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When does it become "manufacturing"?


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Old 03-20-2012, 04:55 PM   #11
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i just got busted by atf. nothing wrong with "assembling" them for personal use or for someone else that has their own parts. but assembling them (to sell) requires a manufactorer's license.

stupid, i agree but those are atf's words
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Old 03-20-2012, 06:15 PM   #12
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When I first got my license I informed my inspector that I wanted to build custom 10/22's. I was informed that I could only purchase complete rifles and change the parts. Buying only 10/22 receivers and then building a rifle would count as manufacturing. I believe this to be true with AR lowers as well. This is why so many dealers sells kits along side built out lower receivers, but not as complete rifles.
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Old 05-25-2015, 04:36 PM   #13
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In my interview for my FFL, I was told by the ATF agents that if you so much as put handguards on the firearm, that is considered manufacturing. How a court would interpret it is something I never want to find out, so I changed my application to a class 7 manufacturer for a few bucks more to save myself some heartburn.
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Old 05-25-2015, 04:59 PM   #14
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As stated by cattle and sniper per my interview with BATF for my 07 if you buy a complete lower and then add an upper you are manufacturing. If the lower has a S/N you either add your information to the lower or you write a letter to the BATF and ask for permission to use the existing manufacturers information as yours and record that in your log book for manufacturing. Anything added to an existing firearm is considered manufacturing and must be recorded as such.
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Old 05-25-2015, 05:05 PM   #15
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Just for informational purposes an 01 is $250.00 and an 07 is only $150.00. Makes more sense to go with the 07 which is less expensive and allows you to do so much more. There is a little more paperwork and added fees when you start to manufacture but it allows you to make a little more money.
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Old 06-18-2015, 03:05 PM   #16
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There is one item that was left out. If you are an 07, you MUST register with Department of State (per ATF Guidebook - Importation & Verification of Firearms, Ammunition, and Implements of War).
"Generally, persons holding a manufacturer's FFL (Types 06, 07, and 10) must register as a manufacturer with the Department of State unless specifically exempted by an International Traffic in Arms Regulation (ITAR)."
This is $2250 per year.
I have also heard that the DOS is starting to strictly enforce this requirement.
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Old 06-18-2015, 09:02 PM   #17
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In correspondence with the Agent who was handling my FFL, she advised me not to worry about it unless I was engaged in transactions with foreign nationals. (I kept my email traffic in the event an issue came up.)
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Old 06-19-2015, 06:37 PM   #18
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Quote:
Originally Posted by fsted2a View Post
In correspondence with the Agent who was handling my FFL, she advised me not to worry about it unless I was engaged in transactions with foreign nationals. (I kept my email traffic in the event an issue came up.)
That information is wrong! The DDTC does not care if you export or deal with any government entity. If you are an 07 you must comply.
An email from a lowly ATF IOI will not protect you. In fact, they do not work for the DDTC and cannot legally comment on their processes. You might contact her and request she stop doing that.

You better worry about it. You HAVE to get an official exception in writing from the office of the DDTC. If not, they can require you to pay for every year you are licensed and did not pay or get an exception. Simple as that. They take ITAR compliance very seriously.

Exceptions are VERY difficult to obtain. I was able to get one but it took months and countless hours of drafting and submitting documents. Most people fail and just pay the tax.

The DDTC has started requesting the updated list of 07 FFL holders. So you bet they know how to find you.

Either pay or get the exception. Only option you have.

Also, If you noticed the news lately the DDTC is updating the ITAR which will make compliance even more important for 07 FFL holders.

Sorry to be so serious but this is a very serious situation.

Let me know if you have any questions.
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Old 06-19-2015, 09:15 PM   #19
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Quote:
Originally Posted by rct View Post
That information is wrong! The DDTC does not care if you export or deal with any government entity. If you are an 07 you must comply.
An email from a lowly ATF IOI will not protect you. In fact, they do not work for the DDTC and cannot legally comment on their processes. You might contact her and request she stop doing that.

You better worry about it. You HAVE to get an official exception in writing from the office of the DDTC. If not, they can require you to pay for every year you are licensed and did not pay or get an exception. Simple as that. They take ITAR compliance very seriously.

Exceptions are VERY difficult to obtain. I was able to get one but it took months and countless hours of drafting and submitting documents. Most people fail and just pay the tax.


The DDTC has started requesting the updated list of 07 FFL holders. So you bet they know how to find you.

Either pay or get the exception. Only option you have.

Also, If you noticed the news lately the DDTC is updating the ITAR which will make compliance even more important for 07 FFL holders.

Sorry to be so serious but this is a very serious situation.

Let me know if you have any questions.
Looks like I am just gonna have to let the customer put his own guns together until I get some clarification from an attorney. Been meaning to get a good 2A experienced attorney on other issues anyway. Next thing you know the Dept of Agriculture will get involved with firearms issues.
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Old 06-20-2015, 01:57 PM   #20
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Quote:
Originally Posted by fsted2a View Post
Looks like I am just gonna have to let the customer put his own guns together until I get some clarification from an attorney. Been meaning to get a good 2A experienced attorney on other issues anyway. Next thing you know the Dept of Agriculture will get involved with firearms issues.
I feel your pain.

You simply do not need to waste money on an attorney. Unless. of course, you want to take on the ATF and the Department of Defense. If you feel you must waste your money, have him/her read the two letters referenced below.

After countless hours working on this before I even became a licensee I was able to determine that the ATF considers building an AR-15, for example, by attaching an already built upper to an already built and serialized lower and then selling it, manufacturing. Simple as that.

Please read this BATFE letter 2010-10. Pay special attention to the two sections 'Manufacturing and 'Gunsmithing':

https://www.atf.gov/file/82791/download


They later further claified that ruling with this letter which also included details on the so called 80% AR lowers:

https://www.atf.gov/file/11711/download



According to the ATF letters referenced above. Assembling ar-15s from lowers and uppers is manufacturing as long as you do it before the sale (This has been their opinion for a LONG time). Any competent ATF IOI should know this and tell you this. However, most will agree that it simply does not make any sense. If the assembly is post sale and the items are not shop inventory, it is gunsmithing.

It appears that the way you get around this is you simply sell and deliver to your customer the two parts separately. Then have your customer hand them back to you for assembly. Now you are providing gunsmithing services. Though it would certainly be a gray area. Especially, if you are advertising the gun as a completed item.

The easy way around this was to simply become a licensed manufacturer and, barring any local restrictions, this was not an issue. That was, until the DDTC and ITAR. Now if you are a licensed manufacturer you must register and pay ITAR or get an exception.

As I mentioned in an earlier posting in this thread, recently the DDTC realized that most 07 licensed FFLs were not registering with them as required and now request updated lists of 07 licensees. Some have already received letters from the DDTC.

Unfortunately, not registering with the DDTC is a serious issue with serious fines and ramifications. They simply do not care about any excuses or what you read online or what some ATF employee told you. This is the Department of Defense we are talking about here. Do you really think they have a sense of humor?

You can read a nice little article about all this here authored by a gun law attorney:

http://blog.princelaw.com/2012/08/10/department-of-state-is-stepping-up-enforcement-of-itar-related-to-manufacturers/

I hope this helps.
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