Class 01 Dealer question

Class 01 Dealer question

This is a discussion on Class 01 Dealer question within the FFL Dealer Discussion forums, part of the Related Topics category; Ok, I can't find it now, but I saw somewhere on this forum that if one has a class 01 dealer license and not a ...

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  1. #1
    Member Array Linny's Avatar
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    Class 01 Dealer question

    Ok,
    I can't find it now, but I saw somewhere on this forum that if one has a class 01 dealer license and not a 02 manufacturing license, that a dealer can't even buy a stripped lower, assemble it with other parts ordered, and then sell it as a complete rifle? That doesn't seem right because the ATF only considers the lower receiver on the AR-15 the actual weapon, can someone verify this?
    -Linny


  2. #2
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    Wrong.

    A class 01 is a dealer. An 02 designation on your FFL means that you are a pawn shop.

    That's it.


    An 07 is a manufacturer.

    The 01 can do a limited amount of assembling, but if they intend to do if for resale and profit, the ATF wants you to have an 07 according to the ATF.
    The lower is the serialized part.

    Also, you are getting your classes mixed up. The 02 that you speak of is the SOT (Special Occupational Tax) designation that only manufacturers have. That allows them to buy, sell, repair, build what ever they please. The 01 SOT is for dealing only. Any FFL can be a SOT, they just have to pay the yearly fee. You'll see business cards that have a the name, title and something like 01/01 FFL or 02/01 FFL or like at the bottom of my stuff here, 07/02. That is the class of FFL and the class of SOT.

    An 01 FFL can be working out of the house or a shop or a store, and 02 designates the pawn shop.
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    AR. CHL Instr. 07/02 FFL
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  3. #3
    Member Array Linny's Avatar
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    Sooo Yes or no,
    For assembling an AR-15 with a stripped lower, parts kit, buffer tube kit etc with no machining involved for resale and profit, the ATF would require me to have an 07?

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    Quote Originally Posted by Linny View Post
    Sooo Yes or no,
    For assembling an AR-15 with a stripped lower, parts kit, buffer tube kit etc with no machining involved for resale and profit, the ATF would require me to have an 07?
    An 01 FFL is a dealer. Broadly defined, a gunsmith must also be licensed as a dealer if he engages in the business of engraving, customizing, refinishing or repairing firearms. Most gunsmiths are 01 FFL Dealers. An 01 may sell lower receivers (a firearm) to any person who may legally possess a firearm and he may take any firearm out of inventory for his personal use. An 01 FFL who assembles any firearm may do so for personal use. A licensee who takes a firearm (receiver) out of inventory for personal use is not required to comply with the Brady Law provided the licensee has maintained the firearm as part of his personal collection for at least 1 year. Record keeping must comply with 27 CFR 478.125(a). 01 FFL's Dealers who gunsmith can add scopes, lasers, sights, but if you intend to assemble complete firearms on a regular basis you are manufacturing and will need an 07 FFL. An 07 may also buy and sell firearms so he is also a dealer. An 07 may manufacture less than 50 firearms per year or he must pay Federal Excise Tax on assembled/manufactured firearms.
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    For assembling an AR-15 with a stripped lower, parts kit, buffer tube kit etc with no machining involved for resale and profit, the ATF would require me to have an 07?
    If you did more than a few of them they would. Its BS, but they make up the rules as they go.
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    AR. CHL Instr. 07/02 FFL
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    Member Array Linny's Avatar
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    Ok, so I guess I'll have to get an 07 to do this business venture, so when I fill out the the ATF paperwork I will only have to apply for an 07 and not include a class 01? And since I have no intent to manufacture NFA items I will not need a love letter from the CLEO?
    -Linny

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    When you fill out the paper its for a particular class, so in your case it would be an 07.

    "Love letters" are only needed for dealer samples (machine guns) for 01and 02 so as an 07 you wouldn't need one you could just make it as a "dealer sample". Still got to get rid of it when you give up the 07.
    I would rather stand against the cannons of the wicked than against the prayers of the righteous.


    AR. CHL Instr. 07/02 FFL
    Like custom guns and stuff? Check this out...
    http://bobbailey1959.wordpress.com/

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    Quote Originally Posted by Linny View Post
    Ok, so I guess I'll have to get an 07 to do this business venture, so when I fill out the the ATF paperwork I will only have to apply for an 07 and not include a class 01? And since I have no intent to manufacture NFA items I will not need a love letter from the CLEO?
    -Linny
    When you apply for ANY FFL license you will need to send in your application with two sets of "wet fingerprints" usually obtained from your county sheriff or local police department. You will also need approval of your CLO (Chief Law Enforcement Officer). Once you are notified of an interview by BATFE they will have already checked with your CLO, your planning and zoning department, other local government such as where you obtained your business license and that you have obtained a state retail license. You will also need a Federal EIN.
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    Member Array Linny's Avatar
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    Federal EIN? As in an LLC business license?

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    You have to have a Federal Employer ID no. to get the FFL.

    You don't have to have an LLC but it doesn't hurt either.
    I would rather stand against the cannons of the wicked than against the prayers of the righteous.


    AR. CHL Instr. 07/02 FFL
    Like custom guns and stuff? Check this out...
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  11. #11
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    Quote Originally Posted by HotGuns View Post
    You have to have a Federal Employer ID no. to get the FFL.

    You don't have to have an LLC but it doesn't hurt either.
    In most states, you will normally need an Employer Identification Number (EIN) in order to obtain a State Retail Sales License. A State license registration is for Sales/Use Tax. An FFL is Required to engage in Business or his application will not be accepted. Therefore, obtaining an EIN is a normal procedure when forming any business, regardless of weather the business has employees. The business can be structured as Sole proprietor, Partnership, Corporation, Type S Corporation or a Limited Liability Corporation. LLC's are popular for small businesses with two or more members. LLC taxes are reported the same as partnerships. ATF form F 5310.12 (Form 7) and its instructions to applicants notes the need to meet all state and local requirements. Besides items mentioned above, some states or local municipalities may also require cash bonds and liability insurance. ATF suggests that applicants contact IRS for information regarding business operations and Federal income taxes. I would highly recommend that a person applying for an FFL has planed his Business and obtained all necessary licenses and registrations prior to filling out ATF Form 7. Any changes made after filing will require an application for an amended FFL, ATF Form F 5300.38. Amended forms are usually the equivalent of reapplying. An EIN may not specifically be required for an FFL but may be required by Banks, Merchant Services Providers, Distributors and others who you will be doing business with.
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    I thnk an EIN is required for the FFL. I know it is for a SOT.
    I would rather stand against the cannons of the wicked than against the prayers of the righteous.


    AR. CHL Instr. 07/02 FFL
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    From what I've read, you also must register with the State Department for ITAR. That is an additional $2500.00.

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    Quote Originally Posted by TaterSalad View Post
    From what I've read, you also must register with the State Department for ITAR. That is an additional $2500.00.
    I thought that was only for 02 SOT stuff, and since I will not be manufacturing NFA items, I thought I will not have to pay that, and I thought if it was you only pay that after manufacturing your 50th firearm. Gah I may just write/call the field office to see what they say.
    -Linny

  15. #15
    Member Array Linny's Avatar
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    UPDATE:
    Just got off the phone with the ATF, the lady on the phone says for their purposes they consider that manufacturing, and the fee for an 07 FFL without SOT is 150$ for three years, and the Federal Excise Tax is what you pay. The rates are available on ttb.gov, the ATF said there's no annual 2500$ tax, at least I think that's what she said.
    -Linny
    Last edited by Linny; July 22nd, 2013 at 03:08 PM. Reason: Typos

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