Itar

[Jim Borden]

Thats the problem. Some laywers say yes, you must pay it, and some say no.Some manufactures pay it and lots of them dont.

It looks to me as that the right way to go would be to get a 01, do the gunsmithing and not worry about ITAR. Since it is the source of much confusion, why mess with it?

If the State Dept,is silly enough to expect small time gunbuilders that dont export anything and probably wont sell to anyone outside of their own town to pay the fee, then it seems best to me to not go the 07 route and just leave them out of the picture.

Bob

Each of us has to make our own decisions concerning business. I wish you the best.
If you are just going to do gunsmithing, then the 01 license makes lots of sense.

If you actually intend to build rifles by using custom actions-then it does not make sense-but that is your business and your decision.

Jim

 

[Boe]

Jim,
I sure you have gone through this before and you would know the answer, but in plain terms where does gunsmithing end and manufacturing begin? Is it true if a customer brings you HIS Remington 700 action to true it up and replace the barrel, Are you now a manufacturer? It seems every goverment agent. you ask has a different answer. Every attorney you ask has a different one too. Thanks Boe

 

[glbreil]

This is an intersting topic, I wish it was all a little easier to interpret.

Boe as for your question I have a letter from the ATF stating that if a customer brings you an action such as you mentioned then HE is the manufacturer in that case. If you provide the action or he purchased it from you then you are the manufactuer.

I am wondering what the belief is about ITAR and unfinished products such as 80% lowers. Does a guy have to register to make those since the ATF says they are not a firearm at that point? It seems that the person who finished it would be the person who is responsible.

I also read on the ITAR regs that just one occasion is enough that you have to register. Does this put the homebuilder, who is building a firearm for himself out of business as well?

Seems that I could come up with a lot more questions than I can find answers for.


Gary

 

[Eagle_view]

I think that we all know what the State Department would say about home builds and 80% frames if they had the time to look at it. i do not believe that they "Gun Freindly" but they also like to go for firms that can pay their Million$ dollar fines they like to give. I understand the frustration that is expressed here by others. I have felt all of it also or would not have spent the time and $$ to put us in a place that I am more comfortable. One of my businesses is only military focused and I have to pay the fee. But here is ther real kicker, the manufactures of the sights and lights that are mounted on my mounts do not have to file the same expot papers that I have too when selling to approved countries. I believbe this is a major reason you see reddot and holographic sight marketed to the civilian market at the prices they are.

Lowell

 

[brian roberts]

Once again, something most attorneys, and others, know nothing.................

about: Article 1, Section 10 "...No State (and this includes the federal state, since they derive their powers FROM the Constitution...) shall...pass any Bill...or Law IMPAIRING the Obligation of Contracts..."

See what your attorneys say about this. You may, however, still be up the creek, since you APPLIED (asked for) for the license; you didn't, however, ask for the government to take the position that they were going to try to put you OUT of business..... or TAX you out of business, since your business is conducted in a lawful manner.
Ask, it will be interesting to see how it plays out. I believe the US is the only country that has such a business-friendly standard.

 

[APCalls]

re ITAR - Jim is correct.

I sent a email to the State Department regarding my situation.

Here's the answer to my quiestion:

Yes, you must register with DDTC because you are producing a US Munitions List Item. All rifles are Category I (a) on the US Munitions List. The definition of firearm in paragraph (J) (2) of Category I makes that clear.


The Registration requirement in Part 122.1 states:

§ 122.1 Registration requirements.

(a) Any person who engages in the United States in the business of either manufacturing or exporting defense

articles or furnishing defense services is required to register with the Directorate of Defense Trade Controls. For the

purpose of this subchapter, engaging in the business of manufacturing or exporting defense articles or furnishing

defense services requires only one occasion of manufacturing or exporting a defense article or furnishing a defense service. Manufacturers who do not engage in exporting must nevertheless register.

Additionally, if ATF requires you to obtain a manufacturer’s license, DDTC must regard you as a manufacturer as well.


Stephen M. Geis
DDTC Response Team
Contractor, XL

NOTE: Information in this message generally discusses controls and information contained in the Arms Export Control Act and International Traffic in Arms Regulations (ITAR), both of which are authoritative on this matter. The Response Team fields basic process and status questions, and assists exporters in identifying how to get answers to more complex questions handled by the Directorate of Defense Trade Control's licensing and compliance offices. The Response Team's services are not a substitute or replacement for the advisory opinion, general correspondence, and commodity jurisdiction processes delineated in the ITAR, which should be used to obtain authoritative guidance on export control issues, and do not in any way relieve exporters from their responsibilities to comply fully with the law and regulations.



This email is UNCLASSIFIED.



From: XXXXXXXXXXX
Sent: Sunday, September 18, 2011 6:35 PM
To: DDTC Response Team
Subject: Questions / Clarification on DS-2032


I have a question regarding my business and whether I need to register with the US State Department under ITAR.

Background:

I'm a low volume (under 50 rifles annually) manufacturer of semi-automatic hunting rifles. My understanding of 22CFR Ch I Part 121.1 is If I exported the semi-auto firearms they would fall under Category I and be considered "*significant military equipment".

I hold a Federal Firearms License Type 07 Manufacturer of Firearms other than Destructive Devices. None of my weapons are for sale to the military or are for export outside the USA.

Question:


Since my firearms are not produced for export, or for sale outside the USA, and I have no intention of ever exporting, do I need to register using the DS-2032 with the State Department.

 

[Superman]

Being the responsible party behind many recent changes in BATFE definitions, I have first hand experience with the ATF legal department. I'll try and clarify a few things with examples that I hope are easy to understand.

First off, I hold 01, 06, and 07 licenses. I am primarily a 1911/2011 pistolsmith that builds some custom rifles in my spare time on the weekends.

My ATF agent told me according to the nomenclature of the law as it was currently written (pre-October 2010) that if I installed an ambi safety on a 1911 that came from the original manufacturer as a single sided safety that I have manufactured a new firearm. *Now I know most of you are going to disagree with him, but he was right, the way the law WAS written, and according to the ATF legal department.*

He said if I joined an AR upper and lower and then sold them as a complete rifle I was manufacturing and would need an 07 license. *Again, he was correct in accordance to the written law.*

I thought that was stupid and started the process with the legal department in asking for clarifications and definitions. According to the way the law was previously written, someone applying cerakote or hard chrome was "altering the appearance of a firearm" and now engaged in the act of "manufacturing". *I think the intent was good, but saying a paint altered the appearance and made it a new gun?!?!*

Enter 2011, new wording of the laws and clarifications are made. LOTS of things changed. Previously, if I took a 1911 frame from my inventory and built a gun on it per customer request I had to log it in my manufacturing log book on my 07 license then transfer it to my 01 log book and on to the customer or their FFL. This frame would count against my 50 guns of no excise tax per year. That has changed. NOW, if a customer calls me up and orders a gun, no matter where the serial numbered frame comes from, it is NOT manufacturing. Transversely, if I go and take a frame from my stock room, build a 1911 and offer it up for general sale, it IS manufacturing and I must report the sale of that gun to the TTE even if it is the only one I built. There is no tax if it was less than 50 built, but it still must be reported.

Same goes for rifles. If I own all the components and I have a customer order, it's not manufacturing, it's gunsmithing. *Funny thing is, I didn't agree with how strict the law was before, now I think it is too lenient.* If I go grab a 6mm bbl and build a 6BR and put it on my shelf for sale, I have now manufactured a firearm and I must report the sale of that item to the TTE.

Being that I also have an 06 license, I wanted clarification on loading ammo and my responsibility there. If I use NEW brass, regardless of who owns that brass, I owe an excise tax the moment I sell that loaded round even if it is the first round. If the brass has been fired and is customer supplied, there is no FET. I ONLY reload ammo because of that. FET is like sales tax, once you start reporting you must report quarterly (was every 2 weeks) rather you manufacture anything or not or you are in violation in failing to report.

I do not post this information to incite debate about how stupid the laws are, about how much taxation our government is currently imposing on us, or rather or not someone should knowingly or willingly brake the law. I think it would be unbecoming of ANY manufacture to openly state on this forum or any other that they are knowingly breaking the law by not registering with the State Department and paying the fees. If you are a firearms manufacturer you are required by law to register with State Department and pay ITAR registration regardless of how big or small you are or how much you manufacture. The simple solution is to maintain an 01 license and ONLY build rifles per customer order. If you build one for yourself you must own it for 12 months before you can sell it.

My plans are to surrender my 07 license when the ITAR registration expires. I'll never get caught up on customer orders enough to build spec guns for general sale (I hope!). Now that there has been some correction and clarifications with the wording of the law I don't need an 07 to build guns for customers.

 

[Ian Robertson]

I have some bad news for our USA friends. It seems that the only country that has anything to do with ITAR is the USA and the only reason for this is because the USA gov can not control guns within their borders they will attempt to control them outside their borders. All this does is cost USA gun makers money in regard to their exports which can be easily what they sell within the USA. I am happy to report that the gov in Canada has changed recently and has stated that they believe in the use of guns for sporting reasons within the UN counties and this has really put the screws to this within the UN! Wo Ho! Finally a little real Canadian Gun Control!

In talking to our USA customers they are jealous about how easy it s to run a gun business in Canada, and it will get easier!

 

[alinwa]

I have some bad news for our USA friends. It seems that the only country that has anything to do with ITAR is the USA and the only reason for this is because the USA gov can not control guns within their borders they will attempt to control them outside their borders. All this does is cost USA gun makers money in regard to their exports which can be easily what they sell within the USA. I am happy to report that the gov in Canada has changed recently and has stated that they believe in the use of guns for sporting reasons within the UN counties and this has really put the screws to this within the UN! Wo Ho! Finally a little real Canadian Gun Control!

In talking to our USA customers they are jealous about how easy it s to run a gun business in Canada, and it will get easier!

I'm glad to see you guys have been watching all these years Ian! I've got lots of friends and rellies in Canada. I've got close family up there, people who moved north in the early 70's and who 3-5yrs ago were thinking of moving back south........ and things started to change, for the good, for you.

Now they're looking south and realizing that THEY are passing us up! You guys are doing good things.

Keep it up, maybe we can learn something

al

 

[Mike Bryant]

When I changed my ffl over from a personal ffl to a LLC, I contacted the division head of the BATF in my area as to whether I needed to have a 01 ffl or a 07 manufacturers license. He researched it with the Firearms Technology branch and here is basically what was e-mailed to me: If a company receives firearms frames from individual customers, attaches stocks and barrels and returns the firearms to the customer for the customer's personal use, the operations performed on the firearms were not for the purpose of sale or distribution. The company should be licensed as a dealer or gunsmith and not as a manufacturer.

I kept a copy of the e-mail on my computer and printed it off to the agent when I was inspected. Whatever information you get from the BATF or any other federal agency, have it in writing and keep a copy of it and it will save you a lot of problems.

 

[Superman]

When I changed my ffl over from a personal ffl to a LLC, I contacted the division head of the BATF in my area as to whether I needed to have a 01 ffl or a 06 manufacturers license. He researched it with the Firearms Technology branch and here is basically what was e-mailed to me: If a company receives firearms frames from individual customers, attaches stocks and barrels and returns the firearms to the customer for the customer's personal use, the operations performed on the firearms were not for the purpose of sale or distribution. The company should be licensed as a dealer or gunsmith and not as a manufacturer.

I kept a copy of the e-mail on my computer and printed it off to the agent when I was inspected. Whatever information you get from the BATF or any other federal agency, have it in writing and keep a copy of it and it will save you a lot of problems.

Mike, you would only need an 06 if you were manufacturing ammunition. For firearms manufacturing, you would need an 07. I have both.

The law is pretty plain and simple now and can be found on the ATF website under "rulings".

If you build "for sale" firearms you are a manufacturer and must have a Type 07 FFL. You must collect FET if you build more than 50 in a year and you must register with ITAR and the State Department. If you do not, you are in violation of a federal felony.

If you build guns per customer order, you only need a Type 01 license. You don't have to charge FET, and you don't have to register with the State Department.

It wasn't always this way, but for the time being it is. Everything you need in writing is on the ATF website.

 

[Mike Bryant]

It would be nice to have the time to build spec firearms for sale, but I just don't have the time as it would take time away from customer orders. I'll just require the customer to furnish the action as I've been doing. I'll build their rifles and use the 01 ffl to do it.

 

[Superman]

It would be nice to have the time to build spec firearms for sale, but I just don't have the time as it would take time away from customer orders. I'll just require the customer to furnish the action as I've been doing. I'll build their rifles and use the 01 ffl to do it.

It's always good to be busy! You don't HAVE to have the customer supply the action. You can take the action from your inventory and still operate under an 01 as long as their is a customer order.

 

[Mike Bryant]

I've been taking my customer work orders and scanning them to the computer for quite awhile now as I read somewhere that you need to keep a copy of the customer work order and it's not a bad idea anyway.

 

[Angelballer]

It's always good to be busy! You don't HAVE to have the customer supply the action. You can take the action from your inventory and still operate under an 01 as long as their is a customer order.

I guess my question would be how do you prove that you performed the work on a customer's action instead of performing work on your action and then selling it to a customer? One would require an 01 and the other an 07 ffl /w ITAR registration. A walk-in customer I would think would be feasible but how do you sell to an out-of-state customer without first transferring the action or lower first? I think the only way to differentiate between a customer's action and yours would be to sell it to the customer, transfer to their dealer so the customer can fill out the paperwork and the ATF has documentation that it is theirs, and then have the customer ship it back to you.