Home / LATEST NEWS / Justice Department Proposes New Regulation to Update Definition of “Engaged in the Business” as a Firearms Dealer

Justice Department Proposes New Regulation to Update Definition of “Engaged in the Business” as a Firearms Dealer

-Editorial

The Justice Department announced it has submitted to the Federal Register a notice of proposed rulemaking that would clarify the circumstances in which a person is “engaged in the business” of dealing in firearms and thus required to obtain a license and run background checks. 

The Bipartisan Safer Communities Act (BSCA), enacted June 25, 2022, expanded the definition of engaging in the business of firearms dealing to cover all persons who devote time, attention, and labor to dealing in firearms as a regular course of trade or business to predominately earn a profit through the repetitive purchase and sale of firearms. 

On March 14, President Biden issued Executive Order 14092, which, among other things, directs the Attorney General to develop and implement a plan to clarify the definition of who is engaged in the business of dealing in firearms and thus required to obtain a federal firearms license. The proposed rule would amend the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) regulations by, among other things, conforming ATF’s regulations to the new BSCA definition and further clarifying the conduct that presumptively requires a license under that revised definition.

 “The Bipartisan Safer Communities Act was passed by Congress to reduce gun violence, including by expanding the background checks that keep guns out of the hands of criminals,” said Attorney General Merrick B. Garland. “This proposed rule implements Congress’s mandate to expand the definition of who must obtain a license and conduct a background check before selling firearms.”

“An increasing number of individuals engaged in the business of selling firearms for profit have chosen not to register as federal firearms licensees, as required by law,” said ATF Director Steven Dettelbach. “Instead, they have sought to make money through the off-book, illicit sale of firearms. These activities undermine the law, endanger public safety, create significant burdens on law enforcement, and are unfair to the many licensed dealers who make considerable efforts to follow the law. The Gun Control Act’s exceptions to the license requirement exist to allow all law-abiding Americans to exercise their Second Amendment rights – not to facilitate the intentional evasion of the background check system. This new proposed rule would clarify the circumstances in which a person is ‘engaged in the business’ of dealing in firearms, and thus required to obtain a license and follow the laws Congress has established for firearms dealers.”

Federally licensed firearms dealers are critical partners to federal, state, local, Tribal, and territorial law enforcement in a shared goal of promoting public safety. They help keep firearms out of the hands of prohibited persons by running background checks on potential purchasers; ensure that crime guns can be traced back to their first retail purchaser by keeping records of transactions; and facilitate safe storage of firearms by providing child-safety locks with every transferred handgun and offering customers other secure gun storage options.  

Unlicensed dealing, however, undermines these public safety features – which is why Congress has long prohibited engaging in the business of dealing in firearms without the required license. 

To increase compliance with the statutes Congress has enacted, the proposed rule identifies examples of conduct that would, in certain circumstances, be presumed to qualify as engaging in the business of dealing in firearms and thus require a federal firearms license. And, in addition to implementing the revised statutory definition discussed above, the proposed rule would help to clarify the circumstances in which a license is (or is not) required by, among other things, adding a definition of “personal firearms collection” to ensure that genuine hobbyists and collectors may enhance and liquidate their collections without fear of violating the law. 

The proposed rule would also provide valuable guidance to the community of federal firearms licensees by addressing the lawful ways in which former licensees may liquidate business inventory upon termination of their license and clarifying how a licensee can lawfully transfer a firearm to another licensee.

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