Today is the last day to comment! Below is my full response to the ATF’s proposal 41P regarding NFA procedures for legal entities. The full ATF proposal can be found here: http://www.regulations.gov/#!docketDetail;D=ATF-2013-0001
Dear Ms. Friend:
I am writing to bring your attention to some troubling aspects of the recent proposal, ATF 41P, and its expansion of the Chief Law Enforcement Officer (CLEO) certification to legal entities for acquisitions of firearms regulated under the National Firearms Act (NFA). I appreciate you taking the time to read through my submission.
One of the first issues that came to mind for me while reading ATF 41P was that the proposal seems to run directly counter to the principles of legal personality with regard to fictitious entities under our Common Law system. ATF liberally defines “responsible persons” within a corporation or trust and creates a situation where these entities are but a mere collection of individuals, stripping them of their legal personhood. According to the proposed definition, shareholders, beneficiaries, and others will all need to submit CLEO certification along with photographs and fingerprints, including those who may never, or rarely, be expected to possess the NFA item outside of the grantor’s supervision. Furthermore, ATF seeks to set a dangerous precedent in attempting to involve itself in estate planning and corporate law. With the understanding that the NFA is a tax law, disqualification of an entire legal entity with respect to NFA items based solely on a CLEO’s unwillingness to cooperate is worrisome and not wholly different than shutting down an entire corporation simply because one stakeholder submitted incomplete personal information to the Internal Revenue Service.
Not only does the proposal assault the personality of a legal entity, but it also seems to run counter to the text of the 1934 NFA as passed by Congress. 26 U.S.C.A. § 5822 (see Appendix) explicitly states that applicants must supply fingerprints and photographs if the applicant is an individual (in this case, a natural person). The language makes a distinction not only between individuals and fictitious entities, but also between the application form (e.g. ATF Forms 1 and 4) and the supplied fingerprints and photographs. Because of this, ATF cannot simply state that these submissions are “a part of the form” as the text has made a clear distinction between the application form and these attachments that are required for individual applicants.
Furthermore, let us assume for a moment that most CLEOs would be willing to sign applications with a simple language tweak. How does ATF propose that these officers find the time to sign potentially hundreds of submissions? As a resident of Columbus, Ohio, I live in a city comprised of nearly 800,000 people and a metro area containing nearly 2 million residents. My CLEO has long been unwilling to sign applications, but assuming she were to have a change of heart, how can she possibly have the time to sign for the litany of NFA collectors in our area (there are several)? Law enforcement officers are far too busy dealing with real crime issues to be bothered by constant paperwork coming in from law-abiding NFA collectors. Because this additional time spent processing applications can easily be assigned a monetary value, ATF 41P runs dangerously close to being an unfunded mandate to local agencies. You may be aware that such mandates have been deemed unlawful by the United States Supreme Court, as in Printz v. United States.
Since I have mentioned my CLEO’s unwillingness to sign applications, I feel it is important to discuss why exactly getting a signature here in Franklin County has proven to be impossible. Just a few years ago, a respected collector contacted then Columbus Police Chief, James Jackson, requesting a signature on a Form 1. In response, the collector received a letter stating, “[a]s policy, Chief Jackson does not sign the ATF form referenced in your letter”. Frustrated but not defeated, the collector contacted the office of then Franklin County Sheriff Karnes which returned the following:
“Since you are in the City of Columbus, this request must be submitted to James G. Jackson, Chief of Police, Columbus Police Department. Furthermore, as Sheriff of Franklin County, it is at my discretion to sign Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF) Forms. I have elected not to make it policy for this administration.”
Here we see two examples of officials who have established policies to refuse ATF applications, regardless of the applicant or language within the application. A further inquiry from a local attorney to the Columbus City Prosecutor revealed that the prosecutor’s office “has a policy of not signing off on any such requests as they do not wish to undercut the County Sheriff and CPD policies”. Not only are CLEOs broadly unwilling to sign applications, but they also cooperate in their refusal efforts. As law-abiding collectors, we simply do not want to be involved in the inter-agency collusion and political silliness that is characteristic of CLEO certification.
Beyond officers being unwilling to sign applications, ATF 41P creates real problems in situations where trustees live in different states under different laws regarding NFA ownership. For example, I have listed my brother, and Indiana resident, on my trust as a trustee. Here in Ohio, citizens may legally own any NFA item with ATF approval. In Indiana, short-barreled shotguns (SBS) are illegal for citizens to possess. The expected issue arises when I go to obtain a SBS with him as a trustee. Since he can legally possess the firearm when visiting or competing in Ohio, there is no good reason to exclude him from a trust that owns a SBS, nor should I have to restrict his legal access to the trust’s NFA holdings. Furthermore, because he is reasonably well versed in firearms law (more so than my wife), he is critically important to managing my affairs and collection in the event that I die. However, under ATF 41P my trust would not be able to legally acquire a SBS as his CLEO will undoubtedly refuse to sign an application for an item that is illegal in his jurisdiction. Thus, even though the trust has been formed in the state of Ohio, according to Ohio law, and the SBS would remain in my possession, my trust would be precluded from legally owning the firearm as a result of ATF 41P.
Somewhat related to the above trust issues, warranty work for NFA items will be unnecessarily complicated by the proposed regulations. According to previous ATF rulings, manufacturers cannot simply destroy and replace a damaged suppressor tube or receiver with a new one possessing the same serial number. As a result, replacements have required new applications and the issuance of new tax stamps. Under ATF 41P, it is a certainty that some collectors will be unable to replace damaged or defective NFA items that they legally own as a result of CLEO certification requirements. In such cases, who will be responsible for reimbursing these owners when their items fail and their CLEOs refuse them a replacement? Damages such as baffle strikes are incredibly common with suppressors and under the proposed regulations; many owners stand to lose their items should such an event take place.
Lastly, ATF admits that the CLEO certification is antiquated, that ATF has access to a variety of effective background check systems, and that many CLEOs will not sign applications. Why then, is such a proposal even necessary? ATF fails to cite a single example of a prohibited person actually acquiring an NFA item, much less such a person using one in the commission of a crime. Furthermore, no other ATF application requires such certification, not even Federal Firearms Licenses (FFLs). The simple and effective answer to this would be to treat NFA applications like FFLs and perform the required checks internally within the ATF. Such a system makes sense not only from a legal standpoint, but also procedurally.
Thank you for your time and attention to this matter. It is my hope that ATF will reconsider or substantially revise this proposal keeping in mind the best interests of the industry and law-abiding collectors.