ATF Threatens to Prosecute Out-Of-Business Gun Dealers Who Comply with the Law

Opinion by Rob Olson

Gun ShopCounter Display FFL iStock-Filipovic018-512219444.jpg
ATF Threatens to Prosecute Out-Of-Business Gun Dealers Who Comply with the Law, img iStock-Filipovic018

Washington, DC – -(AmmoLand.com)- Internal ATF documents obtained by Gun Owners of America show that the agency, once again, is asserting powers not given it by Congress.

This time, the agency appears to be gearing up to force out-of-business federal firearms licensees (“FFL”) to turn over their remaining firearms in inventory to other dealers — even though federal law explicitly allows former dealers to transfer these firearms to their own personal collection. 

ATF has even threatened prosecution of former dealers who do not comply with ATF’s unlawful requirement.

For years, ATF operated within the rules Congress established.  When an FFL ceases business operations, any firearms remaining in inventory may be transferred either to another dealer or to the licensee’s own personal collection.  Either way, the disposition for each and every firearm must be recorded in the dealer’s “acquisition and disposition” (A&D) book.  The A&D book, along with other records, must then be transferred either to the ATF out-of-business center, or to a successor licensee who takes over the business.

This is the system set up by federal law.  For example, 18 U.S.C. Section 923(c) makes clear that it is perfectly acceptable for a dealer to maintain a “personal collection” of firearms, and even to transfer firearms from business inventory to that collection.  And, of course, once a dealer goes out of business, he is no longer a “licensee” under the Gun Control Act, and has no record-keeping duties under the statute.  He is entirely a private party, and any firearms that have previously become part of his personal collection are treated no differently than for any other gun owner.  Indeed, when it comes to disposing of a personal collection of firearms, 18 U.S.C. Section 921(21)(C) clearly provides that a person may “sell[] all or part of his personal collection of firearms,” without being considered to be engaged in the business, requiring a license.

In other words, federal law explicitly allows a dealer to transfer firearms to his personal collection, which includes any remaining inventory when he goes out of business.

Thereafter, federal law explicitly allows that ex-licensee, now a private party, to sell any and “all” of those firearms without being considered to be “engaged in the business.”

For many years, ATF operated within the statute as written.  For example, in its 2012 “FFL Newsletter,” here or back-up here ATF explained that, “[w]hen a licensee elects to discontinue his or her business … licensees have the option of transferring the firearms to their personal collection.”

ATF Glory Hole Agent Still Drawing Pay, Pension, Benefits
ATF Glory Hole Agent Still Drawing Pay, Pension, Benefits

In 2014, that changed.  A December 1, 2014 email from the ATF Deputy Chief, Field Management Staff (the same ATF official who was promoted!?, and reassigned after it was discovered he was running a Craig’s List glory hole for random men in his hotel room) stated that ATF’s “preferred manner for disposing of firearms inventory” was to transfer them to another dealer — not transfer to a private collection, as the statute permits.

Attached to the email was an “Important Notice” signed by Andrew R. Graham, then-Deputy Assistant Director for Industry Operations, which also advised out-of-business FFLs against transferring firearms to their own personal collection.  Then came the veiled threat:

“[s]hould a former FFL decide against” transferring his firearms to another dealer, “he/she should be aware that future sales — whether from his/her personal collection or otherwise — will be evaluated for a potential violation of 18 U.S.C. § 922(a)(1)(A).”

The Graham Notice even went so far as to claim that, “[i]f a former FFL is disposing of business inventory, the fact that no purchases are made after the date of license … surrender does not immunize him/her from potential violations.”  Contrast that with the statute, which requires, among other things, “the repetitive purchase and resale of firearms” in order to be considered a dealer.

The 2014 ATF threat sounds eerily similar to the January 2016 “executive action” taken by President Obama, claiming that a gun owner could be prosecuted for being “engaged in the business” if he sold even one firearm.

Graham Notice, Selling Firearms AFTER Revocation, Expiration, Or Surrender of an FFL

Based on the same absurd theory, in 2015 ATF prosecuted former FFL Bob Arwady in federal district court in Houston, Texas.

ATF claimed that Bob was “engaged in the business” simply for selling firearms he had transferred to his personal collection when he gave up his license.  Gun Owners of America and my law firm, William J. Olson, P.C., helped defend Arwady, arguing that he could not be prosecuted simply for having followed the procedure established by law.  Only a few days before trial, ATF finally dropped the “engaged in the business” charges, and, at trial, a jury acquitted Bob of the two remaining counts.

The Arwady case dealt a serious black eye to ATF and the Obama administration, especially in their attempts to go after law-abiding gun owners who sell firearms from their personal collections.

Fast forward to the present.  On September 25, 2020, ATF Deputy Assistant Director, Office of Field Operations Megan Bennett issued an instruction to all ATF field offices, ordering that ATF personnel are to “stop publicly disseminating the notice of permissible methods of inventory liquidation to FFLs who go out of business.”  DAD Bennett advised that a “revised template” would soon be made available.

It seems that ATF wishes to pick up today where it left off in 2014.  ATF does not want out-of-business dealers transferring firearms to themselves, even though federal law expressly permits them to do so.  Gun owners can expect that any future ATF guidance on the issue will eliminate the personal collection option, and instead order that all out-of-business dealers must transfer their inventory to other licensees.

ATF’s continued threats to prosecute former dealers who simply follow the law not only is egregious and unlawful but also it represents another situation where the agency seems determined to undermine President Trump as the nation nears an election, by reverting to Obama-era policies to threaten and intimidate law-abiding gun owners.



Rob Olson is a Virginia attorney whose practice focuses on firearms law and the right to keep and bear arms.  He represents Gun Owners of America and Gun Owners Foundation.

Robert J. Olson with William J. Olson, P.C.
Robert J. Olson with William J. Olson, P.C.
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2ndA'murrican
2ndA'murrican
1 month ago

A deviant [email protected]$ucker regulating licenses for the ATF? Why doesn’t that surprise me? They’re all a bunch of [email protected]$uckers who want to get their way by taking away your right to legally have something to defend yourself with against their kind. I would just hate to imagine what else they’ve gotten away with for so long because of the power they hold. And to perpetrate their deviant agenda while on “Official Business” is sickening.

Last edited 1 month ago by 2ndA'murrican
Get Out
Get Out
1 month ago

Gotta wonder who supervises these people and allows them to make these kinds of decisions?

CourageousLion
CourageousLion
1 month ago

How does the wiener eater fit into the story? Probably most people that work in the government engage in some sort of sordid activity.

JDT
JDT
1 month ago
Reply to  CourageousLion

LOL, He wedged that wiener eater story right on in there and I thoroughly enjoyed it!

Capn Dad
Capn Dad
1 month ago

KGB Gestapo ATF….one of these mothers is just like the others.

Finnky
Finnky
1 month ago

My understanding was that FFLs only had to keep their books for ten years, and could then destroy them or turn them in to ATF. Was the rule just that they could destroy records after ten years? So hang onto FFL for ten years, destroy all records, then surrender FFL & turn over remaining records at that point? If they impose such rule on retail FFLs, what is to stop them from doing the same to C&R-FFLs? Whole purpose of that license is to simplify building a personal collection, will they now require one to maintain the license for life… Read more »

Last edited 1 month ago by Finnky
J Richardson
J Richardson
1 month ago
Reply to  Finnky

It is actually 20 years per 18 USC 923(g)(1)(A).

Dealer must send the following when going out of business:

The records consist of the licensee’s acquisition and disposition (A/D) records, ATF Forms 4473, ATF Forms 3310.4 (Report of Multiple Sale or Other Disposition of Pistols and Revolvers), ATF Forms 3310.11 (Federal Firearms Licensee Theft/Loss Report), records of importation (ATF Forms 6 and 6A), and law enforcement certification letters.
[18 U.S.C. 923(g)(4); 27 CFR 478.127]

Curios and Relics don’t have to turn in their books.

musicman44mag
musicman44mag
1 month ago

I cannot open the ATF is BRACIST. Is anyone else having this problem?

uncle dudley
uncle dudley
1 month ago

It looks like there are so many swamp creatures still in D.C. that need to be weeded out and sent down the road, we need for Trump to get another four years to keep working on draining the swamp.

Joe
Joe
1 month ago
Reply to  uncle dudley

When you are up to your ass in alligator’s, it’s hard to remember that your original intent was to DRAIN the SWAMP !!

GUNFUN
GUNFUN
1 month ago
Reply to  Joe

HEY! Lets not forget what he has done! SHUT UP!

Morrigan
Morrigan
1 month ago

I have wondered where these people were when the Head Honcho was handing out rifles out of the trunk of a car in the Seattle Independent Municipality Of Idiots.

Bubb
Bubb
1 month ago

Nice article…clear, concise and revealing about what the bastards are up to…never let our guard down.

Boomer
Boomer
1 month ago

I’m beginning to think this is more about collecting the sales tax than anything else.

Tionico
Tionico
1 month ago
Reply to  Boomer

sales taxes are a state issue. There are federal taxes on firearms sales, which will apply when the former retired dealer might resell them, because a new backgroind check will be required in many jurisdictions, making it a retail sale in the eyes of the involved state.
But this is nothing but Nannies wanting to flrx their nanniemuscles and control. Ain’t their job.

John Dow
John Dow
1 month ago

It is in the nature of every govt agency to seek to expand its fiefdom – both in manpower and power over the people.

Time to have a round of personnel reductions at all agencies, 50% to 100%.

Oldman
Oldman
1 month ago
Reply to  John Dow

I agree with that, and the fact that the FBI had Hunter’s laptop in Dec, ’19, and nothing was brought up about it in the impeachment of Trump means they are in on it. Wray will, in my opinion, be fired right after Trump wins re-election. And , IMO, The top 25% needs to be gone from the FBI and replaced by law abiding and lovers of our Constitution!

GomeznSA
GomeznSA
1 month ago
Reply to  Oldman

Old – might be even better to NOT replace that “top 25%” – let the field agents run their own investigations. A new director that is actually a street cop or competent investigator – NOT a liar er um lawyer is definitely in order.

musicman44mag
musicman44mag
1 month ago
Reply to  Oldman

Sweep the floor and flush the swamp.
Trump 2020

Will
Will
1 month ago
Reply to  musicman44mag

President Trump will still have one hell of a lot of swamp flushing to do during his 2nd term!

JSNMGC
JSNMGC
14 days ago
Reply to  Oldman

The BATFE reports to Trump.
The FBI reports to Trump.
Most of this stuff he can fix with a phone call.

Cruiser
Cruiser
1 month ago

Shame on every Gun Owner who votes Democrat!

2a-atf-disband-1200.png
GomeznSA
GomeznSA
1 month ago
Reply to  Cruiser

Cruiser – I’ll keep giving ya a thumbs up every time you post this. 😉

Will
Will
1 month ago
Reply to  GomeznSA

Me too!

JIAZ
JIAZ
1 month ago

Alcohol is legal. Tobacco is legal. Firearms are legal. Crimes involving explosives can more than adequately be investigated by the FBI.
Defund these administrative clowns and disband this unnecessary taxpayer burden.

Don
Don
1 month ago
Reply to  JIAZ

The ATF doesn’t simply suck tax dollars fron the treasury. It collects billions of dollars in federal excise taxes from all three products.

GomeznSA
GomeznSA
1 month ago
Reply to  Don

Don – there is likely a LOT better and far more efficient way to collect all of those tax dollars. Like maybe letting the local and/or states where those businesses are conducted do the collecting and of course ‘donate’ their ‘fair share’ to fedzilla. I imagine the other readers could come up with an even better system.

CourageousLion
CourageousLion
1 month ago
Reply to  GomeznSA

Fedzilla doesn’t need any taxes. They can create all the “money” they want out of thin air.

almost-legalized-theft.png
Tionico
Tionico
1 month ago
Reply to  Don

those excise taes can just as easily be collected by the final retail seller, just as are local and state taxes already, and submitted to the appropriate Fed agency.. probably IRS. Can be made simple and painless, and does NOT need BATF to be involved. So don’t try and float that leakey submarine.

Dubi Loo
Dubi Loo
1 month ago
Reply to  JIAZ

,
I agree up to the point where you mention the FBI. I believe the FBI is another dangerous agency that has been playing politics instead of investigating federal crimes. I say get rid of BATFE, the FBI, and most sections of Homeland Security. Let the US Marshall’s be the premiere federal law enforcement agency. We don’t need several LE agencies to go after us pesky citizens while soaking up massive tax dollars.
That’s my $0.02, YMMV

musicman44mag
musicman44mag
1 month ago
Reply to  JIAZ

You may have hit on something here. They want to defund the police? Lets call the ATF another police agency and start defunding them.

JSNMGC
JSNMGC
14 days ago
Reply to  musicman44mag

Or maybe Trump could make a phone call. Why do so many people, rightfully, disagree with the BATFE’s actions and not have an expectation that Trump simply tell them to back-off? The cognitive disconnect is amazing. People are recommending all sorts of things that completely remove Trump from any accountability. Write the Chairperson of the Republican Party in your state and tell them how disappointed you are that Trump is letting the BATFE run amuck and you will never voter for another Republican candidate if the Republican Party does not pledge to demand the next candidate get the BATFE under… Read more »

a.x. perez
a.x. perez
1 month ago

The BATFE has always tried to grab more power than it was assigned. In1979 they got so bad even liberals such as Ted Kennedy were ready to break up the agency. Forty years and the only thing that seems to have changed is that the new liberal/ progressives are egging them on. Vote Republican or expect them to get worse

JSNMGC
JSNMGC
14 days ago
Reply to  a.x. perez

Why don’t you hold Trump accountable for not doing something?

Why would I vote for a Republican unless I am sure they will do things Trump has refused to do?

Dave in Fairfax
Editor
Dave in Fairfax
14 days ago
Reply to  JSNMGC

JSNMGC, I tried to contact the GOP/RNC and found that they don’t accept e-mail if they can get away with it. They are delighted to use the social platforms that discriminate against them. That should tell us all something.I did come up with a couple of usable e-mail addresses. The leadership uses a verification program so that if you aren’t in their district you can’t e-mail them. Here is what I managed to send off along with the 2 addys. [email protected] https://www.republicanwhip.gov/contact/ While I do not agree with everything said in this article, it raises some important points that you… Read more »