NFA Trust

NFA Tax Stamp Denials

NFA Tax Stamp Denials.

NFA Tax Stamp Denials

Something apparently has changed at the ATF/FBI. Clients who, in the past, had no problem getting an NFA tax stamp are being disapproved. The reason for being disapproved is because the NCIC background check is being classified by ATF as “unresolved”.

I was hoping to have more information and a solution before writing this article. However, the 120-day clock for the special Form 1 applications is ticking. Those making application to the ATF need to be aware of the issue.

So far, it appears to be older applicants with criminal charges as old as the early 1970s and as recent as the early 2000s. These NFA tax stamp applicants have no problem passing dealer – initiated background checks on Title I firearms. Dealer-initiated background checks are Form 4473 checks run through the Colorado Bureau of Investigation (CBI) and NCIC. A public search of CBI records sometimes shows the offending criminal record. Often a public search of CBI records does not show the offending record because Colorado considers the matter resolved and the record sealed. Criminal records are often sealed automatically after a certain period of time and sometimes at the request of the individual. Once sealed, those matters do not show up on a standard CBI search request but do show up to the FBI. To obtain those records requires a special trip to CBI or an application to the FBI for your personal NCIC “rap sheet”. CBI will only release sealed criminal records to the individual in question and in person. FBI will release the criminal records to us if authorized by the client. Both require formal fingerprinting.

In speaking with the FBI, the FBI points the finger at the ATF claiming that all the FBI does is run the NCIC report. However, we have requested UPINs from the FBI via a Voluntary Appeal File application (VAF) process and the FBI is denying those UPIN requests. I would say for the same reason, but so far, nobody is telling us or the client exactly what the issue is. There is a process in Colorado to supplement criminal records. However, to supplement the record we must know what the problem or issue is that needs to be corrected. Otherwise, we are guessing. Needless to say, this has been a little frustrating and time consuming.

Below is my best guess about what is going on. It appears that somebody at the ATF, FBI, or both has decided that any charge, no matter how minor, that could possibly result in an individual being considered a prohibited person is being used to disapprove NFA tax stamp applications as an unresolved background check. Pursuant to current case law, there is no court remedy for an improper denial of an NFA tax stamp. See, e.g., Bowen v. United States (S.D. Ga. 2021) and Kaszycki v. United States (W.D. Wash. 2020). These two cases coincide with about when clients report the issue arising. For example, if there is a charge involving a physical altercation, we suspect the ATF takes the position that the individual must show that it did not involve domestic violence even though the charge is not a DV charge. To contrast, another example would be a felony arrest where no charges were ever filed. Individual is arrested, fingerprinted, and then let go because law enforcement determined that it was a mistake. In that case and assuming older cases, after ten years the Colorado record might be automatically sealed and then eventually purged with the CBI disposition being “Record Purged”. “Record Purged” is not a defined criminal disposition even though CBI may know that means charges were never filed. FYI. Today, if charges are not filed, the Colorado record is sealed rather quickly. The individual feels vindicated for the moment. However, that arrest record is still out there and now, since even shielded from the individual’s view, can come back to haunt them when they apply for an NFA tax stamp.

I will write more on this issue as we progress. Hopefully, we will have some success in clarifying the record and eventually getting our clients back in good standing with the ATF.

NFA: Should My Spouse or Significant Other Be a Co-Trustee?

NFA: Should My Spouse or Significant Other Be a Co-Trustee?

Under the NFA, only the individual named on the tax stamp may be in actual or constructive possession of the NFA item. For this reason, trusts became popular because a trust holding the tax stamp allows for multiple individuals to be in possession of the NFA item as current, co-trustees. However, that means the co-trustees must submit fingerprint cards, photos, and responsible person forms with every NFA purchase. This can be a hassle. Sometimes we are asked if a spouse or significant other really needs to be a co-trustee. No, they do not so long as the trust NFA items are secured so that only the current trustee can be in actual or constructive possession. An understanding with others that they will not touch the NFA item is not enough.

Colorado Gun Law Update – Polis Signs Two Gun Bills

Note:  I use the term “prohibited person” in the video.  The exact statutory language is a person ineligible to possess a firearm — which is much broader than just a prohibited person as that term is used by the federal government.

For a complete copy of the recent Colorado laws, click the links:

https://leg.colorado.gov/sites/default/files/2021a_078_signed.pdf
https://leg.colorado.gov/sites/default/files/2021a_1106_signed.pdf

Will You Need A Gun Trust? 

There is a new sheriff in town.  His name is Joe Biden.  The Biden administration has already floated the idea of applying the $200 National Firearm Act (NFA) tax to all semi-automatic rifles.   The sleeper is the application of the NFA, in general, to those rifles.  And for that reason, many individuals are considering a gun trust.

To understand the issue requires starting with the Colorado background check law enacted on July 1, 2013.  The 2013 law required a background check on all Colorado gun sales.  Sounds reasonable, right?  Well, the law is not about gun sales.  The law is about firearm possession.  Anytime a Colorado firearm is handed off to anyone, the question you must ask is, is a background check and approval of the transfer required?

As originally introduced by the Colorado House, the 2013 law required a background check on almost any transfer of possession no matter how temporary.  Out in the field plunking cans and your buddy wants to try out your new rifle?  Background check required.  Want to leave the gun in your house and available to your spouse?  Background check required.  Want to take your gun to a gunsmith and get it cleaned up?  Background check required.  Want to get the gun back from the gunsmith?  Background check required.  And of course, a fee each time.

When the 2013 law came out of the Colorado House, many individuals created a gun trust, identified family members who would be entitled to possession of trust firearms, and transferred their firearms to the trust.  Why?  So that family members need not be afraid of violating the law by sharing family firearms.  To make a long story short, the Colorado Senate modified the background check law passed by the Colorado House.  The Colorado Senate made exceptions including immediate family loans and gifts, gunsmiths, and loans for up to 72 hours.  In my opinion, a much less onerous law than originally thought.

Until 2013, I never drafted a firearm trust for “regular” firearms (Title I Firearms).  Firearm trusts were a creature of the NFA (Title II Firearms sold by a Class 3 dealer).  The NFA was enacted in the 1930s when the federal government did not think it could prohibit guys like Al Capone from owning full-auto firearms – Tommy Guns.  However, the federal government could tax the transfer of possession, strictly limit possession to the transferee, and require registration through a tax stamp.

The Biden Administration has floated the idea of not just taxing semi-automatic rifles like they do full autos, suppressors, short barreled rifles, and short barreled shotguns; but to have the semi-automatic rifles be subject to the entire NFA.  That would mean any transfer of possession, would require an application to the Bureau of Alcohol, Tobacco, Firearms, and Explosives (BATFE or ATF), the submission of fingerprint cards and photos, $200, and a year-long wait.  There would be no exceptions for a spouse, child, father, etc.  There would be no exception for a gunsmith.  There would be … no exceptions.  The penalty for violating the NFA is up to 10 years in federal prison and $250,000 in fines.

In a properly drafted gun trust, multiple individuals can share possession of the trust firearms.  Usually these are family members or members of the same household.  Individuals are already conveying firearms to their firearm trusts in anticipation of the anticipated law.  Many of the concerns in 2013 causing individuals to establish firearm trusts are concerns, today.  If you want to share your firearms with family members, a firearms trust may be in your future.