NFA Cleo signatures going away but Trusts and Corps get some changes

[David Hineline]

Ok so the CLEO signature is going away, but trusts and corps each person who can possess get to notify the CLEO do fingerprints photos and background checks to possess.

http://www.reginfo.gov/public/do/eAgendaViewRule?pubId=201210&RIN=1140-AA43

[bkoenig]

Tag for later when I can read more. 

[CitizenClark]

Tag for later when I can read more. 

There isn't much to go on right now, so far as I can tell. The abstract is as follows:

The Department of Justice is proposing to amend the regulations of the Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF) regarding the making or transferring of a firearm under the National Firearms Act. The proposed regulations would (1) add a definition for the term "responsible person"; (2) require each responsible person of a corporation, trust or legal entity to complete a specified form, and to submit photographs and fingerprints; (3) require that a copy of all applications to make or transfer a firearm be forwarded to the chief law enforcement officer (CLEO) of the locality in which the maker or transferee is located; and (4) eliminate the requirement for a certification signed by the CLEO.

I'm not closely acquainted with the federal rulemaking process, but it appears that this is just a notice of proposed rulemaking, something that I assume is the precursor to a requisite comment period, hearing, etc. I don't know if the July 2013 date given in the timeline is when the comment period begins or ends or what.

[Hardwood83]

Not surprised 'they' want to dull the appeal of the trust. Still has some advantages- but pretty crappy overall. May need to submit another form before this takes effect.

[A-FIXER]

grandfathered?

[RobertH]

stupid, stupid, stupid.  keep it the way it is, rather than change it to this.  not impressed.

[Burnsy87]

When does this take effect?  May fast-track my planned Form 1 and Form 4.

[David Hineline]

I would expect this in place by summer time.

When govment changes a process legal notice like this needs be given for public review.  If no public outcry takes place then they proceed.  My memory says they have to open it for 90 days for public review but I remember things wrong and sometimes can't tell between dreams and reality.

[sattv4u]

ok I'm game so what if your a ccp holder...another fee above the tax?

[RobertH]

ok I'm game so what if your a ccp holder...another fee above the tax?

sorry im a little confused to your post... CHP has nothing to do with NFA.

[Phantom]

sorry im a little confused to your post... CHP has nothing to do with NFA.

Not everyone Understands what a NFA is or means


And this move seems to me it's just the Department of Justice wanting to close the NFA loop hole
so felons can't just form a trust and gain access and own firearms (semi) legally.

It's a round about thingi that i first noticed and though of back when i first started learning about what the term NFA meant and the suggestions on the best ways to do one.


Phantom     

[CitizenClark]

I would expect this in place by summer time.

When govment changes a process legal notice like this needs be given for public review.  If no public outcry takes place then they proceed.  My memory says they have to open it for 90 days for public review but I remember things wrong and sometimes can't tell between dreams and reality.

See http://en.wikipedia.org/wiki/Notice_of_proposed_rulemaking#In_the_United_States

Josh Prince, an attorney in PA who works on gun trusts, notes that a nearly identical notice of proposed rulemaking was published in Fall 2011 and it didn't go anywhere: http://blog.princelaw.com/2013/01/15/cleo-signature-requirement-to-end-not-so-fast/ 

Here's the abstract for the previous proposed rule change:
http://www.reginfo.gov/public/do/eAgendaViewRule?pubId=201110&RIN=1140-AA43

[CitizenClark]

And this move seems to me it's just the Department of Justice wanting to close the NFA loop hole so felons can't just form a trust and gain access and own firearms (semi) legally.

Forming a trust does not make it legal (or "semi-legal") for a prohibited person to acquire NFA firearms or any other type of firearm.

[dkarp]

I thought I had read somewhere else that the ATF was worried that somehow felons were being named in trusts, or they were getting around a bg check by doing this (don't know of any specific cases) and that the fingerprint/bg check would prevent this.....even though a felon still can't legally possess a firearm. Like they had no way (legally) to check on the persons named in the trust??? CoNfuSed.....

I guess I don't understand why an individual has to go through all this while a "responsible person" in a trust doesn't....aren't both a person?

Or do I not understand the difference between a trust, as a legal entity, vs an individual? Please enlighten me!

[RobertH]

you still have to fill out a 4473 when you pick up your NFA firearm.  i think there was a felon in a trust, but did not get a background check and that made them really mad.  these changes are dumb, i do not like them.  there's no reason for a local LEO to be notified about Federal paperwork.

here are the differences, and i'm glossy over them pretty fast:
Trust - multiple people can be trustees and in possession of said firearms.  also good for passing on to next of kin.
Individual - CLEO approves transfer.  you must get photographs and fingerprinted.  ie... takes longer and costs more.

[dkarp]

So even when a bg check is not done on trust "responsible persons", (under current rules) they could still (theoretically) get caught by lying on a 4473 form....that is, if the BATFE has time to enforce an existing law....

Now what did Biden say about that..... Not enough manpower to enforce that particular law.....

[CitizenClark]

Or do I not understand the difference between a trust, as a legal entity, vs an individual? Please enlighten me!

Are you asking (1) how a trust is different from an individual, or (2) how they are treated differently for purposes of the NFA?

(1) A trust is a relationship as to property in which a settlor transfers a legal property interest to a trustee who then manages the property for the benefit of a beneficiary or beneficiaries who have an equitable interest in the property. The usual trust agreement goes something like this: A (settlor) to B (trustee) for the benefit of C (life estate holder), and then to D (beneficiaries who take free and clear of trust). In most gun trusts, A, B, and C are probably the same people, and then D is probably a descendant or descendants. (NB: A, B, C, and D cannot all be the same person, or else you run afoul of the merger doctrine.)

(2) See this post for a good short list of some of the differences between registering NFA firearms to a trust instead of as an individual taxpayer: http://www.702shooter.com/community-awareness/advantages-nfa-trust/

[Phantom]

Forming a trust does not make it legal (or "semi-legal") for a prohibited person to acquire NFA firearms or any other type of firearm.

Isn't it possible to hide ownership in a trust though
Aren't NICS checks only done on the trust it's self and not the trustees currently or did i misunderstand the process ?
or was it Trustees added after the trust was all ready in place?

[CitizenClark]

Isn't it possible to hide ownership in a trust though
Aren't NICS checks only done on the trust it's self and not the trustees currently or did i misunderstand the process ?

I think you've misunderstood the process. See Chapter 9 of the ATF's NFA Handbook, especially 9.12.1:

9.12.1 NFA Transfers to other than individuals. 
Subsequent to the approval of an application requesting to transfer an NFA firearm to, or on behalf of, a partnership, company, association, trust, estate, or corporation, the authorized person picking up the firearm on behalf of, a partnership, company, association, trust, estate, or corporation from the FFL must complete the Form 4473 with his/her personal information and undergo a NICS check.  See also, question P60 in the ATF FAQs.

In a trust the trustees are the legal owners of the trust property, though the powers normally associated with legal ownership are limited by the fiduciary duties owed by the trustee to the beneficiaries, who each have an equitable interest in the trust property. (The distinction between legal and equitable interests in property is an arcane one going back to the days when English courts of law and the Court of Chancery were separate institutions.)

This issue of a prohibited person potentially taking possession of an NFA firearm under the terms of a trust is why it is important that your trust make it clear that no prohibited person may be a trustee, and that no transfer of the trust property to a beneficiary should occur until after the appropriate paperwork has been filed and the transfer is approved by ATF. If your trust directs the trustee to transfer an NFA firearm to a prohibited person, that provision of the trust would be void as against public policy, but that doesn't mean it won't confuse the heck out of your successor trustee and potentially cause some real headaches down the road.