What Are Title I Firearms and Title II Firearms?
Title I firearms are rifles, shotguns, handguns, and firearm frames or receivers. Title II firearms are regulated by the National Firearms Act of 1934 and are thus designated NFA firearms (these are sold by Class 3 Dealers and thus some people also call them Class 3 firearms). Title I is generally known as the Gun Control Act (18 U.S.C. 921, et seq.). Title II is generally known as the National Firearms Act (26 U.S.C. 5801-5872). The Gun Control Act of 1968 primarily restricts the transfer of typical firearms between persons. The National Firearms Act imposes a taxation and registration scheme on certain specific types of firearms (imposing a $200 registration tax).
NFA firearms include fully automatic firearms, short barrel shotguns, short barrel rifles, sound suppressors, destructive devices or other weapons known as AOW (any other weapon). The following is a brief description of those categories:
• Short Barreled Rifles (SBRs) - This type of rifle has an overall length of less than 26 inches and a barrel length of less than 16 inches. If a folding type stock is attached to the firearm, the measurement is taken with the stock extended and locked in an open position. Simply adding a stock to a handgun can in many circumstances instantly cause it to be reclassified as an SBR. Removing the butt stock from a rifle and adding a pistol grip may also be cause for reclassification under federal law.
• Short Barreled Shotguns (SBSs) - Short barreled shotguns are defined as having a smooth bore and an overall barrel length of 18 inches or less and a minimum overall length of 26 inches. Muzzle loading, black powder, short barrel shotguns are exempt under federal law, however, your state's laws may deem them to be illegal.
• Suppressors - A suppressor or silencer is any device attached to a firearm, be it a rifle or handgun, that lowers or muffles the report of a firearm. Some people confuse a flash suppressor with a sound suppressor. A flash suppressor requires no registration or tax stamp. Flash suppressors do nothing more than cool and disperse burning gases exiting a barrel without dampening the sound.
• Fully-Automatic Firearms – Fully-automatic firearms (or machine guns) are defined as any firearm that can fire more than one shot per trigger pull.
• Destructive Devices - Destructive devices include bombs, grenades, modern day artillery, chemical weapons and non-sporting firearms with a bore size over 0.50 inches. Although firearms such as the 12-gauge shotgun may have a bore in excess of 0.50" they are exempt from the NFA because they do have a generally accepted sporting purpose.
• Any other weapon or AOW - This is a highly encompassing and complex category. Examples include firearms disguised to look like something other than a firearm, such as a cell phone gun, wallet gun, cane gun or a flashlight gun. Short barreled shotguns that come from the factory with a pistol grip will be considered an AOW under federal law. Excluded items include firearms built prior to 1898 that do not use conventional ammunition.
What is ATF 41F?
ATF 41F is codified in the Federal Register as 27 C.F.R. 479 and implemented certain changes relating to the processing of NFA firearm documentation. A very brief overview of the changes are as follows:
• Individuals desiring to purchase an NFA firearm as well as the grantor (person who creates the trust) and the trustees for a trust desiring to purchase an NFA firearm will have to submit a new form with a passport-style photograph and fingerprints along with their ATF Form application.
• The grantor and the trustees will have to send a copy of their ATF Form application to the Chief Law Enforcement Officer (CLEO) in their locality prior to their submission of the ATF application.
• In order to submit a Form 1 or Form 4 to the ATF with a firearm trust, the ATF Form 1 or Form 4 must be submitted along with a copy of the firearm trust and with ATF Form 5320.23 for each "Responsible Person" of the firearm trust. "Responsible Person" has a very specific definition, which is, in the case of a Trust, those persons with the power or authority to direct the management and policies of the trust and includes any person who has the capability to exercise such power and possesses, directly or indirectly, the power or authority under any trust instrument, or under state law, to receive, possess, ship, transport, deliver, transfer, or otherwise dispose of a firearm for, or on behalf of, the trust. Beneficiaries do not fit into this definition unless and until the trust gives the beneficiary ownership rights over the trust property. Basically, the beneficiary would not ordinarily come into possession of the trust property unless and until the trust grantor dies and the NFA firearms pass along to the beneficiaries. Thus, the only people who would have to submit ATF Form 5320.23 along with a passport-style photo and fingerprints would be the grantor and the trustees.
• Under the pre-ATF 41F law, when a person who had NFA firearms in their estate died, the executor of the estate had to first apply with the ATF to be eligible to be in possession of the NFA firearms, or would otherwise be at risk of committing a felony. Under ATF 41F, an executor/administrator of an estate will be able to be in possession of NFA firearms for the purposes of wrapping up the deceased's estate.
What are the Advantages of a NXTGUN Trust™?
• All Trustees Can Use and Possess the NFA Firearms Registered to the Trust
- NFA firearms registered to the trust can be used and possessed by more than one person. The grantor of the trust can add or remove co-trustees who are allowed to use and possess the NFA firearms throughout his or her lifetime.
- NFA firearms registered to an individual can only be used and possessed by the registered individual during the individual’s lifetime.
• Beneficiaries Can Use the NFA Firearms Registered to the Trust While in the Presence of a Trustee
- As long as not prohibited by state law, NFA firearms registered to the trust can be used by a beneficiary on the range or in the field as long as any trustee of the trust is present.
- NFA firearms registered to an individual can only be used by the registered individual during the individual’s lifetime.
• Avoidance of Probate
- NFA firearms registered to the trust pass to the beneficiaries of the trust outside of the probate process according to the terms and conditions of the trust.
- NFA firearms registered to an individual pass to the beneficiaries according to the terms of the individual’s last will and testament, which is probated in a probate court and provided to the ATF during the transfer process so the executor can prove to the ATF that the individual intended to transfer the NFA firearms to the beneficiaries. This can be both slow and expensive.
• Firearm Trusts Protect Your NFA Firearms Upon a Determination of Incompetency
- NFA firearms registered to the trust can be protected if the grantor is later deemed to be incompetent, since any other trustee can take possession of the NFA firearms to hold them on behalf of the grantor. As a result, the trust will retain the ability to either direct that the NFA firearms be sold and the cash returned to the grantor, or that the NFA firearms continue to be held in trust for the beneficiaries to inherit when the grantor dies.
- NFA firearms registered to an individual who is later deemed to be incompetent are subject to confiscation by the ATF immediately, since it is illegal for any other individual to take possession of the registered individual's NFA firearms during the individual's lifetime.
Can NFA firearms be registered to other types of entities, such as corporations, LLCs, and partnerships, instead of a firearm trust?
Yes, but there are several disadvantages to doing so. These types of entities are required to file federal income tax returns to the IRS and state tax returns and public information reports. Overall, a firearm trust is the most flexible, most private, least expensive, and least maintenance-intensive method of registering NFA firearms.
Do I need a separate taxpayer identification number for the firearm trust?
No, as long as a grantor is a trustee of the firearm trust, no taxpayer identification number is required. Instead, a grantor's social security number is used.
Is a firearm trust required to file any annual reports or pay any state franchise taxes?
No, firearm trusts are not required to file any annual reports or to pay any franchise taxes.
Do I need to register or record a firearm trust?
No. Since the firearm trust is a revocable trust, it does not need to be registered or recorded with any county or local government entity. A firearm trust is not a public document. However, when the trust files an application with the ATF to transfer or make an NFA firearm, a complete copy of the firearm trust, any amendments, and any current appointment of additional trustee documents are filed with the application.
Does the firearm trust include an inventory of the non-NFA firearms assigned to the trust?
No. The NXTGUN Trust™ does not require an inventory of the non-NFA firearms that have been assigned or acquired by the trust to be listed in or as an exhibit to the trust. As NFA firearms are added to the trust, there is an exhibit that must be updated with the ATF tax stamp information for each NFA firearm registered to the trust.
Can more than one person legally possess NFA firearms?
NFA firearms must be titled in the name of an individual or an entity. However, unlike almost any other kind of titled property, the ATF has never allowed more than one person’s name to appear on the ATF tax stamp, which is effectively a title certificate. As a result, if an NFA firearm is titled in the name of an individual, only that specific individual may possess it. One of the chief advantages of registering NFA firearms in the name of a firearm trust, rather than in the name of an individual, is that more than one person may legally possess and use the NFA firearms. Ordinarily, any person that meets state law requirements for legally possessing firearms may agree to be included as a trustee of the firearm trust and, thereby, legally possess the NFA firearms assigned to the firearm trust.
Do I need a firearm trust if I am single?
Even if a person is single, it still makes sense to register NFA firearms in the name of a firearm trust because of the built-in flexibility of being able to amend the trust throughout the person’s lifetime to add or remove additional co-trustees and beneficiaries as the person’s life changes. This is especially useful if the individual desires to allow other responsible adults (such as a spouse or other family member) to use their NFA firearms at the range without the individual present as the trust allows for the addition of temporary co-trustees whereas only the individual to whom the NFA firearm is registered may lawfully possess and use it.
Does a firearm trust eliminate the need for a background check?
No. As part of the ATF application process, the ATF conducts a background check on each “Responsible Persons” to ensure that each “Responsible Person” is not prohibited from receiving and possessing firearms and ammunition. In addition, when the trustee visits the dealer, the trustee provides the dealer with his or her driver’s license and completes an ATF Form 4473, which is the same ATF form a person would fill out if he or she were buying a non-NFA firearm from a dealer.