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Posted By FFL Dealer Network on 08/04/2018 in FFL Business

FFL Responsibilities and Regulations

FFL Responsibilities and Regulations

Having a Federal Firearms License (FFL) brings with it a set of responsibilities and duties. Every FFL holder gets a package of information from the Bureau of Alcohol, Tobacco, Firearms and Explosives (BATF) that explains everything in detail. The 237-page book can be downloaded here. Below are highlights from the regulations. 


FFL Type 03 and Type 06 are the two major exceptions to some of the BATF rules. 

A Type 03 FFL holder does not have to do a background check on a buyer, unless required by state law. The Type 03 license holder must record and keep information on where the gun came from as well buyer information if the gun is later sold. Other requirements remain in place. The Type 03 FFL is for a collector of Curios or Relics (Cruffler). A Cruffler is not a license to run a gun business. 

A Type 06 allows the holder to make ammunition, except for armor piercing and destructive device ammo and only ammunition. Since firearms are not involved with this license, the FFL holder is only subject to federal age restrictions and applicable state laws when selling ammo. A buyer must be 18 or older to buy shotgun and rifle ammo. A buyer must be 21 or older to buy handgun ammo. 

Type 06, being a manufacturing license, comes with other requirements also attached to the Type 07 and Type 10 licenses.  This is explained below.


The BATF requires FFL holders to keep paperwork. The paperwork must: 

  • Cover the sale of firearms and where appropriate, restricted items like suppressors. BATF Form 4473 is part of the paperwork. 
  • Cover the purchase of any of the above. Inventory must be logged into the FFL's holders records book. BATF does not supply these books, but does explain what they are. FFL 123 says the Acquisitions and Dispositions book, " is one of the most important record keeping tools for FFL license holders. It is the book where every single firearm acquisition by the FFL holder is recorded as well as the disposition of every firearm." 
  • Ammo records are different. Unless required by local or state law, no records are needed for the resale of commercial sporting ammunition. Imported ammo, domestically made armor piercing and some destructive device ammo do have special records requirements. 
  • Kept for at least 20 years. If the FFL holder surrenders the license, these records are turned over to BATF. Items that must be listed in the book are: 
  • Gun maker or importing company. 
  • Model. 
  • Serial number, if available. Some older firearms do not have serial numbers
  • Caliber or gauge. 
  • Date received and later on the date when it was sold. 
  • Dealer information and FFL where the gun came from. 
  • Information on who bought the item. For 4473 has this information. 
  • If bought used or pawned, the FFL holder should get as much information about the person as possible. Most places buying used guns or taking items on pawn get some form of identification and a picture taken in the store. Some even ask for fingerprints. Pawn shops typically provide much of this information to local law enforcement in daily or weekly reports. "The regulations do not require that a pawnbroker execute Form 4473 when a firearm is pledged for a loan. However, he must record the receipt thereof in his permanent acquisition and disposition record," says the BATF. 

BATF has a short Frequently Asked Questions section on records keeping. 


With the exception of a Type 03 license, BATF expects an FFL holder to run a business. During the application interview process, the BATF agent will ask about the profit motive behind the license application. BATF expects the FFL holder to buy and sell firearms and make regular attempts to do both with an eye toward making a profit. Accepting transfers from out-of-state dealers for an in-state buyer qualifies under BATF's unwritten requirements. 

This begs the question "Do I need an FFL if I buy and sell firearms?" BATF does not have a hard rule on this. The dividing line is doing it regularly and making a regular profit. BATF has two different downloads that discuss the profit requirement and the need to get an FFL. They are: 

Local communities may put additional requirements on an FFL holder such as zoning requirements, a business license and a sales tax number. 


BATF does not do the background check. The FBI conducts background checks through the National Instant Criminal Background Check System (NICS). This is done at no charge to the FFL holder or the buyer. Some FFL holders do charge for this, especially when acting as a transferring FFL for a pre-purchased firearm. 

A background check then returns one of three decisions: 

  1. OK to sell.
  2. Delay. 
  3. Do not sell. 

If the sale is delayed, the FBI may be looking for additional information on the buyer. This is not an automatic disqualification for buying the firearm. If the purchase is delayed, the FBI has three business days to either authorize or reject the sale. If FBI does neither, then the sale may go through at the FFL holder's discretion. 

If the report comes back with do not sell, the FFL holder must not sell the firearm to the buyer. 

In some rare cases, the FBI background check turns up information after the three business days that shows the buyer should not have the gun. If that happens, the ATF is tasked with retrieving the gun from the buyer. If this happens, the buyer, not the FFL holder, is held accountable. 

Some states have additional background check requirements. 


A safe way to store firearms for sale is recommended. BATF does not have a specific list of requirements for makes a safe retail storage space, but it has some suggestions. "Physical security including alarm systems and safe business practices are also highly recommended and in some cases may be required by State or local law," the agency says in the report Working for a Safer and More Secure America through Innovation and Partnerships to Prevent Firearms Thefts. A list of ideas to make storage safe and ATF-acceptable start on Page 12. 


Part of having an FFL is allowing BATF agents to inspect the records and guns purchased under the FFL. BATF may do an inspection once a year. In practice, inspections are far less common. "There were 134,738 FFLs in fiscal year 2017. This includes firearm licenses for dealers, manufacturers, importers and collectors. During that time, ATF conducted 11,009 firearms compliance inspections," says the BATF's Compliance Inspection fact sheet

SHOT BUSINESS, a magazine by the National Shooting Sports Foundation, explains what to expect in an FFL inspection


Provided all the BATF requirements are met, an FFL holder can refuse to sell a gun to anyone. No reason is needed. 

US News and World Report covered this topic in the wake of a Florida FFL holder saying he would not sell a gun to a Muslim. "As private business owners, [Federal Firearms License holders] can and do use discretion in determining to whom they will or will not provide service,” said Ginger Colbrun, public affairs chief for the BATF. 


Manufacturing FFL holders, Type 06, 07 and 10, need to get an International Traffic in Arms Regulations (ITAR) permit even if no guns are shipped overseas. 

John Pierce is a Virginia lawyer who specializes in firearms, FFLs and restrict item transfers. He says the ITAR is a must. "The short answer is that those licensed to manufacture firearms or ammunition are covered by ITAR and are required to register and pay the registration fee," he wrote. 

It is expensive. The fee starts at $2,250. 

Mr. Pierce adds, "Are there 06, 07, or 10 type FFLs who have not registered and have not been prosecuted? Yes there are. But they could be prosecuted at any time and the penalties are severe. Is it stupid? Of course it is! But legally there is no question. If you are getting, or already have, an 06, 07, or 10 FFL then you need to consider the ITAR yearly registration fee as a cost of doing business and register."

  1. How to Get an FFL
  2. FFL Application Process and Procedures
  3. Your FFL Transfer Fee
  4. Gun Wholesalers for FFL Dealers
  5. What Can You Do With an FFL?
  6. The FFL eZ Check System
  7. The NFA and Owning NFA Items
  8. Offline Firearms Marketing and Your FFL Business Plan
  9. Online Firearms Marketing and Your FFL Business Plan
  10. Pawn Shops and the Type 02 FFL
  11. FFL Responsibilities and Regulations
  12. BATF Will Approve Home Based FFLs
  13. Customer Service in Your FFL Business

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