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Posted By FFL Dealer Network on 07/17/2018 in FFL Business

What Can You Do With an FFL?

What Can You Do With an FFL?

A Federal Firearms License (FFL) is a federal government permit to buy, sell, trade and make guns and ammunition without going through a required background check. What can you do with an FFL?

That depends on the license. The federal Bureau of Alcohol, Tobacco, Firearms and Explosives (BATF) has nine different licenses. FFL dealer benefits vary with the license held.

With the appropriate FFL, a person can buy guns from other FFL holders and wholesalers across state lines. The restriction on handguns - a buyer must be a resident of the state - do not apply. Handguns can be bought and sold across state lines between FFL holders just like a shotgun or rifle.

An FFL holder can receive guns on behalf of buyers or from sellers. This is explained in more detail below.

Most of the licenses give the FFL holder the right to work as a gunsmith, shipping firearms across state lines. The import licenses let a gunsmith buy parts from overseas and ship parts overseas. The exceptions for gunsmith work are Types 03 and 06. Type 06 only allows the license holder to manufacture ammo.

CLASS 03 EXCEPTION

In the list of FFL pros and cons, the Class 03 license stands out from the others. The Curio and Relic license, often called a Cruffler, is not a license to do business. All the other FFLs are permits from the federal government to have a profit-making business with firearms. A Cruffler is for collectors.

Firearms bought under a Type 03 license must either be more than 50 years old or be designated a Curio and Relic firearm by the BATF. BATF maintains a list of individual firearms it has ruled are Curio and Relic firearms. These all have some historical significance or are from a limited manufacturing run.

BUSINESS

Among the FFL pros and cons, except for a Type 03, is the requirement to have a profit-making business to have a license. “ATF defines a Responsible Person (the person getting the license) as a sole proprietor, partner, or anyone having the power to direct the management, policies, and practices of the business or activity as it pertains to firearms. In a corporation this includes corporate officers, shareholders, board members, or any other employee with the legal authority described above,” says the federal agency.

BATF will not grant a license to someone who only wants to grow a firearms collection. The person applying must have a plan to use the license to make money.

Acceptable business plans in the past include:

  • Buying and selling firearms to the public.
  • Being a gunsmith.
  • Being an FFL transfer point. 

FFL TRANSFER

Among the FFL dealer benefits is being an FFL transfer point. As a transfer FFL, the license holder does not need to maintain an inventory of firearms. Any guns coming in were ordered and paid for by someone else. The transfer FFL holder receives the firearm and after filling out the paperwork, hands it over to the buyer.

The transfer FFL is for people who buy firearms in another state and have them shipped to an FFL holder in their state. For instance, Internet firearms dealer Buds Gun Shop and its online auction house maintain a list of FFLs to receive firearms customers bought online. Most gun auction websites also maintain an FFL directory. The top online auction houses are:

An FFL holder can sign up with these companies to become a receiving FFL for a gun bought in an auction. Click a link above for more information. Most FFL holders charge a small fee to receive a gun bought from another FFL. BATF sees this as an acceptable business.

A few auction companies sell firearms online but do not maintain an FFL database. The buyer must find an FFL holder to receive the gun.

FFL TYPES

Briefly, here is a list of the FFL pros and cons that come with each license. For a more detailed explanation of FFLs, click here.

Guns

Types 01 and 02 allow the holder to buy and sell firearms across state lines. The licenses also allow the holder to ship and receive guns across state lines for repair. Type 08 allows the holder to import non-NFA firearms. Type 09 is a dealer for destructive devices

Ammo

Type 06 is a license to make ammunition, other than armor-piercing or ammo for destructive devices.

Combo

Combo licenses allow the FFL holder to deal in guns and ammo with one license. Type 07 allows the holder to make, sell and repair non-NFA firearms and make ammo for those weapons. Type 10 allows the holder to make, sell and repair NFA destructive devices and make ammo for them, along with armor-piercing ammo. Type 11 lets the holder import, sell and work on everything listed under Type 10.

SOT

One of the FFL dealer benefits, except for the Class 03 license, is the Special Occupation Tax (SOT) added. The SOT allows the license holder to deal in National Firearms Act (NFA) restricted items. If a Class 03 FFL holder wants to buy an NFA item, the sale must go through a dealer with the appropriate FFL and the SOT permit. Selling any NFA weapon must also go through a SOT permit holder.

With a SOT, a dealer can buy and sell suppressors, short-barrel shotguns and rifles and the limited supply of full-auto firearms.

IMPORTS

As noted, some licenses give an FFL holder the right to import firearms into the US. These imports must meet BATF and federal law guidelines regarding importing weapons into the US. BATF regulations are explained here.

BATF says Types 01, 02 and 07 can "occasionally obtain an approved ATF F 6 (Part I) import permit to import firearms and ammunition for his or her own use, for repair, or as the import agent for a specific customer." This is not permission to import items on a regular basis.

Federal law also governs firearms imports. The Arms Export Control Act (AECA) gives the president the authority to control the import and export of firearms into and out of the US. The act specifically exempts sporting use firearms, sporting firearms parts and sporting firearms ammo from the president's control. Page 4 of the report says exempt items are, "Handguns – Pistols & revolvers must meet size & safety requirements and accrue a qualifying point value specified on ATF Form 4590, Factoring Criteria for Weapons. Rifles and Shotguns –Firearms such as single shot, lever action, bolt action and certain semiautomatic long guns with generally recognized sporting features."

Unless listed as a curio or relic firearm, surplus military guns cannot be imported. An exception to this rule for Curio and Relic rifles is the Mosin-Nagant. This bolt-action 7.62x54R rifle was made in the United States, parts of Europe and Eastern Bloc nations. It is still used by some nations and in insurrections in many places, making this rifle an outlier in the BATF regulations regarding military use firearms.

As far as ammo is concerned, BATF says, "Sporting ammunition is all ammunition EXCEPT, tracer or incendiary rounds, ammunition for destructive devices, less than lethal (i.e., rubber projectiles) and armor piercing ammunition."

BATF has a lengthy report on the AECA.

LOCAL LICENSES

The list of FFL pros and cons includes local regulations and local licenses.

To open a business dealing in guns and ammo more than just the FFL is needed. A dealer must have a local business license and sales tax ID or number. Local and state laws require this. To open a business, the property where the license is located must be zoned for a gun store. The local City Hall or County Administration offices can help with this.


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

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