Any 07 FFL's out there?

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Thread: Any 07 FFL's out there?

  1. #1
    New Member Array Joatman66's Avatar
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    Any 07 FFL's out there?

    I have everything in place to fire off my FFL application except... DBA name and the type (01 or 07).

    I want to apply for a 07 so I have future options, even though initially I know I won't be utilized.

    But, I am nervous about the ITAR registration and fee.

    Seems like it's 50/50 on whether or not 07 holders pay the fee or not.

    Does anyone have 1st hand experience with the ITAR registration? Paying it or not?

    As I type this, I am leaning towards 01 to start and go back and apply for a 07 if the need arises. The extra app fee and a 2nd license fee is smaller than the ITAR fee and any penalty that might come from not registering...

    Appreciate any and all input.

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  3. #2
    VIP Member Array Tubby45's Avatar
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    Quote Originally Posted by Joatman66 View Post
    I have everything in place to fire off my FFL application except... DBA name and the type (01 or 07).
    Get the DBA in order before you send the FFL application.

    But, I am nervous about the ITAR registration and fee.

    Seems like it's 50/50 on whether or not 07 holders pay the fee or not.

    Does anyone have 1st hand experience with the ITAR registration? Paying it or not?
    Don't be nervous. Just do it. It's 50/50 based on people that actually read the ITAR law and contacted the State Department or those that think they have the authority to interpret federal law without actually doing it themselves, let alone being an FFL themself.

    Here's the cold hard facts from someone that read it, talked with the State Department, and deals with this every single day. If you're an 07 (or 06 or 10 FFL) and are manufacturing defensive articles as defined (for simplicity's sake, guns and/or ammo), you must register with the State Department under ITAR. There are two exceptions that may apply in practicality. You are doing R&D or you are only making sporting shotguns and/or sporting shotgun ammunition. It doesn't matter if you're not exporting. It doesn't matter if you're not selling to a government agency or the US military. If you make anything on "the list", you must register or face penalty. They do not play around with this stuff. Blue Bunny Ammunition got shut down by ITAR. The federal prosecutor told them to drop their 06 FFL, stop manufacturing ammunition, or the government will file ITAR violation charges against the owner, which includes penalties such as $1 million fine and/or 10 years in federal prison. They opted to drop the 06 FFL in favor of an 01 FFL and no longer manufacture ammunition (a defensive article). No charges filed and everyone went on their way.

    I had a commodities jurisdiction ruling for a few years basically stating that my products weren't defensive articles and registration wasn't required. That got revoked a couple years ago and I've had to pay ITAR ever since. The State Department is no longer approving any commodity jurisdiction requests for ITAR exemption.

    The ATF cannot advise you on State Department issues. The ATF can only check that you are compliant and forward information to the State Department. If your ATF IOI (Industry Operations Investigator) says anything regarding advisement about ITAR, they are full of crap. The only thing they can tell you is to contact the State Department to see if registration is required. BTW, the State Department finally communicated to the ATF about ITAR for manufacturers and the ATF put it out there in a recent open letter.

    As I type this, I am leaning towards 01 to start and go back and apply for a 07 if the need arises. The extra app fee and a 2nd license fee is smaller than the ITAR fee and any penalty that might come from not registering...

    Appreciate any and all input.
    If you have enough customers to warrant the 07 FFL and can easily payoff the ITAR fee, do it. If not, there are ways around the 07 FFL and ITAR. The basic core definition of manufacturing per the ATF is essentially anything done to a firearm prior to a 4473 transfer is manufacturing. So if a customer wants a custom AR15 built, sell and transfer them a bare lower, then have them give it back to you to customize into a complete firearm. That's not manufacturing, it's gunsmithing because you are working on a customer's firearm (the lower) and not a firearm (lower) from your FFL inventory.

    The thing with ITAR is it was meant for the big time military suppliers and exporters, but without the exceptions, the little boutique manufacturers got swept under the rug. For a long time it wasn't enforced against them, but last several years the government has been enforcing ITAR on manufacturers to the letter of the law. Stop or you will be arrested and tried in federal criminal court.
    07/02 FFL/SOT since 2006

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    New Member Array Joatman66's Avatar
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    Quote Originally Posted by Tubby45 View Post
    Get the DBA in order before you send the FFL application.
    Seems to be the most difficult part... Choosing a name. Everything else is in place.

    Quote Originally Posted by Tubby45 View Post
    Here's the cold hard facts from someone that read it, talked with the State Department, and deals with this every single day. If you're an 07 (or 06 or 10 FFL) and are manufacturing defensive articles as defined (for simplicity's sake, guns and/or ammo), you must register with the State Department under ITAR. There are two exceptions that may apply in practicality. You are doing R&D or you are only making sporting shotguns and/or sporting shotgun ammunition. It doesn't matter if you're not exporting. It doesn't matter if you're not selling to a government agency or the US military. If you make anything on "the list", you must register or face penalty. They do not play around with this stuff.
    So, just by being a 07 holder does not automatically require me to register with ITAR? I can be a 07 and register if and when I do start manufacturing listed items?


    Quote Originally Posted by Tubby45 View Post
    If you have enough customers to warrant the 07 FFL and can easily payoff the ITAR fee, do it. If not, there are ways around the 07 FFL and ITAR. The basic core definition of manufacturing per the ATF is essentially anything done to a firearm prior to a 4473 transfer is manufacturing. So if a customer wants a custom AR15 built, sell and transfer them a bare lower, then have them give it back to you to customize into a complete firearm. That's not manufacturing, it's gunsmithing because you are working on a customer's firearm (the lower) and not a firearm (lower) from your FFL inventory.
    Fantastic advice!

    Again, Thanks!

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    VIP Member Array Tubby45's Avatar
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    Quote Originally Posted by Joatman66 View Post
    So, just by being a 07 holder does not automatically require me to register with ITAR? I can be a 07 and register if and when I do start manufacturing listed items?
    If you have a license but aren't actually manufacturing anything, then you aren't really a manufacturer. ITAR registration is only for licensed manufacturers that actually manufacture. Once instance triggers such requirement.
    07/02 FFL/SOT since 2006

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    New Member Array Joatman66's Avatar
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    Quote Originally Posted by Tubby45 View Post
    If you have a license but aren't actually manufacturing anything, then you aren't really a manufacturer. ITAR registration is only for licensed manufacturers that actually manufacture. Once instance triggers such requirement.
    Perfect! 07 it is.

    Now if I could just come up with a name...

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    VIP Member Array Tubby45's Avatar
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    Quote Originally Posted by Joatman66 View Post
    Perfect! 07 it is.

    Now if I could just come up with a name...
    Best advice I can give you is don't get cute with the name and don't pick a word that will turn off potential customers. Also Google the name first at least so you don't violate any trademarks of other companies. In the gun industry, get the FFL in a corporate or LLC name and use a trade name. Legally the corporation is the FFL, not you. Gives additional protections, but the bad side is you'll have to run a 4473 on yourself for personal gun purchases through the FFL since it's not a sole proprietorship.
    07/02 FFL/SOT since 2006

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    Member Array DeltaFirearms's Avatar
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    You must register for ITAR if you are a 07 regardless if you don't assemble guns. It also depends on your IOI, because my first IOI for my 07 home based just issued me my license without mentioning ITAR. However when I applied for my other 07 for my retail store they told me I had to register with ITAR prior to receiving my license.

    However in my case I just pointed them to the IRS Website, because I was exempted from paying any actual ITAR or Federal excise tax because I operate outside of the Continental United States.

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    VIP Member Array Tubby45's Avatar
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    Quote Originally Posted by DeltaFirearms View Post
    You must register for ITAR if you are a 07 regardless if you don't assemble guns. It also depends on your IOI, because my first IOI for my 07 home based just issued me my license without mentioning ITAR. However when I applied for my other 07 for my retail store they told me I had to register with ITAR prior to receiving my license.
    First sentence is false. If you are an 07 but not doing any manufacturing, you are not a manufacturer and ITAR registration is not required. The rest is misleading. The ATF IOIs cannot comment on ITAR. That is not their jurisdiction. ATF has no authority to deal with or comment upon State Department policy and regulations.
    07/02 FFL/SOT since 2006

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    VIP Member Array Kennydale's Avatar
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    Question about dealing with FFL. I am very new to guns, Bought my first one at a gun show here in Texas. If I decide to buy online There is an Acedemy Sports & Outdoors near by. And also a Gander Mountain. There was a listing on a website that showed an address that is one of our Local Municipal Police Stations. The man is a Sgt there. I guess this is a MOONLIGHTING job for him. I do like small independent businesses and his fee is $10-15 cheaper than the Big Stores. Just curious about going to the PoPo to pick up a gun ?

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    Member Array DeltaFirearms's Avatar
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    Quote Originally Posted by Tubby45 View Post
    First sentence is false. If you are an 07 but not doing any manufacturing, you are not a manufacturer and ITAR registration is not required. The rest is misleading. The ATF IOIs cannot comment on ITAR. That is not their jurisdiction. ATF has no authority to deal with or comment upon State Department policy and regulations.
    I agree with you, but that's what happened to me for my 2nd 07. The IOI told me I had to register for ITAR, but this IOI was in Hawaii and had little experience dealing with FFLs outside the US.

    However since my FFL is in a AFP i'm exempted from ITAR and Federal excise.
    FFL 07 / SOT 2. I run a small hobby shop that makes custom firearms, and high performance ammunition.

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    VIP Member Array Tubby45's Avatar
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    Quote Originally Posted by DeltaFirearms View Post
    However since my FFL is in a AFP i'm exempted from ITAR and Federal excise.
    Curious about the ITAR exemption for the AFP. I do a bit of ITAR consultation on the side and am unaware of this exemption for US territories.
    07/02 FFL/SOT since 2006

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    New Member Array WCNEWBIE's Avatar
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    We're a new manufacturer

    Regarding ITAR, our ATF agent told us that if we are audited and are not registered, then the ATF will give us one hour to take care of it or be reported. Needless to say, we registered and paid the (rather outrageous) fee.

    I'm looking for reasonable A&D software that is meant for 07. We are not and will not be dealing. We anticipate making and shipping 50 - 100 serialized components daily so we want something that will make that easy while meeting the ATF requirements for A&D Records. Any suggestions or referrals?

    Thanks!

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