Dealer Licensing Requirements

       When is a federal license required?

Federal law requires that firearms dealers, manufacturers, and importers, as well as ammunition manufacturers and importers, obtain federal licenses to engage in these businesses. 18 U.S.C. § 923(a). Pursuant to 18 U.S.C.§ 921(a)(11)(A), (B), (C), a federal firearms dealer is:

  • Any person engaged in the business of selling firearms at wholesale or retail;

  • Any person engaged in the business of repairing firearms or certain components thereof; or

  • A pawnbroker.

The term “engaged in the business” as it applies to "a dealer in firearms" is defined under 18 U.S.C. § 921(a)(21)(C) as:

[A] person who devotes time, attention, and labor to dealing in firearms as a regular course of trade or business with the principal objective of livelihood and profit through the repetitive purchase and resale of firearms, but such term shall not include a person who makes occasional sales, exchanges, or purchases of firearms for the enhancement of a personal collection or for a hobby, or who sells all or part of his personal collection of firearms. 

 

       What is required to obtain a federal dealers license?

To obtain a federal firearms dealers license a person must file an application with the Department of the Treasury, Bureau of Alcohol, Tobacco and Firearms (“ATF”).  Under 18 U.S.C. § 923(d)(1)(E), ATF will approve the application for that three-year license if the applicant:

  • Pays the $200 application fee;

  • Is at least 21 years old;

  • Is not prohibited from shipping, receiving or possessing firearms or ammunition;

  • Has not willfully made false statements or failed to disclose material information in connection with the application;

  • Has premises for conducting the business;

  • Certifies that the business is not prohibited by state or local law in the area or zone where the premises is located;

  • Certifies that within 30 days of approval of the license application the applicant will be in compliance with all applicable state and local law and that the applicant will not conduct the business until such compliance is achieved; and

  • Certifies that the applicant has sent or delivered a form to the local chief law enforcement officer notifying the officer that the applicant intends to apply for a license to conduct business as a federally licensed firearms dealer at the premises listed on the license.

 

       What are the duties of federally licensed firearms dealer?

The key duties imposed by federal law on licensed firearms dealers are set forth at 18 U.S.C. §§ 922 and 923.  A federally licensed firearms dealer:

  • Must keep records of sales transactions;

  • Must process sales of firearms in compliance with the “background check” requirements of the Brady Act and may not sell firearms to persons who do not pass the background check, except in certain limited circumstances, including if the prospective purchaser has a valid State-issued firearms permit, issued for a term of five years or less, as described in 18 U.S.C. § 922(t)(3)(A)(i) (such as a concealed carry permit);

  • Must comply with all applicable state and local laws;

  • Is prohibited from selling any firearm to a person the dealer knows or has reasonable cause to believe is under the age of 18, and if the firearm(s) is a handgun, to a person under the age of 21;

  • Is prohibited (with certain limited exceptions) from selling a firearm to a person who does not reside in the same state as the state where the dealer’s business is located;

  • Is prohibited (with certain limited exceptions) from selling a firearm to a person who does not appear in person to make the purchase;

  • May sell firearms only from the premises listed on the federal license except that a dealer may sell firearms at a “gun show” within the state where the dealer is licensed;

  • Must make a report to ATF whenever the licensee sells or otherwise disposes of two or more pistols or revolvers or any combination thereof, at one time or within five consecutive business days if the purchaser does not have a federal firearms dealer, collector, importer or manufacturer license, but such multiple sales are not illegal unless prohibited by state or local law; and

  • Must submit to not more than one ATF inventory and records inspection annually unless the inspection is pursuant to a search warrant issued by a federal magistrate or pursuant to a criminal investigation; and

  • Must report the theft or loss of a firearm to ATF and local law enforcement within 48 hours of the theft or loss being discovered.

 

       "Kitchen Table Dealers"

As noted above, federal law requires that a federally licensed firearms dealer conduct business from the premises shown on the license except when the dealer is selling at a gun show in the same state that the business premises are located.  However, federal law does not require that the licensed premises be a storefront or that it be located in a non-residential zone, or away from schools or places of worship.  Dealers who do not operate out of storefronts are sometimes referred to as “kitchen table dealers.”  Some states and local governments restrict licensed dealers to commercial or non-sensitive zones.  Where such a state or local restriction exists, a federally licensed dealer is required to comply with that restriction as well as any other pertinent state or local dealer regulations.

 

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