https://www.atf.gov/file/100896/download
ATF RULE 41F FAQS
(Previously known as ATF Proposed Rule 41p)Please Note:
This FAQ is for information purposes only and is NOT legal advice.
Please consult with an attorney if you have any legal questions.
What is ATF Rule 41f?
ATF Rule 41f is the final
regulatory rule signed by the Obama administration on January 4, 2016
regarding the transfer and manufacture of weapons regulated by the
National Firearms Act.
The initial proposed rule (Rule 41p) proposed adding a new
definition of a "responsible person" (RP) to the regulations and would
have required all RPs in any entity used to purchase or manufacture NFA
weapons to obtain the signature of their Chief Law Enforcement Officer
(CLEO signature) on the application, as well as submit fingerprints and
photographs for review by ATF examiners. Entities, such as trusts, LLCs
and corporations, have become popular for acquiring NFA weapons because
individuals experienced great difficulty in obtaining the CLEO
signature in many areas of the country, if it was not outright
impossible, and the use of an entity to acquire such weapons did not
previously require the applicant to obtain the CLEO signature.
Over 9,500 comments were submitted to the ATF voicing opposition to
this proposed rule, highlighting the fact that the rule, as proposed,
would create a defacto ban on NFA weapons such as silencers in
jurisdictions where CLEO signatures were impossible to secure, in
addition to other related concerns.
ATF Rule 41f is the Obama administration's final version of the
proposed rule and will have a substantial impact on the use of trusts
and other entities in the acquisition and sharing of NFA weapons.
When does Rule 41f take effect?
The effective date of the rule will be 180 days from the date that
it is published in the Federal Register, which was January 15, 2016.
That makes it effective July 13, 2016. All paperwork that was submitted
to the NFA Branch for processing prior to July 13, 2016 will be
processed under the former rules.
What is a Responsible Person?
While the comments of the preamble to the rule give varying
interpretations of an RP, the actual language of the rule basically says
that an RP is any individual who possesses 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. The definition
goes one step further in defining an RP for a trust, saying that this
definition includes any person with the capability to exercise such
power and possesses the power or authority to possess, ship, transport,
deliver, transfer, or otherwise dispose of a firearm for, or on behalf
of, the trust.
Boiled down, this refers to grantors and trustees of a trust. The
ATF even clarifies that beneficiaries of the trust are not considered to
be RPs if they do not have the capability to exercise the powers or
authorities specified.
The language addressing RPs in a trust appears to raise the
possibility that a class of trustees could be created who have no
authority to "direct the management and policies of the trust" but may
still have possession of trust assets, which would appear to be similar
in rights and powers to lower level employees of a business entity.
If confirmed, this may provide a mechanism to permit possession of
NFA weapons by others without having to go through the new application
requirements created by the new rule.
How will this affect my existing gun trust?
The construction of the final rule does not apply directly to
existing trusts or entities in possession of NFA weapons, but to future
applications made by both individuals and entities. After July 13,
2016, you will be required to submit or do the following with any Form 1
or Form 4 application:
- a complete copy of your trust and any schedule or exhibit referenced by it;
- for each RP -
- Two FD-258 fingerprint cards
- A 2X2-inch photograph taken within the last year
- A completed NFA Responsible Person Questionnaire (ATF Form 5320.23). This form will require the input of a RP's full name, position, Social Security number (optional), home address, date and place of birth and nationality
- Provide CLEO "notification"
- Prior to submission, the applicant must forward a completed copy of the application form (Form 1 or Form 4) and all other RPs must forward a completed copy of their Form 5320.23 to the CLEO of the locality in which the applicant or RP is located. The new rule also defines who may be considered the CLEO as "the local chief of police, county sheriff, head of the State police, or State or local district attorney or prosecutor."
If I have had an application
approved within the preceding 24 months, will I have to resubmit all of
the documents required above?
No. If a trust application has been approved within the preceding
24 months of your current application, and there has been no change to
the documentation previously provided (no new PRs), a certification can
be submitted instead, stating that the information has not been changed
since the prior approval and identifying the prior application by form
number, serial number and the date on which it was approved.
Will already pending applications be impacted by Rule 41f?
No. The final rule clearly states that it "is not retroactive" and
will not apply to applications that are in pending status, which will
include "all applications postmarked prior to the effective date of the
rule".
Will I need to submit anything to the ATF simply because I change my trust?
Apparently not. The proposed rule considered a requirement that
notification of the change would have to be submitted to the ATF within
30 days of the change in RPs. However, the final rule states "The
Department is not requiring, in this final rule, that new responsible
persons submit a Form 5320.23 within 30 days of any change of
responsible persons at a trust or legal entity." However, if a Form 1
or Form 4 is submitted, documentation reflecting changes existing at
that time must be filed with the ATF as specified above.
This may also provide a mechanism to simplify applications. If you
have added RPs and have subsequently removed them prior to making a
future application, so that conditions reflect the status at the time of
the prior application or as exist in your original trust document, no
additional RP information may be necessary.
What happened to the CLEO signature requirement?
The CLEO signature requirement was replaced with a CLEO
notification requirement and this change applies to all transferees and
makers of NFA firearms. This significant change from the proposed rule
is certainly a welcome sight, given that a requirement that all RPs
would have to obtain CLEO signature would have created a prohibition by
regulation in many areas of the country. However, the requirement is
still problematic in that it requires you to disclose confidential tax
information and there is no centralized place designated to send it.
Remember, the definition of a CLEO includes your local chief of police,
county sheriff, head of the State police, or State or local district
attorney or prosecutor. That raises the question, how do I prove that I
submitted it if my local police chief fails to retain it in his
records? Multiple RPs in a single trust could submit their Form 5320.23
to multiple CLEOs, creating chaos if you are ever forced to prove your
compliance with the new rule. This would suggest that the use of
registered mail to deliver such forms would be advisable.
The new rule clarifies that "an executor, administrator, personal
representative, or other person authorized under State law to dispose of
property in an estate (collectively "executor") may possess a firearm
registered to a decedent during the term of probate without such
possession being treated as a transfer".
The phrase "during the term of probate" seems to assume the fact
that all estates are going to be probated in the proper timeframe. In
most states, there is only a limited period of time to commence a
judicial probate process, oftentimes a period of 3 years. Many estates
do not require a probate process to transfer the decedent's other
assets, because of the existence of joint ownership, beneficiary
designations and revocable living trust planning.
If the family forgets or never realizes that a probate must be
opened to transfer a simple suppressor with a value of less than $1,000,
they may be precluded from doing so after limitation period has
expired. Does this new rule change then prohibit any transfer from
occurring after that point when it may not be possible to appoint an
executor anymore?
What will the new rule do to existing wait times for NFA applications?
This may be the most concerning element of the new rule. The ATF
actually estimates that implementation of the new rule will INCREASE
processing times to "six to eight months", but expects that this will
again subside once they have adapted and adjusted to the new process.
It further states that the agency "will work to increase its resources
and staffing to process the applications", which unfortunately may be
nothing more than a hollow statement. But here is possibly the most
alarming statement of all: "Of course, continued increases in the number
of applications submitted may correspondingly continue to place
pressure on processing times." Given the frenzied buying of gun trusts
and rush to get applications submitted that has been seen in just the
single day since the new rule was signed, this statement looks quite
prophetic, indeed.
Is it too late to set up a gun trust and make applications?
Absolutely not. You can create a gun trust right away and get
applications submitted that may never be impacted by the new rule,
assuming that you don't make future applications after its effective
date.
Does the new rule render gun trusts meaningless?
No, not at all. The gun trust will still be extremely advantageous
in owning NFA weapons. While you may be subject to some new
requirements in making future applications (which may be minimized, as
discussed above), a gun trust is without doubt the best way to legally
share the use of NFA weapons with others. The possibility of an
accidental felony transfer of NFA weapons by permitting others to use
them can be eliminated by holding the weapons in trust and making others
beneficiaries and co-trustees of the trust.
In addition, use of a gun trust eliminates the need for a judicial
probate process to transfer the weapons upon your death. When you
consider that an attorney's retainer to do the most basic of probates
may be $2,500 or more, this is a no-brainer.
Finally, a properly constructed gun trust is a comprehensive
management system to instruct successors on how these weapons need to be
handled, so that they know what restrictions are involved and don't get
into trouble with these weapons.