9 November 2017,

Selling firearms: What auction professionals need to know


 

The ATF wants to shed its secretive label and help industries, including auction, understand what is needed to lawfully sell firearms.

By NAA Staff

After years of operating in a behind-the-scenes fashion, the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) wants to shed its mystique.

As part of changing that secretive, sometimes negative image, it has taken a communicative stance regarding federal laws that pertain to firearms and is encouraging positive relationships with industries it comes into contact with, including the auction industry.

“Over the years, we’ve been behind the curtains in D.C.,” said Curtis Gilbert, Deputy Assistant Director. “What we’re trying to do with these talks is to hopefully break down the wall that’s between us and you.”

Gilbert joined the ATF as an inspector in 1988 before moving into supervision and outreach. He now works out of Washington D.C.’s Enforcement Program Services, where he’s been tasked with getting to know the independent dealers, big businesses, and others in the firearm industry the bureau is regulating.

“The boogeyman image is gone. We want to have some communication so you feel like you can contact us and ask questions without thinking you’re going to get into trouble,” he said.

Gilbert has presented to and answered questions from NAA members in the past, including about the Federal Firearms License (FFL). Below is a selection of those questions and answers that have been edited for space and clarity. (NAA members can keep up-to-date on the latest firearms regulations conversation by visiting atf.gov or by contacting local or regional authorities.)

Selling firearms: Do I need a license to sell firearms?

Federal law requires that persons who are engaged in the business of dealing in firearms be licensed by the ATF. The penalty for dealing firearms without a license is up to five years in prison, a fine of up to $250,000 or both. As a general rule, you will need an FFL if you repetitively buy and sell firearms with the principal motive of making a profit.

Selling firearms: How do I apply?

Visit the ATF’s website to request a firearms application package. You’ll want to apply for the FFL prior to conducting any sales as a firearms dealer or Auctioneer at any consignment-type sales as it can take at least 30 days to receive approval.

Selling firearms: Can a licensee conduct background checks and transfer firearms on behalf of an unlicensed Auctioneer?
Generally, no. Most auctions do not qualify as a gun show or qualifying event and therefore a licensee would not be permitted to conduct business away from the licensed premises.

Selling firearms: If a licensed Auctioneer is making sales of firearms, where may those sales be made?

In a consignment auction, firearms may be displayed at an auction site away from the Auctioneer’s licensed premises. Sales of the firearms can be agreed upon at that location, but the firearms must be returned to the Auctioneer’s licensed premises prior to transfer. The simultaneous sale and delivery of the auctioned firearms away from the licensed premises would violate the law, i.e., engaging in business at an unlicensed location.

However, if the Auctioneer is assisting an estate in disposing of firearms, the estate is the seller of the firearms and the estate is in control and possession of the firearms. In this situation, the firearms may be sold by the estate at the auction site.

Selling firearms: Does an Auctioneer who is involved in firearms sales need a dealer’s license?

There are two types of auctions: estate–type auctions and consignment auctions.
In estate–type auctions, the articles to be auctioned (including firearms) are being sold by the executor of the estate of an individual. The firearms belong to and are possessed by the executor. The firearms are controlled by the estate, and the sales of firearms are being made by the estate. The Auctioneer is acting as an agent of the executor and assisting the executor in finding buyers for the firearms. In these cases, the Auctioneer does not meet the definition of engaging in business as a dealer in firearms and would not need a license. An Auctioneer who does have a license may perform this function away from his or her licensed premises.

In consignment–type auctions, an auctioneer often takes possession of firearms in advance of the auction. These firearms are generally inventoried, evaluated, and tagged for identification. The firearms belong to individuals who have entered into a consignment agreement with the Auctioneer giving that Auctioneer authority to sell the firearms. The Auctioneer, therefore, has possession and control of the firearms. Under these circumstances, an Auctioneer would generally need a license.

If you aren’t sure if a license is needed in a particular consignment auction situation, contact your local ATF office.

This article was an excerpt from a presentation given at the 2017 NAA International Auctioneers Conference and Show. Want even more tips on this topic? Full audio of the presentation is available in the NAA Knowledge Center soon. You can also check out other valuable NAA content here.

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