How to deal with transfers into and out of personal collection
If you have a federal firearms license (“FFL”) or you own a company that has an FFL, can you use the FFL to transfer guns into your “personal” collection? If so, what does the law require?
The first thing to know is that both individuals and business entities (e.g., corporations, LLCs, etc.) can get FFLs. How a licensee handles the type of transfer described above will vary depending on whether the individual is truly the licensee, or whether an entity (of which the individual is an owner or officer) is the licensee.
This is often where people get tripped up, especially when it comes to single-member LLCs. For federal tax purposes, after all, single-member LLCs are often disregarded. But for pretty much all other purposes, including federal firearms laws, the LLC is considered distinct from the individual owner. In other words, if you hold your FFL through an LLC, the LLC is the federal firearms licensee, not you.
So, back to the question: If you have an FFL or you own a company that has an FFL, can you get firearms into your “personal” collection? Yes. But how?
If you hold an FFL as an individual, transferring a firearm you acquired through your FFL is relatively easy. You simply log the firearm into your A&D records as an acquisition (like you normally would). Then you log the firearm out as a disposition to yourself personally in accordance with 27 CFR 478.125(e). You do not need to complete a 4473. You also do not need to run a NICS check on yourself.
But be cautious. When you look to sell a firearm you have put into your “personal” collection in this manner, you cannot complete a private-party sale like you would have before you got your FFL. Instead, you must either comply with all requirements of 27 CFR 478.125a, or you must log the firearm back into your business inventory and sell the gun in accordance with all normal requirements associated with FFLs.
If you have an FFL through an entity of some form (like an LLC), things are different. If your business is the licensee, then a transfer of a “business” firearm to your personal collection is considered a transfer from a licensee (the business) to a non-licensee (you). Accordingly, you must 4473 yourself. You must also run a NICS check on yourself (unless you have a CPL or some other valid exception to the NICS check requirement exists). I know, this may sound strange. But just remember, business entities are legally separate and distinct from their owners. Even when there’s only one owner.
When you look to sell a “personal” firearm you received from your LLC, you technically are able to sell the firearm just like any other non-licensee private citizen would sell the firearm. Note, however, not all IOIs understand this concept. So just because you can does not mean you should.
From a practical perspective, if you have an FFL or you own a company with an FFL, for goodness sake, sell your personal firearms through the FFL. Skirting the requirements associated with FFLs by routing guns through your personal collection is playing with fire. While doing so can be lawful, it will probably look fishy in the eyes of ATF. And perception, for better or worse, is extremely important when you are dealing with ATF.
If you have questions about this topic, or any other legal topic related to firearms, feel free to shoot a call or an email.
