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NFA Ownership

SO…the secret it out. Owning NFA firearms such as machine guns and suppressors used to be a mystery. With as much information on ownership available today, it is still common for me to hear people state these firearms are illegal. This happens as often as once a week! Thanks to the internet, the NFA hobby has exploded with new collectors, shooters, and investors. Below, we will explain how you can take ownership of these weapons. You will find the process easy. This is an awesome hobby so take the time to get involved and you will have a very rewarding and enjoyable experience.

All NFA firearms are registered in a federal database. In 1934, the federal government enacted the National Firearms Act of 1934 which required the federal registration AND taxation of all firearms under the act. Machine guns, suppressors (also commonly referred to as silencers), short barrel rifles, and short barrel shotguns require a $200 federal registration tax. Weapons classified as AOW–which means Any Other Weapon, require a $5 federal registration tax. These taxes are a one time tax per weapons.

How may I take ownership?
You may take ownership in your name, an entity such as a corporation or LLC, or in a trust. Ownership in each form has both advantages and disadvantages. We will discuss these below.

Individual ownership registration:
Taking ownership in your name is one option. This is often the most difficult because you must get a CLEO (chief law enforcement officer) in the jurisdiction you reside in to sign your application. He is NOT giving you permission to own the firearm. That decision is strictly up to the federal government. When he does sign the application, he is stating that, to his knowledge, you are not prohibited from possessing the firearm. He is also stating that you reside in his jurisdiction that that ownership is not prohibited by local laws. If you choose to apply for ownership in your name, you MUST get the CLEO signoff from a local official such as a sheriff, chief of police, district attorney, or other official approved by the BATF. The bottom line is: no signature—NO ownership in your name. Another disadvantage is you must get fingerprints and photographs. FBI checks of fingerprints will slow down your application. For this reason, many buyers are now opting to either take ownership in a business entity such as a corporation or LLC, or in a firearms trust.

Business entity registration:
This is easier than registration in your personal name because, at this time, the BATF does not require a CLEO signature for this form of ownership. You also do not have to get fingerprinted and photographed which will save time and money. The downside to this form of ownership is: you MUST maintain the entity. If you fail to renew your corporation or LLC in your state, when the entity is dissolved you will be in possession of an unregistered NFA firearm. If you already have a business entity which you know you will maintain for years, then opting for this form of registration is OK. DO NOT form a business entity strictly for possessing NFA firearms. It is expensive, and there is no need to do so. See below.

Trust ownership:
Over the last few years, ownership in a trust has become the method of choice for registration of NFA firearms. The advantages of registration in a trust are noteworthy. The trusts are NOT recorded, so you have more privacy than with a business entity. The trusts, which are not recorded and are not a business entity, do not have an annual fee. You may set the trust up to have several trustees which allows all trustees to possess the firearms. Finally, you can have several beneficiaries to receive the various firearms upon your death. Last, you can amend the trust anytime to add or remove beneficiaries and or trustees. For these reasons, trust ownership has become the most popular form of registration.