ATF 41F - rule changes to how trusts are used to buy or makeNFA firearms

What you NEED to know about ATF Rule 41F (formerly 41P)

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?The dreaded day is here, but it isn’t as bad as it could have been. On January 4, 2016, the Obama administration released the final version of the long dreaded rule change, ATF Rule 41F, which addresses how the ATF handles NFA gun trusts. The new rule will certainly impact how your gun trust works in the future, but also offers a great opportunity to be exempted from the rule - a 180 day window gives you time to set up a premium trust and to make or buy NFA firearms without having to deal with the new rule. Indeed, even after the rule becomes effective, a premium gun trust from AZ Gun Law creates unique opportunities under the new rule that low-end trusts simply cannot.

When will the rule take effect?
The rule will be effective 180 days after the date of publication in the Federal Register. The effective date is July 13, 2016 (page 1).

How does the rule affect me if I currently have a trust or own NFA firearms?
The rule plainly states that it is not retroactive and therefore the rule will not apply to previously approved applications (NFA firearms you already own) or to pending applications. Additionally, the rule clearly states that all applications postmarked prior to the effective date of the rule will be processed under the current regulations, as opposed to the new rule (page 198 and 164). All future applications made after the effective date will be subject to the new rule.

How does the rule affect me if I don’t currently have a trust or own NFA firearms?
The rule will not affect you for all applications that you submit that are postmarked prior to the effective date, which will be sometime in June or July 2016 (page 164). The rule doesn’t specifically address electronic e-forms submissions, but presumably, they would simply have to be submitted by deadline as well. After the effective date, all future applications to make or buy NFA firearms will be subject to the new rule. That means that you can purchase or make all the NFA firearms you want in the next six months and you may never have to deal with the new rule if you don’t choose to buy or make more after the effective date. If you have ever wanted to own silencers, machine guns, or short barreled rifles, now is the time to act – get your gun premium trust now.

What are the changes to how the ATF treats NFA trusts?
Believe it or not, the changes are NOT nearly as bad as we thought they might be. After the effective date, all Responsible Persons on a trust will be required to submit the following as part of the application process to make or buy an NFA firearm:

A copy of your trust
ATF form 1 or 4
Two FD-258 fingerprint cards
A 2 x 2 inch photograph (think passport photo)
ATF form 5320.23, which requires general information such as name, address, date and place of birth, citizenship, and social security number (optional)
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notification to your CLEO by submitting to him or her a completed form 4 of 5320.23.

Who is a “responsible person” under the new rule?
Sadly, there are several definitions in the new rule that are not identical to each other, however, the most common definition, and apparently official definition, reads as follows “In the case of an unlicensed entity, including any trust, partnership, association, company (including any Limited Liability Company (LLC)), or corporation, any individual who possesses, directly or indirectly, the power or authority to direct the management and policies of the trust or entity to receive, possess, ship, transport, deliver, transfer, or otherwise dispose of a firearm for, or on behalf of, the trust or legal entity. In the case of a trust, those persons with the power or authority to direct the management and policies of the trust include any person who has the capability to exercise such power and possesses, directly or indirectly, the power or authority under any trust instrument, or under State law, to receive, possess, ship, transport, deliver, transfer, or otherwise dispose of a firearm for, or on behalf of, the trust. Examples of who may be considered a responsible person include settlors/grantors, trustees, partners, members, officers, directors, board members, or owners. An example of who may be excluded from this definition of responsible person is the beneficiary of a trust, if the beneficiary does not have the capability to exercise the powers or authorities enumerated in this section” (pages 238 and 239).

Do I have to resubmit everything if I make another purchase?
No! "If you have had an application approved as a marker or transferee within the preceding 24 months and there have been no changes to the documentation previously provided, the entity may provide a certification that the information has not been changed since the prior approval and shall identify the application for which the documentation had been submitted by form number, serial number, and date approved" (page 243). Presumably, this means that you will just can skip items 3, 4, and 5 above, and instead send the certification. Thus, as long as you buy or make one new item every two years, you will only have to submit fingerprint cards, photographs, and the personal information contained on form 5320.23 once.

How can a premium gun trust from AZ Gun Law help me deal with the hassles associated with the new rule?
A careful reading of the legal definition of “responsible person” appears that it may maintain potential for different classes of trustees, some of which don’t possess the power or authority to direct the management of the trust, but yet have the legal ability to possess NFA firearms! This feature is already built into most of our trusts, however, I am going to continue to investigate this avenue and make a determination if a “tweak” is needed or is beneficial to our existing client’s trusts. We will make necessary tweaks, if any, to all future trusts that we draft.

Additionally, the new rule allows that additional responsible persons can be added after applications are approved, without having to submit an ATF form 5320.23 for the newly added person (page 206-209). This appears to allow trustees, who have the legal right to possess NFA firearms, after the fact. This feature is also something that most of our existing trusts feature. A multi-generational trust makes more sense now than ever! Learn more about how to get your own multi-generational gun trust.

What will the CLEO do with the information they receive?
The rule places no requirements on the CLEO as to what they do with the copies of applications they receive – indeed they have no federal duties at all. CLEO is welcome under the law to review, save, and store the information, or they may immediately shred it. The Rule states that “CLEO’s will have flexibility and discretion to review and maintain the information they obtain as a result of this rule in the manner that best enhances public safety in their respective jurisdictions…this final rule imposes no obligations on CLEOs but does provide them with the ability to obtain information that is potentially useful to accomplishing their missions” (page 139 -140).

Will the e-forms system still work?
Given that e-forms has barely worked since its inception, the question is almost moot. Since all responsible persons must submit fingerprints and photos, the e-forms system will likely be unavailable to the general public (non-SOTs) (page 142).
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