On January 4, 2015, the ATF issued its proposed Final Rule Change for proposal 41P, now called 41F, which will directly affect the process of submitting applications for NFA items through gun trusts. The rule may be viewed here.
The proposed rule that was published has been in process for nearly two years. I do not find it coincidental that it was released with President Obama’s announcement for other executive actions on gun control. My thoughts are that this rule sat on the shelf for those years and was rushed in an effort to meet the press deadline. For that reason, there are a number of issues that are inconsistent in their current form, and may need clarification or revision in the future. Regardless, here are the major points that we are able to garner at this time:
THE EFFECTIVE DATE IS JULY 13, 2016
The ATF's new regulations for gun trusts have been published in the Federal Register as of January 15, 2016. This means that the new regulations will take effect on July 13, 2016. You may still submit your applications to the ATF under the current rules, and I suggest doing so as soon as possible. You need to leave enough lead time for your application to go pending. If your dealer is requiring you to start complying with the rule before it is implemented, find another dealer.
CLEO SIGN-OFF HAS BEEN CHANGED TO CLEO NOTIFICATION
This is actually a good thing for gun owners. Under the current law in Louisiana, the sheriff was not required to sign-off, so your application could have sat on his desk indefinitely. The exact form of notification appears to be a copy of your Form 1 or 4 and a copy of the new Form 2320.23 entitled “Responsible Person Questionnaire” for each “responsible person” in the trust.
This is a major change to the process. For the purposes of a gun trust, “Responsible Persons” will be the trustees. All Responsible Persons for a trust will have to submit fingerprints, a photograph, a Form 2320.23 (Responsible Person Questionnaire), to the ATF and give notification to CLEO. BENEFICIARIES ARE NOT CONSIDERED RESPONSIBLE PERSONS. These new requirements are eased by the 24 month rollover period.
24 MONTH ROLLOVER PERIOD*
The proposed rule states that if the trust has had an application approved in the prior 24 months, it may make a certification that there has been no change in documentation, and the trustees will not have to resubmit the fingerprints, photograph, or questionnaire. For example: Assuming that the proposed rule is enacted over the summer, and you decide to make a purchase in October 2016, each responsible party will have to submit to the new requirements (fingerprints, photos, questionnaire and CLEO notification). That information will be kept on file with the ATF for 24 months after the approval of the application, and as long as no changes are made to the trust, any new application during that period will not require the responsible parties to resubmit the fingerprints, photos, questionnaire and CLEO notification. This provision makes the pill a bit easier to swallow.
*As of 2/5/16, the ATF may have backpedaled on the language of 41F, by asserting that fingerprints and photographs will be required with all NFA applications submitted after July 13, 2016. This information is based on an alleged private meeting between the ATF, the ASA, and Silencer Shop, and has not been made public by the ATF, itself. Thus, the credibility of these statements remains in question at this time. I will keep you posted as this develops.
ADDING RESPONSIBLE PERSONS NOT PROHIBITED
At this time, the proposed final rule does not place a prohibition on adding responsible persons to your trust after items are purchased. As it currently stands, one could establish a trust, make a purchase, receive approval, and subsequently add trustees without incident. Whether this feature will remain is unclear, so it’s something to watch.
NO RETROACTIVE APPLICATION
All trusts and trust purchases made prior to implementation will not be required to resubmit information. If you already have applications that are pending with the ATF, or have already received your tax stamps, you don’t need to do anything. This is extremely important- If you can get your purchases underway prior to implementation you may be able to skip all of the new requirements.
The logistics of your purchases will change, but not to an unmanageable degree. Photographs are easy to obtain with your own camera and printer, or visiting a local drug store. FBI Forms FD-258 for fingerprints can be obtained at your local sheriff’s station or via the state police for roughly $10 a form. It would be conceivable for trustees to simply gather multiple copies of photographs and fingerprints for current and future purchases. The “Responsible Person Questionnaire” will be a form document available on the ATF website, and I expect that there will be a CLEO notification form as well. When viewed in detail, the new requirements may be inconvenient, but they are far from being insurmountable.
Now that the process requires more interaction and coordination between trustees to make a purchase, a small user pool is advisable. Depending on the number of trustees on your trust, it may be time to consider how many are really necessary and how many could be removed or made beneficiaries.
WHY USE A TRUST IN LIGHT OF THE NEW RULES?
For many, the main benefits of using a gun trust were avoiding administrative requirements. The outlook for those benefits is grim, but the other benefits of a gun trust remain intact. For a single individual who has absolutely no intention of ever sharing or passing on their NFA items, a gun trust may not be the best fit. That said, for the vast majority of people wishing to create a pool of users for their NFA items, ensure an estate plan for their family, and forgo the necessity of submitting fingerprints, photos, and questionnaires with every purchase, a gun trust is still the best method to make purchases. Because all applicants (individuals and trustees) are initially required to submit to the same rules, there is no reason not to apply through a gun trust and allow yourself, and your family and friends, the maximum benefits under law.
The changes that have been in process are fast approaching. This is not a death knell for NFA ownership. A gun trust is still the best choice for law-abiding gun owners to apply for NFA items, as it offers the most flexibility in application, ownership, and long term estate planning.
That said, there is still time to act without having to deal with the impending administrative hassles. If you have been on the fence or are considering making purchases through a gun trust, the clock is now officially ticking. If the “panic” of years past is any indication, NFA items will be bought up quickly and dealers will begin running out of stock. Don’t get caught in the mad rush just before implementation- Establish and make use of your gun trust today.
- Austin Clancy and Joseph Cataldie