ATF Questions and Answers

The Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) issues several types of federal firearms licenses:

• Type 01: Dealer
• Type 02: Pawnbroker
• Type 03: Collector
• Type 06: Manufacturer of Ammunition
• Type 07: Manufacturer of Firearms
• Type 08: Importer
• Type 09: Dealer of Destructive Devices
• Type 10: Manufacturer of Destructive Devices
• Type 11: Importer of Destructive Devices

Each license type has specific limitations on authorized activities, and licensed manufacturers must comply with additional federal regulations beyond standard dealer requirements.

ATF processing times improved in early 2025 thanks to system upgrades and broader eForm adoption. However, an ATF Form 7: Application for Federal Firearms License (FFL), must be submitted via paper application, and there is a regulatory statute dictating that perfected applications – applications that are accurately and completely submitted – must have initial action within sixty (60) days.

Application fees vary by license type and, if the license is issued, will be valid for three years:

• Type 01 and Type 02: $200 initial / $90 renewal
• Type 07 and Type 08: $150 initial / $150 renewal
• Type 03 and Type 06: $30 initial / $30 renewal
• Types 09, 10, and 11: $3,000 for 3 years

These fees are set by federal regulation and subject to change through the federal government’s regulatory process. Payments can be made online or by check/money order as directed in the current Form 7 process.

Federal firearms license applications require the identification of all responsible persons associated with the business. This includes anyone with the power to direct the management and policies of the licensed business. A “responsible person” is defined at 27 CFR 478.11. Each responsible person must complete the Responsible Person Questionnaire, provide fingerprints, a photograph, and is subject to an FBI background check.

ATF defines firearms to include complete weapons, frames, receivers, and certain unfinished components. The 2022 frame or receiver final rule remains in effect following the March 26, 2025 Supreme Court decision in Bondi v. VanDerStok, which upheld the agency’s authority. Under this rule, kits or partially complete frames and receivers that can be readily converted to function as firearms must be treated as firearms and marked and recorded accordingly.

The 2024 Final Rule 2022R-17F, implementing the Bipartisan Safer Communities Act, clarifies when individuals must be licensed (i.e., offering firearms for sale with the predominant intent of profit). For existing FFLs, compliance turns on correct records and transfers, not having a set daily sales cadence or storefront hours.

Another important element is how the rule distinguishes personal collections from business activity. Firearms held for study, exhibition, hunting, or as part of a genuine hobby may not treated as dealer inventory. However, when individuals purchase firearms with the intent to resell them, particularly in new or like-new condition, the ATF presumes a business purpose.

Federal law authorizes the Attorney General (delegated to ATF) to conduct one routine compliance inspection per 12-month period. These inspections are designed to review an FFL’s acquisition and disposition records, Forms 4473, and physical inventory for accuracy and compliance.

ATF may also conduct additional inspections outside the annual cycle if certain conditions apply:

• A firearm needs to be traced as part of a criminal investigation.
• There is a bona fide criminal investigation involving a firearm.
• There are credible complaints, referrals, or suspected violations tied to the licensee’s operations.

In these cases, ATF Industry Operations Investigators (IOIs) will arrive without advance scheduling to examine your records and business practices.

The most frequent violations include:

• Form 4473 completion errors: Missing information, incorrect entries, or failure to properly document background check results
• Bound book recordkeeping violations: Missing acquisition or disposition entries and calculation errors
• Failure to obtain a completed 4473
• Missing/late/incorrect A&D entries
• Failure to record NICS data
• Failure to report multiple handgun sales
• ATF-identified “public safety”/willful violations: Transferring to a prohibited person, failing to run a required NICS, falsifying records, failing to respond to a trace, refusing inspection

Background check procedural errors frequently result in violations that can lead to revocation proceedings.

The National Firearms Act regulates specific firearm categories including machine guns, short-barreled rifles, short-barreled shotguns, suppressors, destructive devices, and any other weapons (AOW).

Required forms include:

• Form 1 (5320.1): Making by any person/FFL
• Form 2 (5320.2): FFL/SOT notice when an NFA firearm is made or imported
• Form 3 (5320.3): Tax-exempt SOT-to-SOT transfer
• Form 4 (5320.4): Tax-paid transfer to a non-SOT (individual/trust/corp)

Form 5 (5320.5): Tax-exempt transfer (e.g., government/heir/unserviceable)

• Through December 31, 2025: The transfer and making tax is $200 for most NFA firearms. Transfers or makings of an Any Other Weapon (AOW) remain $5.
  
  
• Effective January 1, 2026: Under Trump’s “Big Beautiful Bill” (Section 70436), the tax for transferring or making NFA firearms is reduced to $0 for all categories except machine guns and destructive devices, which remain subject to the $200 tax.

The effective date is based on calendar quarters beginning more than 90 days after July 4, 2025, which makes January 1, 2026 the start date for the new structure.

Licensed manufacturers and dealers should confirm current rates through the ATF website, as regulatory guidance may impact tax stamp requirements. Special Occupational Tax (SOT) classes 1, 2, and 3 remain in effect for NFA importers, manufacturers, and dealers, and are separate from the transfer and making tax changes.

Additionally, states and local regulators may apply additional taxes and/or restrictions on NFA production, transfer and/or possession.

Federal law requires every FFL to maintain acquisition and disposition (A&D) records, commonly referred to as the “bound book,” under 27 CFR §478.125(e).

• Acquisitions must be recorded by the close of the next business day after receiving a firearm.
• Dispositions must be recorded no later than 7 days following the date of transfer.

• Include the following information:
  • Manufacturer and importer, if any
  • Model
  • Serial number
  • Type (pistol, rifle, shotgun, etc.)
  • Caliber or gauge
  • Date of acquisition/disposition
  • Name and address (or FFL number and address) of the other party
    
    

These records must be maintained at the licensed premises and be readily available for inspection by ATF Industry Operations Investigators. Electronic A&D record systems are permitted as long as they comply with the standards established in ATF Ruling 2016-1. Many FFLs now rely on compliant electronic systems to reduce errors and simplify inspections.

A&D records must be retained until the business or licensed activity is discontinued in accordance with 27 CFR 478.127. When a license is discontinued, all records must be sent to the ATF Out-of-Business Records Center within 30 days.

Completed Forms 4473 must be retained until the business or licensed activity is discontinued as required by 27 CFR 478.129(b). Paper Forms 4473 that are more than 20 years old may be stored off-site in a warehouse, but the warehouse/storage location is considered part of the licensed premises and is subject to inspection under all the same regulations like the usual FFL premises.

Forms 4473 for transactions that did not occur, such as denied or cancelled transfers, must be retained like all other Forms 4473, but filed separately per 27 CFR 478.129(d).

The ATF’s National Tracing Center works to conduct tens of thousands of firearm trace requests each year to facilitate law enforcement investigations.  Proper record retention protects both public safety interests and Second Amendment rights by ensuring lawful firearm transactions can be verified years after completion.

The National Instant Criminal Background Check System (NICS) must conduct a background check for all firearm transfers conducted by licensed dealers, unless a statutory exemption applies (18 U.S.C. §922(t) and 27 CFR 478.102). Although some states may opt to be the point of contact (POC) for all background checks, these agencies utilize the NICS system as part of their checks. FFLs contacting NICS directly receive one of three responses: Proceed, Denied, or Delayed. If a transfer remains delayed after 3 business days, the FFL may transfer the firearm at their discretion, though some states impose stricter requirements. FFLs in POC states receive similar responses, though some states opt to have additional responses and/or variations of responses to provide FFLs with more information.

For transferees under the age of 21, when a background check request is submitted, federal law requires NICS to review additional juvenile records. Under the Bipartisan Safer Communities Act of 2022, the background check period may extend up to a total of 10 business days (3 initial business days plus up to 7 additional). The transaction result and NICS data must be recorded on ATF Form 4473.

FFLGuard’s comprehensive legal and compliance program ensures your business stays fully compliant with federal firearms regulations while providing the legal protection you need when facing ATF enforcement actions.

With 24/7 access to experienced firearms attorneys, licensees can resolve Form 4473 questions, background check issues, and compliance concerns quickly. FFLGuard also offers QuickAudit services to review ATF Forms 4473 and bound book entries before inspections, as well as comprehensive legal defense during ATF audits and investigations. Clients benefit from predictable flat-fee representation, eliminating hourly billing surprises, along with ongoing training and updates through exclusive webinars and courses.

Contact FFLGuard today for proactive compliance support and expert guidance on maintaining your federal firearms license.