The So-called “Gun Trust Loophole” Rule has been Published…

Gun Trusts are not being eliminated. But one of the benefits of having a gun trust could potentially be eliminated. The proposed rule, if passed as currently drafted, would require that a “responsible person” of a company or trust be photographed, fingerprinted, and obtain the signature of the chief law enforcement officer (CLEO). This is where the loophole could exist.

The concern, according to the federal government, is that criminals are using entities to avoid a background check, and thereafter obtaining firearms regulated by the National Firearms Act without a background check. Although the government provides no statistical support for its conclusion, it proposes a fix for the phantom problem. This “fix” could cost taxpayers an estimated $3,000,000.00 annually. The estimate for ATF to process the responsible person information is estimated at $1.8 million annually. The estimated cost to state and local agencies for processing applications for the CLEO signature is $1.2 million.

According to the BATFE, the petition for the rule change was originally submitted to the BATFE in 2009 by the National Firearms Act Trade and Collectors Association (NFATCA). The BATFE claims that the NFATCA expressed concern that firearms subject to the National Firearms Act (primarily full automatics, suppressors, and short barreled rifles and short-barreled shotguns) may wind up in the hands of people who intend to commit violence. The Department of Justice, of course, agreed with the undocumented concern of the NFATCA, and hence, the proposed rule change.  However, the NFATCA has taken the position that while they acknowledge that their petition expressed concern regarding “prohibited persons receiving firearms without background checks via trusts and corporations, the draft NPRM does not reflect any discussions or negotiations we have had with the Federal Government regarding same.”  If you are interested, you can read the NFATCA’s official position.

The most proposed undesirable effect on most individual gun owners is that a “responsible person”, which includes any individual possessing, directly or indirectly, the power to direct or cause the direction of the management, policies, and practices of the legal entity, insofar as they pertain to firearms, must submit a photograph, fingerprints, and obtain the CLEO stamp of approval (signature) on an application to receive or make an NFA firearm.

Until December 9, 2013, the government will be accepting public comments to the proposed rule change. You can view the rule and submit your “own comments” if you feel strongly about this new ruling.

If you wish to avoid the effects of the rule change, make your purchases before the comment period ends. I would highly recommend you contact us and get your Gun Trust established as soon as possible so you can submit your paperwork to the BATFE prior to any changes. Remember, despite the proposed new burden on “responsible persons”, a gun trust is still the best way to own and pass your firearms because a gun trust will still allow sharing of your NFA firearms and will still provide a streamlined incapacity and death plan for your firearms and firearms-related accessories.

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