, or 5.
    The estimated costs to legal entities that are discussed above are 
summarized in Tables B(1) and B(2). The total estimated new cost of the 
proposals for legal entities to provide to ATF identification 
information for each of its responsible persons is $11,963,087 
annually.

             Table B(1)--Cost Estimates of the Time To Comply With the Proposed Rule's Requirements
----------------------------------------------------------------------------------------------------------------
                                                                  Estimated time     Number of     2 Responsible
                             Process                                 (minutes)       entities         persons
----------------------------------------------------------------------------------------------------------------
Completion of F 5320.23.........................................              10          40,700        $417,854
Procure Photographs.............................................              50          40,700       2,089,267
Procure Fingerprints............................................              60          40,700       2,507,120
Obtain Certificate..............................................             100          40,700       4,178,533
Copy Attachments................................................               5          40,700         104,463
                                                                 -----------------------------------------------
    Total.......................................................  ..............  ..............       9,297,237
----------------------------------------------------------------------------------------------------------------

              Table B(2)--Cost Estimates of Procuring Photographs, Fingerprints, and Documentation
----------------------------------------------------------------------------------------------------------------
                                                                                     Number of     2 Responsible
                      Process-related item                        Estimated cost     entities         persons
----------------------------------------------------------------------------------------------------------------
Photographs.....................................................           $8.00          40,700        $651,200
Fingerprints....................................................           24.00          40,700       1,953,600
Documentation of Legal Entity...................................            1.50          40,700          61,050
                                                                 -----------------------------------------------
    Total.......................................................  ..............  ..............       2,665,850
----------------------------------------------------------------------------------------------------------------

Cost to ATF
    ATF incurs costs to process forms, fingerprint cards, photographs, 
and to conduct and review background checks. Currently, ATF incurs 
these costs for the 29,448 applications for individuals to make or 
receive NFA firearms. Under the proposed rule, ATF would incur these 
costs for applications for legal entities to make or receive NFA 
firearms. ATF estimates that:
     ATF's cost for FBI to process a set of fingerprints is 
$14.50. (The cost is based on FBI's current fee, which is set by 
statute on a cost recovery basis.)
     The estimated cost for an examiner at ATF's NFA Branch to 
conduct and review the results of a background check is $7.70 (15 
minutes at $30.80 per hour); and
     The estimated cost to print the new 5320.23 forms is $.01 
per form.
    Based on an estimate of 2 responsible persons per legal entity and 
40,700 entities, the estimated cost for ATF to process forms, 
fingerprint cards, photographs, and to conduct and review background 
checks for applications for legal entities to make or receive firearms 
is $1,807,894 annually. (Cost for processing fingerprints = $14.50 x 
40,700 x 2 = $1,180,300; Cost for background checks = $7.70 x 40,700 x 
2 = $626,780; Cost to print forms = $.01 x 40,700 x 2 = $814).

                                    Table C--Costs to ATF Under Proposed Rule
----------------------------------------------------------------------------------------------------------------
                                                                                     Number of     2 Responsible
                    Process                          Estimated cost or time          entities         persons
----------------------------------------------------------------------------------------------------------------
ATF's costs for Processing Fingerprints.......  $14.50..........................          40,700      $1,180,300
Time Needed to Conduct and Review Background    15 minutes......................          40,700         626,780
 Check by ATF.
Cost of 5320.23 form..........................  .01.............................          40,700             814
                                               -----------------------------------------------------------------
    Total.....................................  ................................  ..............       1,807,894
----------------------------------------------------------------------------------------------------------------

[[Page 55023]]

Cost to State and Local Agencies
    The proposed requirement for each responsible person of a legal 
entity to obtain a CLEO certificate may increase the cost to state and 
local agencies as they may decide to review the information provided, 
conduct their own background checks, and determine whether to complete 
the certificate. Based on an estimate of 2 responsible persons per 
legal entity and 40,700 entities, the estimated cost for state and 
local agencies to determine whether to sign the CLEO certificate is 
$1,253,560 (30 minutes of review time at $30.80 per hour x 40,700 x 2).

                         Table D--Costs to State and Local Agencies Under Proposed Rule
----------------------------------------------------------------------------------------------------------------
                                                                                     Number of     2 Responsible
                    Process                              Estimated time              entities         persons
----------------------------------------------------------------------------------------------------------------
Agency Costs to Review/Sign Certificate.......  30 minutes......................          40,700      $1,263,560
                                               -----------------------------------------------------------------
    Total.....................................  ................................  ..............       1,263,560
----------------------------------------------------------------------------------------------------------------

Benefits of Background Checks for Responsible Persons
    Existing regulations do not require the identification of 
responsible persons of a legal entity. Therefore, ATF lacks the 
necessary information to perform a background check on a person who 
meets this proposed rule's definition of ``responsible person'' to 
determine if that person is prohibited from possessing an NFA firearm. 
This proposed rule, if finalized, would provide important public safety 
and security benefits by enabling ATF to identify and perform 
background checks on such persons.
    For example, there may be a number of responsible persons 
associated with a corporation, LLC, or trust. As noted above, based on 
a recent review of paper (hardcopy) applications for corporations, 
LLCs, and trusts, ATF estimates that there are 2 responsible persons 
associated with such legal entities. One or more of these persons could 
be a prohibited person, e.g., a convicted felon. Currently, when an NFA 
transfer application is approved, a corporate officer or trustee 
arranges for the receipt of the firearm. If the seller is a Federal 
firearms licensee, the officer or trustee must complete ATF Form 4473 
(5300.9), Firearms Transaction Record. On the Form 4473, the officer or 
trustee must answer questions which determine if the officer or trustee 
is a prohibited person. If one of the officers or trustees is 
prohibited, then one of the other officers or trustees may pick up the 
firearm and complete the Form 4473. If the seller is not a licensee, 
then no form is completed. Once the firearm is picked up by the officer 
or trustee, then it becomes corporate or trust property and can be 
possessed by any of the officers or trustees. In Texas, ATF became 
aware of a situation in which the member of an LLC was an illegal 
alien, living in the United States under an assumed name, and had a 
felony warrant outstanding. At that time, the LLC had 19 firearms 
registered to it and ATF lacked the necessary information to conduct 
any background checks to determine whether the member was a prohibited 
person. In Tennessee, as a result of information provided by a Federal 
firearms licensee, ATF became aware of applications submitted to 
transfer two NFA firearms to a trust in which one of the trustees was a 
convicted felon. If there had been no referral, ATF would not have 
known of the need to conduct any background checks for the trust 
members to determine if any were prohibited persons. As a result, under 
current regulations, prohibited persons can circumvent the statutory 
prohibitions and receive and possess firearms. This proposed rule will 
make the requirements for background checks the same for certain legal 
entities as they are now for individuals.
3. Consolidation of Forms
    The incorporation of the information required on ATF Form 5330.20 
into the existing Forms 1, 4, and 5 will reduce the burden upon the 
applicant or transferee by eliminating an additional form to be 
completed and filed. The current estimated time to complete the form is 
3 minutes. Because the information requested on the forms is the same, 
any savings result from the applicant not having to attach a separate 
form. ATF estimates the elimination of the form will reduce the 
industry costs by $108,028 (70,148 transactions for both individuals 
and legal entities x 3 minutes per form saved x $30.80 per hour) and 
ATF's printing costs by $701 (70,148 forms x .01 cents per form) for a 
total reduction in costs of $108,729.
4. Number of Legal Entities
    ATF cannot estimate with reasonable precision what effect this 
proposed rule will have on resources used for creating and maintaining 
these entities. ATF seeks information from the public to measure this 
effect, including how many fewer legal entities there may be (if any), 
and how much it costs on average to create and maintain such entities.

B. Executive Order 13132

    This proposed rule will not have substantial direct effects on the 
States, on the relationship between the Federal Government and the 
States, or on the distribution of power and responsibilities among the 
various levels of government.
    While there would be an increase in the paperwork filed with ATF 
and an increase in the resources ATF devotes to processing that 
paperwork, as well as a potential increase in the resources state and 
local agencies may devote to processing CLEO certificates for 
responsible persons of a legal entity, any impact on state and local 
resources would be voluntary and expected to be minimal, and must be 
balanced against the benefits of ATF being able to identify and conduct 
background checks on such persons. Therefore, in accordance with 
section 6 of Executive Order 13132 (``Federalism''), the Attorney 
General has determined that this proposed regulation does not have 
sufficient federalism implications to warrant the preparation of a 
federalism summary impact statement.

C. Executive Order 12988

    This proposed rule 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

    The Regulatory Flexibility Act requires an agency to conduct a 
regulatory flexibility analysis of any rule subject to notice and 
comment rulemaking requirements unless the agency certifies that the 
rule will not have a significant economic impact on a substantial 
number of small entities. 5 U.S.C. 605(b). Small entities include small 
businesses, small not-for-profit enterprises, and small governmental 
jurisdictions. 5 U.S.C. 601. The Attorney

[[Page 55024]]

General has reviewed this proposed rule and, by approving it, certifies 
that this proposed rule will not have a significant economic impact on 
a substantial number of small entities.
    This proposed rule will primarily affect legal entities that are 
seeking to make or acquire NFA firearms and are not making or acquiring 
them as a qualified Federal firearms licensee. ATF believes that the 
increased cost of implementing the proposed regulations will not be 
significant on the entities. The estimated annual cost of implementing 
the proposed regulations is $11,963,087 for identification costs for 
legal entities. Accordingly, the estimated cost increase per entity is 
$293.93 (Cost of increase / 40,700 entities).

E. Small Business Regulatory Enforcement Fairness Act of 1996

    This proposed rule is not a major rule as defined by section 251 of 
the Small Business Regulatory Enforcement Fairness Act of 1996. 5 
U.S.C. 804. This proposed rule will not result in an annual effect on 
the economy of $100 million or more; a major increase in costs or 
prices; or significant adverse effects on competition, employment, 
investment, productivity, innovation, or on the ability of United 
States-based enterprises to compete with foreign-based enterprises in 
domestic and export markets.

F. Unfunded Mandates Reform Act of 1995

    This proposed rule will 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 are deemed necessary under the provisions of the Unfunded 
Mandates Reform Act of 1995.

G. Paperwork Reduction Act

    Under the Paperwork Reduction Act, a federal agency may not conduct 
or sponsor, and a person is not required to respond to, a collection of 
information unless it displays a valid control number assigned by OMB. 
This proposed rule would revise several existing information 
collections and create a new information collection. The existing 
information collections that would be revised are in 27 CFR 479.62, 
479.63, 479.84, 479.85, 479.90, 479.90a, and 479.91, which are 
associated with ATF Forms 1, 4, and 5. Forms 1, 4, and 5 have been 
approved by the OMB under control numbers 1140-0011, 1140-0014, and 
1140-0015, respectively. The new information collection that would be 
created is associated with ATF Form 5320.23. Form 5320.23 would require 
certain identifying information for each responsible person within a 
legal entity requesting to make or receive an NFA firearm, including 
their full name, position, social security number (optional), home 
address, date and place of birth, and country of citizenship. Form 
5320.23 also would require a proper photograph of each responsible 
person; two properly completed FBI Forms FD-258 (Fingerprint Card) for 
each responsible person; and a law enforcement certificate.
    ATF is submitting a request to revise currently approved OMB 
control numbers 1140-0011, 1140-0014, and 1140-0015, and to obtain a 
new OMB control number for ATF Form 5320.23 in accordance with 5 CFR 
1320.11. ATF requests public comments on all aspects of these proposed 
collections, including to:
     Evaluate whether the proposed collection of information is 
necessary for the proper performance of the functions of the agency, 
including whether the information will have practical utility;
     evaluate the accuracy of the agency's estimate of the 
burden of the proposed collection of information, including the 
validity of the methodology and assumptions used;
     enhance the quality, utility, and clarity of the 
information to be collected; and
     minimize the burden of the collection of information on 
those who are to respond, including through the use of appropriate 
automated, electronic, mechanical, or other technological collection 
techniques or other forms of information technology, e.g., permitting 
electronic submission of responses.
    The estimated total annual burden hours and related information 
(number of respondents, frequency of responses, costs, etc.) for the 
proposed revisions to Forms 1, 4, and 5, as well as the new Form 
5320.23, appear below.
    For a recent submission of an information collection request to the 
OMB regarding other changes to these forms, ATF performed an analysis 
of the time it takes to fulfill the requirements of each form. ATF 
found that the time varies among individuals, legal entities, and Gov/
FFLs. For example, ATF estimates that it takes four hours for an 
individual to complete Form 1 due to the requirements to provide 
fingerprints, photographs and a law enforcement certificate. ATF 
estimates it takes less time for a Gov/FFL to complete Form 1 because 
the application does not require the submission of these items. The 
estimated submission times for individuals, legal entities, and Gov/
FFLs are:
     230 minutes for submission by an individual (50 minutes to 
procure photographs; 60 minutes to procure fingerprints, 100 minutes to 
obtain certificate; and 20 minutes to complete and mail the form);
     465 minutes for a submission by a legal entity (for two 
responsible persons) (20 minutes to complete Form 5320.23; 100 minutes 
to procure photographs; 120 minutes to procure fingerprints; 200 
minutes to obtain CLEO certificate; 5 minutes to procure the 
attachments; and 20 minutes to complete and mail the form); and
     20 minutes (to complete and mail the form) for a 
submission by a Gov/FFL.
    With respect to ATF Form 1:
    Estimated total annual reporting and/or recordkeeping burden: 
55,890 hours (current estimated total annual reporting and/or 
recordkeeping burden from OMB Information Collection Number 1140-0011: 
4,284 hours). Note: 576 Gov/FFL responders will take 20 minutes (192 
hours); 5,328 legal entity responders will take 465 minutes (41,292 
hours); and 3,758 individual responders will take 230 minutes (14,406 
hours). (The numbers of responders by type are estimated based on the 
data in Table A.)
    Estimated average burden hours per respondent and/or recordkeeper: 
5.78 hours (current estimated average burden hours per respondent or 
recordkeeper from OMB Information Collection Number 1140-0011: 4 
hours).
    Estimated number of respondents and/or recordkeepers: 9,662 
(current estimated number of respondents and/or recordkeepers from OMB 
Information Collection Number 1140-0011: 1,071).
    Estimated annual frequency of responses: 1 (current estimated 
annual frequency of responses from OMB Information Collection Number 
1140-0011: 1).
    Estimated total costs: $487,757.60.
$461,248 (fingerprints and photographs ($32 x 3,758 (individuals) = 
$120,256; $32 x 10,656 (2 responsible persons) = $340,992))
$7,992 (copies of legal entity documents ($1.50 x 5,328))
    $18,517.60 (mailing ($2 each for 9,086 respondents and $.60 for 576 
respondents) (current estimated total costs from OMB Information 
Collection Number 1140-0011: $471).
    With respect to ATF Form 4:
    Estimated total annual reporting and/or recordkeeping burden: 
370,893 hours

[[Page 55025]]

(current estimated total annual reporting and/or recordkeeping burden 
from OMB Information Collection Number 1140-0014: 44,260 hours). Note: 
4,746 Gov/FFL respondents will take 20 minutes (1,582 hours), 35,237 
legal entity respondents will take 465 minutes (273,087 hours), and 
25,102 individual respondents will take 230 minutes (96,224 hours). 
(The numbers of responders by type are estimated based on the data in 
Table A.)
    Estimated average burden hours per respondent and/or recordkeeper: 
5.69 hours (current estimated average burden hours per respondent and/
or recordkeeper from OMB Information Collection Number 1140-0014: 4 
hours).
    Estimated number of respondents and/or recordkeepers: 65,085 
(current estimated number of respondents and/or recordkeepers from OMB 
Information Collection Number 1140-0014: 11,065).
    Estimated annual frequency of responses: 1 (current estimated 
annual frequency of responses from OMB Information Collection Number 
1140-0014: 1).
    Estimated total costs: $3,234,813.
$3,058,432 (fingerprints and photographs ($32 x 25,102 (individuals) = 
$803,264; $32 x 70,474 (2 responsible persons) = $2,255,168))
$52,855.50 (copies of legal entity documents ($1.50 x 35,237))
    $123,525.60 (mailing ($2 each for 60,339 respondents and $.60 for 
4,746 respondents) (current estimated total costs from OMB Information 
Collection Number 1140-0014: $4,536).
    With respect to ATF Form 5:
    Estimated total annual reporting and/or recordkeeping burden: 6,288 
hours (current estimated total annual reporting and/or recordkeeping 
burden from OMB Information Collection Number 1140-0015: 379,896 
hours).\3\ Note: 8,965 Gov/FFL respondents will take 20 minutes (2,988 
hours); 135 legal entity respondents will take 465 minutes (1,046 
hours); and 588 individual respondents will take 230 minutes (2,254 
hours). (The numbers of responders by type are estimated based on the 
data in Table A.)
---------------------------------------------------------------------------

    \3\ The large drop in burden hours from 379,896 to 6,288 is 
attributable to a change in methodology. We no longer count each 
item on a Form 5 as a separate response. The current burden hours 
using the new methodology is 4,380 hours ((7,388 government agencies 
or legal entities x 20 minutes and / 60) plus (500 individual 
respondents x 230 minutes and / 60)).
---------------------------------------------------------------------------

    Estimated average burden hours per respondent and/or recordkeeper: 
.65 hours (current estimated average burden hours per respondent and/or 
recordkeeper from OMB Information Collection Number 1140-0015: 4 
hours).
    Estimated number of respondents and/or recordkeepers: 9,688 
(current estimated number of respondents and/or recordkeepers from OMB 
Information Collection Number 1140-0015: 7,888).
    Estimated annual frequency of responses: 1 (current estimated 
annual frequency of responses from OMB Information Collection Number 
1140-0015: 12).
    Estimated total costs: $34,483.50.

$27,456 (fingerprints and photographs ($32 x 588 (individuals) = 
$18,816; $32 x 270 (2 responsible persons) = $8,640))
$202.50 (copies of legal entity documents ($1.50 x 135))
    $6,825 (mailing ($2 each for 723 respondents and $.60 for 8,965 
respondents)) (current estimated total costs from OMB Information 
Collection Number 1140-0015: $20,894).
    With respect to ATF Form 5320.23:
    Estimated total annual reporting and/or recordkeeping burden: 
13,566.67 hours (based on 2 responsible persons).
    Estimated average burden hours per respondent and/or recordkeeper: 
.33 hours.
    Estimated number of respondents and/or recordkeepers: 40,700.
    Estimated annual frequency of responses: 1.
    Estimated total costs: 0. (All the estimated costs are associated 
with the submission package for Forms 1, 4, and 5.)
    The current estimated costs provided above for Forms 1, 4, and 5 
are being revised. Due to an administrative oversight, the initial 
costs provided to OMB only reflected the costs associated with mailing 
the completed forms to ATF. They did not include the costs associated 
with certain information that must be included as part of the 
application, e.g., fingerprint cards. ATF has provided OMB with the 
adjusted cost estimates for these forms.

Public Participation

A. Comments Sought

    ATF is requesting comments on the proposed rule from all interested 
persons. ATF is also specifically requesting comments on the clarity of 
this proposed rule and how it may be made easier to understand, as well 
as comments on the costs or benefits of the proposed rule and on the 
appropriate methodology and data for calculating those costs and 
benefits.
    All comments must reference the docket number (ATF 41P), be 
legible, and include the commenter's name and complete mailing address. 
ATF will treat all comments as originals and will not acknowledge 
receipt of comments.
    Comments received on or before the closing date will be carefully 
considered. Comments received after that date will be given the same 
consideration if it is practical to do so, but assurance of 
consideration cannot be given except as to comments received on or 
before the closing date.

B. Confidentiality

    Comments, whether submitted electronically or on paper, will be 
made available for public viewing at ATF, and on the Internet as part 
of the eRulemaking initiative, and are subject to the Freedom of 
Information Act. Commenters who do not want their name or other 
personal identifying information posted on the Internet should submit 
their comment by mail or facsimile, along with a separate cover sheet 
that contains their personal identifying information. Both the cover 
sheet and comment must reference this docket number (ATF 41P). 
Information contained in the cover sheet will not be posted on the 
Internet. Any personal identifying information that appears within the 
comment will be posted on the Internet and will not be redacted by ATF.
    Any material that the commenter considers to be inappropriate for 
disclosure to the public should not be included in the comment. Any 
person submitting a comment shall specifically designate that portion 
(if any) of his comments that contains material that is confidential 
under law (e.g., trade secrets, processes). Any portion of a comment 
that is confidential under law shall be set forth on pages separate 
from the balance of the comment and shall be prominently marked 
``confidential'' at the top of each page. Confidential information will 
be included in the rulemaking record but will not be disclosed to the 
public. Any comments containing material that is not confidential under 
law may be disclosed to the public. In any event, the name of the 
person submitting a comment is not exempt from disclosure.

C. Submitting Comments

    Comments may be submitted in any of three ways:
     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 your mailing address, 
be signed, and may be of any length.
     Facsimile: You may submit comments by facsimile 
transmission to (202) 648-9741. Faxed comments must:
    (1) Be legible and appear in minimum 12 point font size (.17 
inches);

[[Page 55026]]

    (2) Be on 8\1/2\'' x 11'' paper;
    (3) Contain a legible, written signature; and
    (4) Be no more than five pages long. ATF will not accept faxed 
comments that exceed five pages.
     Federal eRulemaking Portal: To submit comments to ATF via 
the Federal eRulemaking portal, visit http://www.regulations.gov and 
follow the instructions for submitting comments.

D. Request for Hearing

    Any interested person who desires an opportunity to comment orally 
at a public hearing should submit his or her request, in writing, to 
the Director of ATF within the 90-day comment 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 will be 
available for public inspection through the Federal eGovernment portal, 
http://www.regulations.gov, or by appointment during normal business 
hours at the ATF Reading Room, Room 1E-062, 99 New York Avenue NE., 
Washington, DC 20226; telephone: (202) 648-8740.

Drafting Information

    The author of this document is Brenda Raffath Friend, Office of 
Regulatory Affairs, Enforcement Programs and Services, Bureau of 
Alcohol, Tobacco, Firearms, and Explosives.

List of Subjects in 27 CFR Part 479

    Administrative practice and procedure, Arms and munitions, 
Authority delegations, Customs duties and inspection, Exports, Imports, 
Military personnel, Penalties, Reporting and recordkeeping 
requirements, Research, Seizures and forfeitures, and Transportation.

Authority and Issuance

    Accordingly, for the reasons discussed in the preamble, 27 CFR part 
479 is proposed to be amended as follows:

PART 479--MACHINE GUNS, DESTRUCTIVE DEVICES, AND CERTAIN OTHER 
FIREARMS

0
1. The authority citation for 27 CFR part 479 is revised to read as 
follows:

    Authority: 26 U.S.C. 5812; 26 U.S.C. 5822; 26 U.S.C. 7805.

0
2. Amend Sec.  479.11, by revising the definition for ``Person'' and 
adding a definition for the term ``Responsible person'' to read as 
follows:

Sec.  479.11  Meaning of terms.

* * * * *
    Person. A partnership, company, association, trust, corporation, 
including each responsible person associated with such an entity; an 
estate; or an individual.
* * * * *
    Responsible person. (1) In the case of a trust, any individual, 
including any grantor, trustee, or beneficiary, who possesses, directly 
or indirectly, the power or authority under any trust instrument or 
other document, or under state law, to receive, possess, ship, 
transport, deliver, transfer, or otherwise dispose of a firearm for, or 
on behalf of, the trust;
    (2) In the case of a partnership, any individual, including any 
partner or manager, who possesses, directly or indirectly, the power or 
authority under any contract, agreement, article, certificate, bylaw, 
or instrument, or under state law, to direct the management and 
policies of the partnership to receive, possess, ship, transport, 
deliver, transfer, or otherwise dispose of a firearm for, or on behalf 
of, the partnership;
    (3) In the case of an association, any individual, including any 
member, officer, director, board member, owner, or manager, who 
possesses, directly or indirectly, the power or authority under any 
contract, agreement, article, certificate, bylaw, or instrument, or 
under state law, to direct the management and policies of the 
association to receive, possess, ship, transport, deliver, transfer, or 
otherwise dispose of a firearm for, or on behalf of, the association;
    (4) In the case of a company (including a Limited Liability Company 
(LLC)), any individual, including any member, officer, director, board 
member, owner, shareholder, or manager, who possesses, directly or 
indirectly, the power or authority under any contract, agreement, 
article, certificate, bylaw, or instrument, or under state law, to 
direct the management and policies of the company to receive, possess, 
ship, transport, deliver, transfer, or otherwise dispose of a firearm 
for, or on behalf of, the company; and
    (5) In the case of a corporation, any individual, including any 
officer, director, board member, owner, shareholder, or manager, who 
possesses, directly or indirectly, the power or authority under any 
contract, agreement, article, certificate, bylaw, or instrument, or 
under state law, to direct the management and policies of the 
corporation to receive, possess, ship, transport, deliver, transfer, or 
otherwise dispose of a firearm for, or on behalf of, the corporation.
* * * * *
0
3. Revise Sec.  479.62 to read as follows:

Sec.  479.62  Application to make.

    (a) General. No person shall make a firearm unless the person has 
filed with the Director a completed application on ATF Form 1 (5320.1), 
Application to Make and Register a Firearm, in duplicate, executed 
under the penalties of perjury, to make and register the firearm and 
has received the approval of the Director to make the firearm, which 
approval shall effectuate registration of the firearm to the applicant. 
If the applicant is not a licensed manufacturer, importer, or dealer 
qualified under this part and is a partnership, company (including a 
Limited Liability Company (LLC)), association, trust, or corporation, 
all information on the Form 1 application shall be furnished for each 
responsible person of the applicant.
    (b) Preparation of ATF Form 1. All of the information called for on 
Form 1 shall be provided, including:
    (1) The type of application, i.e., tax paid or tax exempt. If the 
making of the firearm is taxable, the applicant shall submit a 
remittance in the amount of $200 with the application in accordance 
with the instructions on the form;
    (2) The identity of the applicant. If an individual, the applicant 
shall provide his or her name, address, and date and place of birth, 
and also comply with the identification requirements prescribed in 
Sec.  479.63(a). If other than an individual, the applicant shall 
provide its name, address, and employer identification number, as well 
as the name and address of each responsible person. Each responsible 
person of the applicant also shall comply with the identification 
requirements prescribed in Sec.  479.63(b);
    (3) A description of the firearm to be made by type, caliber, gauge 
or size, model, length of barrel, serial number, other marks of 
identification, and the name and address of the original manufacturer 
(if the applicant is not the original manufacturer);
    (4) The applicant's Federal firearms license number (if any);
    (5) The applicant's special (occupational) tax stamp (if 
applicable); and
    (6) If the applicant (including, if other than an individual, any 
responsible person) is an alien admitted under a nonimmigrant visa, 
applicable documentation demonstrating that the

[[Page 55027]]

nonimmigrant alien falls within an exception to 18 U.S.C. 922(g)(5)(B) 
under 18 U.S.C. 922(y)(2) or has obtained a waiver of that provision 
under 18 U.S.C. 922(y)(3).
    (c) Approval of Form 1. If the application is approved, the 
Director will affix a National Firearms Act stamp to the original 
application in the space provided therefor and properly cancel the 
stamp (see Sec.  479.67). The approved application will then be 
returned to the applicant.
0
4. Revise Sec.  479.63 to read as follows:

Sec.  479.63  Identification of applicant.

    (a) If the applicant is an individual, the applicant shall:
    (1) Securely attach to each copy of the Form 1, in the space 
provided on the form, a photograph of the applicant 2 x 2 inches in 
size, clearly showing a full front view of the features of the 
applicant with head bare, with the distance from the top of the head to 
the point of the chin approximately 1\1/4\ inches, and which shall have 
been taken within 1 year prior to the date of the application;
    (2) Attach to the application two properly completed FBI Forms FD-
258 (Fingerprint Card). The fingerprints must be clear for accurate 
classification and should be taken by someone properly equipped to take 
them; and
    (3) Have a certificate completed on each copy of the Form 1 by the 
local chief of police, sheriff of the county, head of the state police, 
state or local district attorney or prosecutor, or such other person 
whose certificate may in a particular case be acceptable to the 
Director, for the jurisdiction in which the individual resides. The 
certificate shall state that the certifying official is satisfied that 
the fingerprints and photograph accompanying the application are those 
of the applicant and that the certifying official has no information 
indicating that possession of the firearm by the maker would be in 
violation of state or local law.
    (b) If the applicant is not a licensed manufacturer, importer, or 
dealer qualified under this part and is a partnership, company 
(including a Limited Liability Company (LLC)), association, trust, or 
corporation, the applicant shall:
    (1) Be identified on the Form 1 by the name and exact location of 
the place of business, including the name and number of the building 
and street, and the name of the county in which the business is located 
or, in the case of a trust, the address where the firearm is located. 
In the case of two or more locations, the address shown shall be the 
principal place of business (or principal office, in the case of a 
corporation) or, in the case of a trust, the principal address at which 
the firearm is located;
    (2) Except as provided in paragraph (c) of this section, attach to 
the application--
    (i) Documentation evidencing the existence and validity of the 
entity, which includes complete and unredacted copies of partnership 
agreements, articles of incorporation, corporate registration, 
declarations of trust with any trust schedules, attachments, exhibits, 
and enclosures;
    (ii) A completed ATF Form 5320.23 for each responsible person. Form 
5320.23 requires certain identifying information, including each 
responsible person's full name, position, social security number 
(optional), home address, date and place of birth, and country of 
citizenship;
    (iii) In the space provided on Form 5320.23, a photograph of each 
responsible person 2 x 2 inches in size, clearly showing a full front 
view of the features of the responsible person with head bare, with the 
distance from the top of the head to the point of the chin 
approximately 1\1/4\ inches, and which shall have been taken within 1 
year prior to the date of the application;
    (iv) Two properly completed FBI Forms FD-258 (Fingerprint Card) for 
each responsible person. The fingerprints must be clear for accurate 
classification and should be taken by someone properly equipped to take 
them; and
    (v) In the space provided on Form 5320.23, a certificate completed 
by the local chief of police, sheriff of the county, head of the state 
police, state or local district attorney or prosecutor, or such other 
person whose certificate may in a particular case be acceptable to the 
Director, for the jurisdiction in which the responsible person resides. 
The certificate shall state that the certifying official is satisfied 
that the fingerprints and photograph accompanying the form are those of 
the responsible person and that the certifying official has no 
information indicating that possession of the firearm by the 
responsible person would be in violation of state or local law.
    (c) If the applicant entity has had an application approved as a 
maker or transferee within the preceding 24 months, and there has been 
no change to the documentation previously provided, the entity may 
provide a certification that the information has not been changed since 
the prior approval and shall identify the application for which the 
documentation had been submitted by form number, serial number, and 
date approved.
0
5. Revise Sec.  479.84 to read as follows:

Sec.  479.84  Application to transfer.

    (a) General. Except as otherwise provided in this subpart, no 
firearm may be transferred in the United States unless an application, 
Form 4 (5320.4), Application for Tax Paid Transfer and Registration of 
Firearm, in duplicate, executed under the penalties of perjury, to 
transfer the firearm and register it to the transferee has been filed 
with and approved by the Director. The application shall be filed by 
the transferor. If the transferee is not a licensed manufacturer, 
importer, or dealer qualified under this part and is a partnership, 
company (including a Limited Liability Company (LLC)), association, 
trust, or corporation, all information on the Form 4 application shall 
be furnished for each responsible person of the transferee.
    (b) Preparation of ATF Form 4. All of the information called for on 
Form 4 shall be provided, including:
    (1) The type of firearm being transferred. If the firearm is other 
than one classified as ``any other weapon,'' the applicant shall submit 
a remittance in the amount of $200 with the application in accordance 
with the instructions on the form. If the firearm is classified as 
``any other weapon,'' the applicant shall submit a remittance in the 
amount of $5;
    (2) The identity of the transferor by name and address and, if the 
transferor is other than a natural person, the title or legal status of 
the person executing the application in relation to the transferor;
    (3) The transferor's Federal firearms license number (if any);
    (4) The transferor's special (occupational) tax stamp (if any);
    (5) The identity of the transferee by name and address and, if the 
transferee is a person not qualified as a manufacturer, importer, or 
dealer under this part, the transferee shall be further identified in 
the manner prescribed in Sec.  479.85;
    (6) The transferee's Federal firearms license number (if any);
    (7) The transferee's special (occupational) tax stamp (if any); and
    (8) A description of the firearm to be transferred by name and 
address of the manufacturer or importer (if known); caliber, gauge, or 
size; model; serial number; in the case of a short-barreled shotgun or 
a short-barreled rifle, the length of the barrel; in the case of a 
weapon made from a rifle or shotgun, the overall length of the weapon 
and the length of the barrel; and any other

[[Page 55028]]

identifying marks on the firearm. In the event the firearm does not 
bear a serial number, the applicant shall obtain a serial number from 
ATF and shall stamp (impress) or otherwise conspicuously place such 
serial number on the firearm in a manner not susceptible of being 
readily obliterated, altered, or removed.
    (9) If the applicant (including, if other than an individual, any 
responsible person) is an alien admitted under a nonimmigrant visa, 
applicable documentation demonstrating that the nonimmigrant alien 
falls within an exception to 18 U.S.C. 922(g)(5)(B) under 18 U.S.C. 
922(y)(2) or has obtained a waiver of that provision under 18 U.S.C. 
922(y)(3).
    (c) Approval of Form 4. If the application is approved, the 
Director will affix a National Firearms Act stamp to the original 
application in the space provided therefor and properly cancel the 
stamp (see Sec.  479.87). The approved application will then be 
returned to the transferor.
0
6. Revise Sec.  479.85 to read as follows:

Sec.  479.85  Identification of transferee.

    (a) If the transferee is an individual, such person shall:
    (1) Securely attach to each copy of the Form 4, in the space 
provided on the form, a photograph of the applicant 2 x 2 inches in 
size, clearly showing a full front view of the features of the 
applicant with head bare, with the distance from the top of the head to 
the point of the chin approximately 1\1/4\ inches, and which shall have 
been taken within 1 year prior to the date of the application;
    (2) Attach to the application two properly completed FBI Forms FD-
258 (Fingerprint Card). The fingerprints must be clear for accurate 
classification and should be taken by someone properly equipped to take 
them; and
    (3) Have a certificate completed on each copy of the Form 4 by the 
local chief of police, sheriff of the county, head of the state police, 
state or local district attorney or prosecutor, or such other person 
whose certificate may in a particular case be acceptable to the 
Director, for the jurisdiction in which the individual resides. The 
certificate shall state that the certifying official is satisfied that 
the fingerprints and photograph accompanying the application are those 
of the applicant and that the certifying official has no information 
indicating that receipt or possession of the firearm by the transferee 
would be in violation of state or local law.
    (b) If the transferee is not a licensed manufacturer, importer, or 
dealer qualified under this part and is a partnership, company, 
association, trust, or corporation, such person shall:
    (1) Be identified on the Form 4 by the name and exact location of 
the place of business, including the name and number of the building 
and street, and the name of the county in which the business is located 
or, in the case of a trust, the address where the firearm is located. 
In the case of two or more locations, the address shown shall be the 
principal place of business (or principal office, in the case of a 
corporation) or, in the case of a trust, the principal address at which 
the firearm is located;
    (2) Except as provided in paragraph (c) of this section, attach to 
the application--
    (i) Documentation evidencing the existence and validity of the 
entity, which includes complete and unredacted copies of partnership 
agreements, articles of incorporation, corporate registration, 
declarations of trust with any trust schedules, attachments, exhibits, 
and enclosures;
    (ii) A completed ATF Form 5320.23 for each responsible person. Form 
5320.23 requires certain identifying information, including the 
responsible person's full name, position, social security number 
(optional), home address, date and place of birth, and country of 
citizenship;
    (iii) In the space provided on Form 5320.23, a photograph of each 
responsible person 2 x 2 inches in size, clearly showing a full front 
view of the features of the responsible person with head bare, with the 
distance from the top of the head to the point of the chin 
approximately 1\1/4\ inches, and which shall have been taken within 1 
year prior to the date of the application;
    (iv) Two properly completed FBI Forms FD-258 (Fingerprint Card) for 
each responsible person. The fingerprints must be clear for accurate 
classification and should be taken by someone properly equipped to take 
them; and
    (v) In the space provided on Form 5320.23, a certificate completed 
by the local chief of police, sheriff of the county, head of the state 
police, state or local district attorney or prosecutor, or such other 
person whose certificate may in a particular case be acceptable to the 
Director, for the jurisdiction in which the responsible person resides. 
The certificate shall state that the certifying official is satisfied 
that the fingerprints and photograph accompanying the form are those of 
the responsible person and that the certifying official has no 
information indicating that receipt or possession of the firearm by the 
transferee would be in violation of state or local law.
    (c) If the applicant entity has had an application approved as a 
maker or transferee within the preceding 24 months, and there has been 
no change to the documentation previously provided, the entity may 
provide a certification that the information has not been changed since 
the prior approval and shall identify the application for which the 
documentation had been submitted by form number, serial number, and 
date approved.
0
7. Revise Sec.  479.90 to read as follows:

Sec.  479.90  Estates.

    (a) The executor, administrator, personal representative, or other 
person authorized under state law to dispose of property in an estate 
(collectively ``executor'') may possess a firearm registered to a 
decedent during the term of probate without such possession being 
treated as a ``transfer'' as defined in Sec.  479.11. No later than the 
close of probate, the executor must submit an application to transfer 
the firearm to beneficiaries or other transferees in accordance with 
this section. If the transfer is to a beneficiary, the executor shall 
file an ATF Form 5 (5320.5), Application for Tax Exempt Transfer and 
Registration of Firearm, to register a firearm to any beneficiary of an 
estate in accordance with Sec.  479.90. The executor will identify the 
estate as the transferor, and will sign the form on behalf of the 
decedent, showing his or her title and the date of filing. The executor 
must also provide the documentation prescribed in paragraph (c) of this 
section.
    (b) If there are no beneficiaries of the estate or the 
beneficiaries do not wish to possess the registered firearm, the 
executor will dispose of the property outside the estate (i.e., to a 
non-beneficiary). The executor shall file an ATF Form 4 (5320.4), 
Application for Tax Paid Transfer and Registration of Firearm, in 
accordance with Sec.  479.84. The executor, administrator, personal 
representative, or other authorized person must also provide 
documentation prescribed in paragraph (c) of this section.
    (c) The executor, administrator, personal representative, or other 
person authorized under state law to dispose of property in an estate 
shall submit with the transfer application documentation of his or her 
appointment as executor, administrator, personal representative, or as 
an authorized person, a copy of the decedent's death certificate, a 
copy of the will (if any), any other evidence of his or her authority 
to dispose of property, and any other document

[[Page 55029]]

relating to, or affecting the disposition of firearms from the estate.

    Dated: August 29, 2013.
Eric H. Holder, Jr.,
Attorney General.
[FR Doc. 2013-21661 Filed 9-6-13; 8:45 am]
BILLING CODE 4410-FY-P
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