I just got off the phone with one of the guys from the National Firearms Act Trade & Collector’s Association, who is a little concerned about all of the misinformation floating around the internet regarding the future of NFA trusts. This article in the New York Times makes it sound like the sky is falling for those who want to use a trust or corporation for NFA items. But the reality is that nothing is going to change right now . . .
As the law and practice currently stands, there are two ways to obtain NFA items (silencers, machine guns, etc). You can either apply as an individual (as I outlined here) or as a trust (as Jim nicely outlined here). The only difference between the two methods is that with the individual registration, you have to submit fingerprints, photos, get your chief law enforcement officer to sign off on your paperwork (to prove that you’re a good guy) and submit to a background check. With the trust, there’s nothing like that going on.
The reason that trusts skip the background check is that a trust is not a person. Well, it’s a person in a legal sense (hence why it can buy guns and silencers) but legal entities like trusts usually don’t have fingerprints and aren’t in the NICS system.
As the New York Times put it, this is a “loophole.” People buying machine guns without a background check? OMG! But as alarmist as the NYT is, and as much as they’d no doubt like trusts to go away altogether, the reality is that there’s no way that is happening.
Trusts are in the same category as corporations and LLCs. And those entities, like movie studios and private security firms, need to be able to purchase NFA items. So from a practical standpoint, there will always be a way to get a silencer or machine gun through a non-corporeal entity of some sort. The only thing that might change is the background check requirement.
According to the guys in the know, what’s on the table now is the idea of adding a “responsible party” to trusts. Just as an FFL/store owner needs to put their personal information down for the background check to get the license, the ATF might want you to list a “responsible person” on your NFA application to provide fingerprints and such. Whether they will require everyone on the trust to submit their information or certain trustees remains to be seen.
In fact, right now this isn’t even a proposed rule. The ATF has merely sent out feelers, indicating that it might look into this kind of change. There’s no fixed proposal, and certainly no set-in-stone ruling. And any such ruling would still be months away — plenty of time for us to agitate to get our voices heard.
In short, trusts are here to stay. What might be on the way out, however, is the CLEO sign-off requirement. Stay tuned.