As you are most likely aware the ATF proposed a rule change in 2013 to close the “Trust loophole” for NFA transfers. This proposed change would require all “responsible parties” to the legal entity, Trusts, corporations, LLC’s etc to comply with the CLEO certification requirements and submit identifying information, ie. Fingerprints and photographs, with each form submission.
Well the Final Rule has just been published to the CFR on January 4th, 2016. It is set to go into effect 180 days after it was submitted which would be July 2, 2016. So what does it do? What has changed?
First off, It is not as bad as it could be. Trusts, Corps and LLC’s are still the most viable way to possess and acquire NFA items. They still allow continuity of ownership and allow multiple persons to be able to use and possess the items legally, unlike personal transfers were only the owner may be in custody and control of the NFA item.
Under the new rule, when a Form is submitted to make or transfer an NFA item (Form 1, Form 4 or Form 5) all responsible parties to the Trust will need to submit photographs, fingerprint cards (two copies), a copy of the Trust, and a Notification to the CLEO. (Note that this is a notification process and NOT a certification process so you will not be subject to the whim of a CLEO that refuses to sign the Forms.)
WHO is a “Responsible Person”? For most trusts this will be the Trustees of the trust, NOT the beneficiaries. BUT depending on how your trust is drafted, if the trust gives the beneficiaries the authority to possess the NFA item without Trustee supervision they could be construed as “Responsible Persons” So it is imperative that you review your trust to ensure that the beneficiaries are not granted too much authority or control over the assets.
Do you have to do this for EVERY form submitted? The answer is maybe, it just depends on how many you submit. If there have been no changes to the entity or the responsible parties and you had a form approved within 24 months of the current submission, then you will not be required to resubmit photos and fingerprints for each trustee. Instead you will provide a certification identifying the prior transfer and certifying that nothing has changed.
What about transfers pending before the rule changes? These transfers will not be affected and will be grandfathered in.
What about adding new trustees after the form has been approved? It does not appear that this has been addressed by the Rule. My position at this time is that only Current “Responsible Persons” will need to submit the information at the time the Form to make or transfer is submitted to the ATF.
What about Individual purchases have they been affected? YES! And for the better. The new rule appears to remove the CLEO certification from individual purchases so now those who do not want to use a trust or legal entity can purchase NFA items even if they live in a county that lacks a CLEO willing to sign the Certification!