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Proposed Rule2026-08919

Revising Regulations Defining “Engaged in the Business” as a Dealer in Firearms

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Published

May 6, 2026

Issuing agencies

Justice DepartmentAlcohol, Tobacco, Firearms, and Explosives Bureau

Abstract

The Bureau of Alcohol, Tobacco, Firearms, and Explosives ("ATF") is proposing to revise regulations implementing the "engaged in the business" definition from the Bipartisan Safer Communities Act ("BSCA"). Although Congress defined that term in BSCA, the Department of Justice ("Department") provided additional definitions in its implementing regulations to further define terms within the statutory definition and to include examples of covered activities that established rebuttable presumptions of being engaged in the business of dealing in firearms. This rule proposes to remove those changes. ATF has determined that the changes have not shown the expected impact on federal firearms licensee applications, administrative licensing actions, civil forfeitures, or other anticipated effects.

Full Text

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<title>Federal Register, Volume 91 Issue 87 (Wednesday, May 6, 2026)</title>
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[Federal Register Volume 91, Number 87 (Wednesday, May 6, 2026)]
[Proposed Rules]
[Pages 24424-24436]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2026-08919]

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DEPARTMENT OF JUSTICE

Bureau of Alcohol, Tobacco, Firearms, and Explosives

27 CFR Part 478

[Docket No. ATF-2026-0074; ATF 2025R-27P]
RIN 1140-AB01

Revising Regulations Defining ``Engaged in the Business'' as a
Dealer in Firearms

AGENCY: Bureau of Alcohol, Tobacco, Firearms, and Explosives,
Department of Justice.

ACTION: Notice of proposed rulemaking.

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SUMMARY: The Bureau of Alcohol, Tobacco, Firearms, and Explosives
(``ATF'') is proposing to revise regulations implementing the ``engaged
in the business'' definition from the Bipartisan Safer Communities Act
(``BSCA''). Although Congress defined that term in BSCA, the Department
of Justice (``Department'') provided additional definitions in its
implementing regulations to further define terms within the statutory
definition and to include examples of covered activities that
established rebuttable presumptions of being engaged in the business of
dealing in firearms. This rule proposes to remove those changes. ATF
has determined that the changes have not shown the expected impact on
federal firearms licensee applications, administrative licensing
actions, civil forfeitures, or other anticipated effects.

DATES: Comments must be submitted in writing, and must be submitted on
or before (or, if mailed, must be postmarked on or before) August 4,
2026. Commenters should be aware that the federal e-rulemaking portal
comment system will not accept comments after midnight Eastern Time on
the last day of the comment period.

ADDRESSES: You may submit comments, identified by RIN 1140-AB01, by
either of the following methods--
<bullet> Federal e-rulemaking portal: <a href="https://www.regulations.gov">https://www.regulations.gov</a>.
Follow the instructions for submitting comments.
<bullet> Mail: ATF Rulemaking Comments; Mail Stop 6N-518, Office of
Regulatory Affairs; Enforcement Programs and Services; Bureau of
Alcohol, Tobacco, Firearms, and Explosives; 99 New York Ave. NE,
Washington, DC 20226; ATTN: RIN 1140-AB01.
Instructions: All submissions must include the agency name and
number (RIN 1140-AB01) for this notice of proposed rulemaking (``NPRM''
or ``proposed rule''). ATF may post all properly completed comments it
receives from either of the methods described above, without change, to
the federal e-rulemaking portal, <a href="https://www.regulations.gov">https://www.regulations.gov</a>. This
includes any personally identifying information (``PII'') or business
proprietary information (``PROPIN'') submitted in the body of the
comment or as part of a related attachment they want posted. Commenters
who submit through the federal e-rulemaking portal and do not want any
of their PII posted on the internet should omit it from the body of
their comment and any uploaded attachments that they want posted. If
online commenters wish to submit PII with their comment, they should
place it in a separate attachment and mark it at the top with the
marking ``CUI//PRVCY.'' Commenters who submit through mail should
likewise omit their PII or PROPIN from the body of the comment and
provide any such information on the cover sheet only,

[[Page 24425]]

marking it at the top as ``CUI//PRVCY'' for PII, or as ``CUI//PROPIN''
for PROPIN. For detailed instructions on submitting comments and
additional information on the rulemaking process, see the ``Public
Participation'' heading of the SUPPLEMENTARY INFORMATION section of
this document. In accordance with 5 U.S.C. 553(b)(4), a summary of this
rule may be found at <a href="https://www.regulations.gov">https://www.regulations.gov</a>. Commenters must
submit comments by using one of the methods described above, not by
emailing the address set forth in the following paragraph.

FOR FURTHER INFORMATION CONTACT: Office of Regulatory Affairs, by email
at <a href="/cdn-cgi/l/email-protection#7b34293a3b1a0f1d551c140d"><span class="__cf_email__" data-cfemail="561904171637223078313920">[email&#160;protected]</span></a>, by mail at Office of Regulatory Affairs; Enforcement
Programs and Services; Bureau of Alcohol, Tobacco, Firearms, and
Explosives; 99 New York Ave. NE; Washington, DC 20226, or by telephone
at 202-648-7070 (this is not a toll-free number).

SUPPLEMENTARY INFORMATION:

I. Background

The Attorney General is responsible for enforcing the Gun Control
Act of 1968 (``GCA''), as amended. This responsibility includes the
authority to promulgate regulations necessary to enforce the provisions
of the GCA.\1\ See 18 U.S.C. 926(a). Congress and the Attorney General
have delegated the responsibility for administering and enforcing the
GCA to the Director of ATF (``Director'') subject to the direction of
the Attorney General and the Deputy Attorney General. See 28 U.S.C.
599A(b)(1), (c)(1); 28 CFR 0.130(a)(1)-(2); Treas. Order No. 221(2)(a),
(d), 37 FR 11696-97 (June 10, 1972).\2\ Accordingly, the Department and
ATF have promulgated regulations to implement the GCA in 27 CFR part
478.
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\1\ Some GCA provisions still refer to the ``Secretary of the
Treasury.'' However, the Homeland Security Act of 2002, Public Law
107-296, 116 Stat. 2135, transferred the functions of ATF from the
Department of the Treasury to the Department of Justice, under the
general authority of the Attorney General. 26 U.S.C. 7801(a)(2); 28
U.S.C. 599A(c)(1). Thus, for ease of reference, this proposed rule
refers to the Attorney General where relevant.
\2\ In Attorney General Order Number 6353-2025, the Attorney
General delegated authority to the Director to issue regulations
pertaining to matters within ATF's jurisdiction, including under the
National Firearms Act, GCA, and Title XI of the Organized Crime
Control Act. ATF's jurisdiction also includes those portions of
section 38 of the Arms Export Control Act pertaining to the
permanent import of defense articles and defense services and the
Contraband Cigarette Trafficking Act.
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The GCA, at 18 U.S.C. 922(a)(1)(A) and as implemented at 27 CFR
478.41(a), makes it unlawful for any person, except a federal firearms
licensee (``FFL'' or ``licensee'')--that is a licensed dealer,
manufacturer, or importer--to ``engage in the business'' of dealing in,
manufacturing, or importing firearms. A person may file an application
with and receive such a license from ATF, to which the Attorney General
has delegated the licensing function. See 18 U.S.C. 923(a); 27 CFR
478.41(b). Licensees are generally required to conduct background
checks on prospective firearm recipients through the Federal Bureau of
Investigation's National Instant Criminal Background Check System
(``NICS'') to prevent prohibited persons from receiving firearms. See
18 U.S.C. 922(t). Licensees also must maintain firearms transaction
records for crime-gun tracing purposes. See 18 U.S.C. 923(g)(1)(A).
In 1986, Congress passed the Firearms Owners' Protection Act
(``FOPA''), Public Law 99-308 (1986), in which it defined the term
``engaged in the business'' for purposes of the GCA as applied to a
dealer.\3\ The statute defined a dealer engaged in the business as ``a
person who devotes time, attention, and labor to dealing in firearms as
a regular course of trade or business with the principal objective of
livelihood and profit through the repetitive purchase and resale of
firearms.'' 18 U.S.C. 921(a)(21)(C) (2020). FOPA also defined the
phrase ``with the principal objective of livelihood and profit'' to
mean ``that the intent underlying the sale or disposition of firearms
is predominantly one of obtaining livelihood and pecuniary gain, as
opposed to other intents, such as improving or liquidating a personal
firearms collection.'' FOPA, Public Law 99-308, sec. 101 (adding
paragraphs (21)(C) and (22) to 18 U.S.C. 921(a)); see also 18 U.S.C.
921(a)(22) (2020). FOPA's definition of ``engaged in the business'' as
a dealer was incorporated into ATF's implementing regulations at 27 CFR
178.11 \4\ (now Sec. 478.11) as ``Dealer in firearms other than a
gunsmith or a pawnbroker.'' 27 CFR 478.11.
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\3\ ATF notes that there is there is some overlap in statutory
control of firearms for purposes of the GCA and for purposes of
section 38 of the Arms Export Control Act. Any person (1) who
``engages in the business of'' manufacturing, exporting, or
temporarily importing defense articles and defense services related
to certain firearms on the United States Munitions List and
designated in the International Traffic in Arms Regulations
(``ITAR''), 22 CFR parts 120-130, at 22 CFR 121.1, or (2) who
engages in the brokering of firearms designated at that section and
those firearms designated as defense articles on the U.S. Munitions
Import List at 22 CFR 447.21, is required to register with the
Department of State and pay a fee. These requirements are prescribed
at sections 122.1 and 129.3 of the ITAR and are distinct from the
requirements discussed in this proposed rule and the definition of
``engaged in the business'' at 18 U.S.C. 921(a)(21).
\4\ Commerce in Firearms and Ammunition, 53 FR 10480, 10491
(Mar. 31, 1988).
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On June 25, 2022, Congress passed the Bipartisan Safer Communities
Act (``BSCA''), Public Law 117-159. Among other provisions, section
12002 of BSCA broadened the statutory definition of ``engaged in the
business'' by eliminating the requirement that a person's ``principal
objective'' of purchasing and reselling firearms must include both
``livelihood and profit'' and replacing it with a requirement that the
person must intend ``to predominantly earn a profit.'' The statute now
provides that, as applied to a dealer in firearms, the term ``engaged
in the business'' means ``a person who devotes time, attention, and
labor to dealing in firearms as a regular course of trade or business
to predominantly earn a profit through the repetitive purchase and
resale of firearms.'' 18 U.S.C. 921(a)(21)(C) (emphasis added). BSCA
defined the term ``predominantly earn a profit'' to mean that the
intent underlying the sale or disposition of a firearm is for pecuniary
gain rather than for other purposes, such as selling a personal
firearms collection. 18 U.S.C. 921(a)(22). Prior to BSCA, this term
required the principal objective of selling or disposing firearms to be
both for profit and, in addition, maintaining a livelihood. BSCA's
statutory amendment to the term ``predominantly earn a profit'' shifts
the primary focus to the intended pecuniary gain from selling or
disposing firearms even when such activity is not the person's main
source of income.
When drafting regulations to implement BSCA, the Biden
Administration directed the Department to further clarify, through
rulemaking, the meaning of the term ``engaged in the business.''
Specifically, President Biden issued Executive Order 14092, which
required the Attorney General to develop and implement a plan to, in
relevant part, ``clarify the definition of who is engaged in the
business of dealing in firearms, and thus required to become [FFLs], in
order to increase compliance with the federal background check
requirement for firearm sales, including by considering a rulemaking,
as appropriate and consistent with applicable law; [and] prevent former
FFLs whose licenses have been revoked or surrendered from continuing to
engage in the business of dealing in

[[Page 24426]]

firearms.'' \5\ The Biden Administration attempted to implement policy
changes that went far beyond the regulatory changes necessary to
implement BSCA.
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\5\ Reducing Gun Violence and Making Our Communities Safer, E.O.
14092, sec. 3(a)(i), 88 FR 16527, 16527-28 (Mar. 14, 2023).
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The Department published a final rule, titled ``Definition of
`Engaged in the Business' as a Firearms Dealer,'' 89 FR 28968 (Apr. 19,
2024) (``EIB rule''), which became effective on May 20, 2024. The EIB
rule amended the regulations in 27 CFR part 478 to (1) incorporate
BSCA's definition of the term ``engaged in the business,'' (2) provide
clarification and guidance on what it means to be ``engaged in the
business'' and to have the requisite intent to ``predominantly earn a
profit,'' and (3) identify conduct that was presumed to constitute
``dealing'' and to show relevant intent. See 89 FR 28968. The EIB rule
also defined the term ``responsible person'' and addressed the
procedures former licensees must follow when they liquidate business
inventory when their license is terminated. Id.
Although the EIB rule purported to provide clarification and
guidance, many provisions of the rule were--and are--at odds with the
statutory text. By broadly defining the concept of unlawful dealing,
for instance, the Biden Administration began to approach a system of
universal background checks through administrative regulation. For
example, one definition narrowed the range of firearms that could
permissibly be deemed part of a ``personal collection,'' and thus, that
may be liquidated by unlicensed persons. The Department also adopted
fact-pattern presumptions that many objectors believed, in practice,
would relieve the Government of its burden of proof to demonstrate
unlawful dealing.
The EIB rule was immediately the subject of litigation. On June 12,
2024, the United States District Court for the Northern District of
Texas enjoined ATF from enforcing the rule as to the plaintiffs--one
individual, four advocacy groups, and the States of Texas, Mississippi,
Louisiana and Utah--for the pendency of the litigation.\6\ In addition,
the district court found that several regulatory presumptions in the
EIB rule conflict with the statute.\7\ In particular, it found that ATF
had no authority to use administrative regulations to expand the zone
of firearms-dealing subject to regulation beyond that which Congress
statutorily created. In subsequent litigation, the United States
District Court for the District of Kansas denied a motion for
preliminary injunction, on both standing and the merits,\8\ as did the
United States District Court for the Northern District of Alabama with
respect to standing.\9\ However, on September 30, 2025, the Northern
District of Alabama granted the plaintiff's motion for summary
judgment. The Northern District of Alabama found that the plaintiffs
had established standing. On the merits, the court determined that ATF
exceeded its statutory authority in issuing the final rule and that the
rule improperly expanded the statutory definition of ``engaged in the
business.'' \10\
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\6\ See Texas. v. ATF, 737 F. Supp. 3d 426 (N.D. Tex. 2024).
\7\ See id. at 442 (stating that ``several presumptions conflict
with the statutory text. Two of them, for example, provide that a
person is presumptively `engaged in the business' if the person
`demonstrates a willingness and ability to purchase and resell'
firearms or `purchases. . . or . . . resells' firearms'').
\8\ See Kansas v. Garland, 2024 WL 3360533, at *9 (D. Kan. July
10, 2024) (finding ``serious issues appear in Plaintiffs' standing
and merits arguments that prevent them from making the strong
showing necessary to obtain injunctive relief'').
\9\ Butler v. Garland, 2024 WL 5424418 (N.D. Ala. Nov. 4, 2024).
\10\ Butler v. Bondi, 805 F. Supp. 3d 1175 (N.D. Ala. 2025).
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II. Proposed Rule

On further review, ATF agrees that the EIB rule is replete with
procedural and substantive problems. Consequently, ATF proposes
repealing those sections of the EIB rule that do not correctly
implement the GCA and BSCA. ATF does not propose, however, to repeal
the EIB rule in its entirety. Some sections of the EIB rule will be
retained--for example, those providing for the discontinuance of
business operations--although this rule proposes to amend some of those
provisions.

A. Presumptions

The EIB rule created fact-pattern presumptions that a person was
engaged in the business. These presumptions were intended to be used to
determine whether a person was engaged in the business as a dealer and
whether a person had the intent to predominantly earn a profit. See 89
FR 28975-80. For example, a person would be presumed to be engaged in
the business when a person repetitively resells or offers for resale
firearms--
(i) within 30 days after the person purchased the firearms; or
(ii) within one year after the person purchased the firearms if
they are--
(A) new, or like new in their original packaging; or
(B) the same make and model, or variants thereof.

27 CFR 478.13(c). Additionally, 27 CFR 478.13(d)(2) identified seven
circumstances that create a presumption of intent to predominantly earn
a profit, which included, for example, when a person ``[p]urchases or
otherwise secures merchant services as a business (e.g., credit card
transaction services, digital wallet for business) through which the
person intends to repetitively accept payments for firearms
transactions.''
The EIB rule's stated intent was to (1) license more persons; (2)
deter others from engaging in the business without a license; (3)
increase the number of background checks by increasing the licensed
population; and (4) expand the reach of crime-gun trace requests by
increasing the licensed population. See 89 FR 28968.
With respect to the first two purposes, ATF's position is the
presumptions created by the EIB rule were largely unnecessary because
the statutory definition is readily comprehensible. For dealers, the
core of being engaged in the business requires the intent to profit
from the repeated buying and selling of firearms. In other words, a
person must be a wholesaler or retailer of new or used goods. For
example, a person who buys ten models of the same handgun, with the
predominant intent to resell for a profit, and then proceeds to sell
any number of them repetitively three days later at a flea market is
engaged in the business within the statutory definition. See 18 U.S.C.
921(a)(21)(C) (applying the definition of ``engaged in the business''
as a dealer). That person would be engaged in the business from the
moment he made repetitive sales with the intent to profit. Even if the
individual sold only two firearms, the individual intended to engage in
a course of business dealings and then began doing so. Courts have held
that such activity requires a license because the statute reaches those
who hold themselves out as retail sources of firearms.\11\ In contrast,
selling two firearms from a personal collection in two isolated
transactions does not rise to the level of engaging in the business
because there is no intent to engage in repetitive buying and selling
for profit.
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\11\ See United States v. King, 735 F.3d 1098, 1107 (9th Cir.
2013) (upholding conviction of defendant who attempted to sell one
firearm and represented to buyer that he could purchase more for
resale, and noting that ``Section 922(a)(1)(A) does not require an
actual sale of firearms''); United States v. Zheng Jian Shan, 90 F.
App'x 31 (9th Cir. 2003) (holding that evidence of sale of weapons
in one transaction where defendant demonstrated willingness and
ability to resell more weapons was enough to affirm conviction).
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More importantly, the existence of these presumptions created a
serious

[[Page 24427]]

risk of abuse in civil and administrative proceedings. The court of
appeals cases relied upon by the EIB rule used the strong form of
rebuttable presumptions: the fact will be presumed to exist until the
defendant offers enough evidence to disprove it. See 89 FR 29007. The
citations in the EIB rule indicate--or at the very least, raise the
risk that courts might erroneously conclude--that the EIB rule was
intended to do more than simply shift the burden of production.
Potentially shifting the burden of proof to the defendant raised
concerns among the regulated public, Members of Congress, and others
that ATF illegitimately attempted to relieve the Government of its
burden of proof in civil and administrative proceedings. Indeed, in
Texas v. ATF, the district court found the presumptions to be highly
problematic because ``they flip the statute on its head by requiring
that firearm owners prove innocence rather than the government prove
guilt.'' \12\ It further stated that ``[p]resumptions, especially in
administrative proceedings that may generate institution-destroying
liability, cannot be a matter of Department ipse dixit.'' \13\ Thus, on
further review, ATF agrees that the risk that the presumptions could
have been used erroneously to relieve the Government of its burden of
proof justifies discarding the presumptions.
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\12\ Texas v. ATF, 737 F. Supp. 3d at 442.
\13\ Id.
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While the Department disclaimed that the presumptions were designed
to relieve the Government of its burden of proof (and the EIB rule
stated that ``the rebuttable presumptions apply only to shift the
burden of production,'' 89 FR 29007), that disclaimer rests on a
questionable foundation. The presumptions all involved fact patterns
from which a fact finder could find that a person was engaged in the
business. Given that the presumptions already involved facts sufficient
to create a prima facie case, the defendant would already be exposed to
a legal judgment unless he came forward with sufficient facts to
explain the plaintiff's case. Switching only the burden of production
would have had no further effect. In light of the foregoing, the rule
could be reasonably perceived as shifting the burden to the individual
to disprove the presumption. At minimum, even if the EIB rule truly
meant to shift only the burden of production--and nothing else--then
the presumptions were unnecessary.
To be clear, discarding the presumptions does not mean that a
person who engages in behavior identified by the presumptions will not
be found to be engaged in the business. The actions identified by the
presumptions in EIB provide circumstantial evidence from which a fact
finder could potentially find that a person was engaged in the
business. Removing the EIB rule's legal presumptions simply prevents
this evidence from being given dispositive effect unless the firearm
seller can carry the burden of disproving that he was engaged in the
business.
Furthermore, ATF has not used the EIB rule's presumptions in civil
proceedings, showing they were in fact unnecessary in practice. An
anecdotal survey of ATF's field divisions uncovered no instances in
which the presumptions were cited in civil proceedings in the time
since the EIB rule became effective. ATF may revoke a license or deny a
renewal application in a civil administrative proceeding if the
licensee willfully violated 18 U.S.C. 922(a)(1)(A), which prohibits a
person from engaging in the business as a dealer without a license, or
aided and abetted others in willfully engaging in the business of
dealing in firearms without a license. Since publishing the EIB rule in
April 2024, ATF has brought two such proceedings against licensees. A
review of these proceedings reflects that none of the presumptions set
forth in 27 CFR 478.13 were cited or referenced by ATF in support of
these actions. Given that the presumptions have not actually proven to
be significant to or applied in ATF proceedings, and likewise do not
appear to have had the expected effect of increasing the number of
licensees, see infra, rescinding the presumptions is warranted to
preserve public confidence in ATF proceedings and avoid a perception
that such proceedings are or may be biased.
Moreover, mandatory presumptions have little role in the
enforcement of the GCA's provisions against dealing without a license.
The EIB rule suggested that the presumptions could be used ``to
determine whether to deny or revoke a federal firearms license.'' 89 FR
28969. But ATF's administrative adjudications, which usually involve
license revocations, operate only on those who are already licensed.
The EIB rule also suggested that they might have application ``in civil
asset forfeiture proceedings,'' 89 FR 28969, but ATF has no anecdotal
or statistical information that indicates it has used any of the
presumptions in a civil forfeiture matter involving dealing without a
license since the EIB rule was published. As a matter of policy, ATF
has concerns about seizing property through the use of regulatory
presumptions.
Individuals who engage in dealing without a license are primarily
subject to criminal sanction. In criminal proceedings, the presumptions
were intended to be useful to courts to the extent that jury
instructions could incorporate permissible inferences if the case
involved a fact pattern that matched one of the presumptions. 89 FR
28976, 28982, 29014. But ATF is not aware of the presumptions
facilitating criminal enforcement. As the EIB rule recognized, see 27
CFR 478.13(h), mandatory presumptions cannot be employed in criminal
proceedings. See Sandstrom v. Montana, 442 U.S. 510 (1979). Further, as
with the civil revocation proceedings mentioned above, ATF is not aware
of any criminal proceedings where presumptions have been invoked as
permissible inferences since the EIB rule was published. Instead of
presumptions or permissive inferences, judges may simply instruct
jurors on the factors relevant to determining whether someone is
engaged in the business--an instruction that judges already give. See,
e.g., Pattern Jury Instruction, 5th Circuit, 2024 922(a)(1)(A)
``engaged in the business''; \14\ Pattern Jury Instructions, 9th
Circuit, 14.3--922(a)(1)(A).\15\
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\14\ A number of factors may be considered in determining
whether a defendant was ``engaged in the business'' of dealing in
firearms, including: (1) the quantity and frequency of sales; (2)
the location of the sales; (3) conditions under which the sales
occurred; (4) the defendant's behavior before, during, and after the
sales; (5) the price charged; (6) the characteristics of the
firearms sold; and (7) the intent of the seller at the time of the
sales. United States v. Brenner, 481 F. App'x 124, 127 (5th Cir.
2012) (explaining that ``the jury must examine all circumstances''
in determining whether the defendant was ``engaged in the business''
of dealing in firearms); see also United States v. Garcia, No. 21-
51065, 2023 WL 116727, *1 (5th Cir. Jan. 5, 2023) (for recent
application).
\15\ The Government must prove beyond a reasonable doubt that a
defendant ``engaged in a greater degree of activity than the
occasional sale of a hobbyist or collector, and that [the defendant]
devoted time, attention, and labor to selling firearms'' as a trade
or business with the intent of making profits through the repeated
purchase and sale of firearms. See United States v. King, 735 F.3d
1098, 1106 (9th Cir. 2013) (quoting 18 U.S.C. 921(a)(21)(C)). For a
person to engage in the business of dealing in firearms, it is not
necessary to prove an actual sale of firearms.
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Definition's Scope

Other aspects of the EIB rule may create confusion around conduct
that falls outside the GCA's definition of being engaged in the
business. For example, as discussed in the EIB rule, courts have stated
that an isolated firearm transaction would not require a license when
other factors were not present.\16\ Nor are persons engaged in

[[Page 24428]]

the business when they engage in repeated sales of firearms if the
predominant intent is something other than earning a profit; for
example, collectors who buy and sell repeatedly to enhance their
personal collections. See 18 U.S.C. 921(a)(21)(C). In these
circumstances, the GCA does not require persons to obtain a license.
Congress made a considered judgment that it did not intend federal law
to extend to the noncommercial, intrastate market. See GCA, Public Law
90-618, sec. 101, 82 Stat. 1213, 1213-14 (1968) (reenacted chapter
analysis without change) (declaring that the GCA was enacted to
``provide for better control of the interstate traffic of firearms''
and that Congress' purpose in creating the GCA was ``not . . . to place
any undue or unnecessary federal restrictions or burdens on law-abiding
citizens with respect to the acquisition, possession, or use of
firearms'').
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\16\ 89 FR 28976 (citing United States v. Carter, 203 F.3d 187,
191 (2d Cir. 2000) (``A conviction under 18 U.S.C. 922(a) ordinarily
contemplates more than one isolated gun sale.'')); United States v.
Swinton, 521 F.2d 1255, 1259 (10th Cir. 1975) (``Swinton's sale [of
one firearm] to Agent Knopp, standing alone, without more, would not
have been sufficient to establish a violation of Section 922(a)(1).
That sale, however, when considered in conjunction with other facts
and circumstances related herein, established that Swinton was
engaged in the business of dealing in firearms.'' (internal citation
omitted)).
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ATF has been diligent in providing guidance to the licensed and
unlicensed communities to ensure they consistently apply the legal
standards associated with licensing requirements.\17\ Similarly, as the
EIB rule explained, there is an established set of case law that
clarifies the factors courts consider regarding whether an individual
needs to be licensed. See, e.g., 89 FR 28976-77, 28978-79, & nn.67-68,
72, 75-77, 82.
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\17\ See ATF, FFL Newsletter at 9 (July 2017), <a href="https://www.atf.gov/media/28911/download">https://www.atf.gov/media/28911/download</a> [<a href="https://perma.cc/34FE-F9TP">https://perma.cc/34FE-F9TP</a>] (gun
show guidelines); ATF, Important Notice to FFLs and Other
Participants at Gun Shows, ATF Information 5300.23A (Rev. June.
2021), <a href="https://www.atf.gov/firearms/docs/guide/important-notice-dealers-and-other-participants-gun-shows-atf-i-530023a/download">https://www.atf.gov/firearms/docs/guide/important-notice-dealers-and-other-participants-gun-shows-atf-i-530023a/download</a>
[<a href="https://perma.cc/4PSR-VVD8">https://perma.cc/4PSR-VVD8</a>]; ATF Revised Ruling 69-59, Sales of
firearms and ammunition at gun shows (1969), <a href="https://www.atf.gov/firearms/docs/ruling/1969-59-gunshow-sales-non-licensed-premises/download">https://www.atf.gov/firearms/docs/ruling/1969-59-gunshow-sales-non-licensed-premises/download</a> [<a href="https://perma.cc/A9D4-5RKZ">https://perma.cc/A9D4-5RKZ</a>]; ATF, How may a licensee
participate in the raffling of firearms by an unlicensed
organization?, https://www.atf.gov/firearms/questions-and-
answers?page=10 (last reviewed May 22, 2020); ATF, FFL Newsletter at
8-9 (June 2021), <a href="https://www.atf.gov/firearms/docs/newsletter/federal-firearms-licensee-ffl-newsletter-june-2021/download">https://www.atf.gov/firearms/docs/newsletter/federal-firearms-licensee-ffl-newsletter-june-2021/download</a>
(addressing conduct of business at firearm raffles); Letter for
Pheasants Forever, from Acting Chief, Firearms Programs Division,
ATF, at 1-2 (July 9, 1999) (addressing nonprofit fundraising
banquets); ATF, FFL Newsletter at 4-5 (Feb. 1999), <a href="https://www.atf.gov/media/28801/download">https://www.atf.gov/media/28801/download</a> [<a href="https://perma.cc/36R3-RCB9">https://perma.cc/36R3-RCB9</a>]
(addressing gun shows and events). See ATF, FFL Newsletter at 5-6
(June 2010), <a href="https://www.atf.gov/media/28856/download">https://www.atf.gov/media/28856/download</a> [<a href="https://perma.cc/LKC9-46BK">https://perma.cc/LKC9-46BK</a>] (flea market guidelines). See ATF, FFL
Newsletter at 8 (June 2021), <a href="https://www.atf.gov/firearms/docs/newsletter/federal-firearms-licensee-ffl-newsletter-june-2021/download">https://www.atf.gov/firearms/docs/newsletter/federal-firearms-licensee-ffl-newsletter-june-2021/download</a> [<a href="https://perma.cc/H5KY-5G9T">https://perma.cc/H5KY-5G9T</a>] (addressing internet sales of
firearms); ATF, FFL Newsletter at 3 (Sept. 2016), <a href="https://www.atf.gov/media/28906/download">https://www.atf.gov/media/28906/download</a> [<a href="https://perma.cc/KY89-FRMZ">https://perma.cc/KY89-FRMZ</a>]
(addressing brokering firearms for exportation); ATF, FFL Newsletter
at 6-7 (Mar. 2023); ATF, FFL Newsletter at 9 (June 2021), <a href="https://www.atf.gov/firearms/docs/newsletter/federal-firearms-licensee-ffl-newsletter-june-2021/download">https://www.atf.gov/firearms/docs/newsletter/federal-firearms-licensee-ffl-newsletter-june-2021/download</a> (discussing social media gun raffles)
[<a href="https://perma.cc/H5KY-5G9T">https://perma.cc/H5KY-5G9T</a>]; Letter for Outside Counsel to National
Association of Arms Shows, from Chief, Firearms and Explosives
Division, ATF, Re: Request for Advisory Opinion on Licensing for
Certain Gun Show Sellers at 1 (Feb. 17, 2017); ATF, ATF Federal
Firearms Regulations Reference Guide, ATF Publication 5300.4, Q&A
L1, at 207-08 (2014), <a href="https://www.atf.gov/firearms/docs/guide/federal-firearms-regulations-reference-guide-2014-edition-atf-p-53004/download">https://www.atf.gov/firearms/docs/guide/federal-firearms-regulations-reference-guide-2014-edition-atf-p-53004/download</a> [<a href="https://perma.cc/KD35-AEXU">https://perma.cc/KD35-AEXU</a>]; ATF, FFL Newsletter at
3 (May 2001), <a href="https://www.atf.gov/media/28811/download">https://www.atf.gov/media/28811/download</a> [<a href="https://perma.cc/46KY-3VUM">https://perma.cc/46KY-3VUM</a>] [ (addressing auctioning firearms); ATF, FFL
Newsletter at 7 (1990), <a href="https://www.atf.gov/media/28756/download">https://www.atf.gov/media/28756/download</a>
[<a href="https://perma.cc/L8QT-VTX6">https://perma.cc/L8QT-VTX6</a>] (addressing auctioning firearms); and
Letter for Editor, CarPac Publishing Company, from Acting Assistant
Director (Regulatory Enforcement), ATF, at 1-2 (July 26, 1979).
---------------------------------------------------------------------------

ATF recognizes that there is no bright line at which a person may
cross the threshold from engaging in personal sales to being engaged in
the business of dealing firearms. The GCA's definition of ``engaged in
the business'' is a standard, not a rule. The standard must be applied
to the factual scenario of each case. And as with any standard, there
are paradigm cases on either side, but no perfectly defined line
between them. Nor is there any magic number of sales that can make a
person ``engaged in the business.'' 89 FR 29016. Persons who sell two
firearms can be engaged in the business, if they couple that sale with
labor and intent to engage in repeated commercial transactions for
profit.\18\ Persons who sell 50 firearms may not be engaged in the
business if they are liquidating their personal collections, at least
in the absence of facts militating in the opposite direction.\19\ As
the Supreme Court has recognized, Congress may legislate ``us[ing]
imprecise terms,'' Sessions v. Dimaya, 548 U.S. 148, 159 (2018), or a
``qualitative standard,'' Johnson v. United States, 576 U.S. 591, 604
(2015).
---------------------------------------------------------------------------

\18\ See King, 735 F.3d at 1107.
\19\ See 18 U.S.C. 921(a)(22); see also, e.g., United States v.
Mulholland, 702 F. App'x 7, 12 (2d Cir. 2017) (``The definition does
not extend to a person who makes occasional sales for a personal
collection or hobby, id., and the government need only prove that a
person was `ready and able to procure [firearms] for the purpose of
selling them from time to time.' '' (quoting United States v.
Nadirashvili, 655 F.3d 114, 199 (2d Cir. 2011)). But see United
States v. Brenner, 481 F. App'x 124, 127 (5th Cir. 2012) (defendant
argued he was liquidating personal collection, but court held
engaged in the business due to facts on sales frequency, location,
profit margins, secretive sales and payments, and references to
firearms ``coming in'' or as ``brand new.'').
---------------------------------------------------------------------------

The core concept of being engaged in the business is clear: the
intent to engage in a course of repeated buying and selling
predominantly motivated by profit. 18 U.S.C. 921(a)(21)(C). Individuals
often meet this standard without question, particularly in cases that
lead to criminal prosecutions. In addition, criminal prosecutions under
the GCA require a showing of a willfulness mens rea, 18 U.S.C.
924(a)(1)(D), which requires showing that an individual acted with
knowledge that the individual's conduct was unlawful. See Bryan v.
United States, 524 U.S. 184, 189 (1998) (maintaining that ``the
willfulness requirement of Sec. 924(a)(1)(D) requires knowledge that
the conduct is unlawful''). With respect to EIB, Congress's preference
for an effort- and intent-based definition, over a bright numerical
threshold, does not merit retaining these presumptions as part of the
definition or other supposed clarifications in the EIB rule.
Increasing Licensees and Background Checks
Some critics incorrectly suggested that the prior Administration
used the EIB rule to try to establish ``universal background checks''
by expanding the statutory definition to capture additional
transactions as retail sales requiring a license.\20\ But, the GCA
allows a non-licensee to transfer a firearm to another non-licensee
within the same state without conducting a background check.\21\ Both
the GCA and FOPA left the noncommercial, intrastate market primarily
regulated by state law. BSCA did not change that basic decision. BSCA
was designed to provide clarification by changing the wording of the
statutory definition about when a person should be licensed. According
to BSCA's sponsors, the Act's change to the definition was driven by
``confusion about the GCA's definition of `engaged in the business,' as
it pertained to individuals who bought and resold firearms repetitively
for profit, but

[[Page 24429]]

possibly not as the principal source of their livelihood.'' \22\ The
sponsors ``maintain[ed] that these changes clarif[ied] who should be
licensed, eliminating a `gray' area in the law, ensuring that one
aspect of firearms commerce is more adequately regulated.'' \23\
---------------------------------------------------------------------------

\20\ See Devan Cole & Hannah Rabinowitz, Biden administration
finalizes rule to close `gun show loophole' in effort to combat gun
violence, CNN Politics (Apr. 11, 2024), <a href="https://www.cnn.com/2024/04/11/politics/gun-show-loophole-rule-finalized-biden-admin">https://www.cnn.com/2024/04/11/politics/gun-show-loophole-rule-finalized-biden-admin</a>; see also
Martha Minow, Not Born a Democracy: Constitutional Preconditions, 67
Wm. & Mary L. Rev. 135, 172 n.176 (2025) (explaining that the Biden
Administration intended the executive order ``to move the United
States as close to universal background checks as possible without
additional legislation'').
\21\ 18 U.S.C. 922(a)(3), (5) (requiring license to sell out of
State); 922(t) (requiring licensees to conduct a background check).
\22\ William J. Krouse, Cong. Rsch. Serv., IF12197, Firearms
Dealers ``Engaged in the Business'' 2 (2022).
\23\ Id.; 168 Cong. Rec. H5906 (daily ed. June 24, 2022)
(Statement of Rep. Jackson Lee) (``[O]ur bill would . . . further
strengthen the background check process by clarifying who is engaged
in the business of selling firearms and, as a result, is required to
run background checks.''); 168 Cong. Rec. S3055 (daily ed. June 22,
2022) (Statement of Sen. Murphy) (``We clarify in this bill the
definition of a federally licensed gun dealer to make sure that
everybody who should be licensed as a gun owner is. . . . [The
definition] is admittedly confusing. So we simplified that
definition and hope that will result--and I believe it will result--
in more of these frequent online gun sellers registering, as they
should, as federally licensed gun dealers which then requires them
to perform background checks.''); see also Letter for Director, ATF,
et al., from Sens. John Cornyn and Thom Tillis at 2-3 (Nov. 1, 2022)
(``BSCA provides more clarity to the industry for when someone must
obtain a federal firearms dealers license. In Midland and Odessa,
Texas, for example, the shooter--who at the time was prohibited form
possessing or owning a firearm under federal law--purchased a
firearm from an unlicensed firearms dealer.'').
---------------------------------------------------------------------------

The EIB rule thus could not, and did not, impose universal
background check requirements. And, as discussed, in light of Congress'
changes to carefully crafted clarifications of the statutory language
through BSCA's amendments, it is unnecessary to supplement or confuse
the statutory language with further regulatory language.
Additionally, ATF has determined that the rule proved ineffective
in its attempt to increase the number of dealer licenses. In the time
since the EIB rule went into effect, ATF has not seen an increase in
licenses and background checks. ATF has reviewed the number of new
applications the Federal Firearms Licensing Center received for Type 01
licenses (Dealer in Firearms Other Than Destructive Devices) for fiscal
years (``FYs'') 2021 through 2025, the four years preceding the EIB
rule, and the one year since the rule was published. See Table 1. Once
issued, a federal firearms license is valid for a three-year period
unless terminated sooner, so there are more total Type 01 licensees in
each year than the number of applications persons submit to ATF in the
same year. 18 U.S.C. 923(c), 27 CFR 478.49.

Table 1--Number of Type 01 Dealer Applications 2021-2025
------------------------------------------------------------------------
Type 01 Total type 01
Fiscal year applications licensees
------------------------------------------------------------------------
2021.................................... 7,445 52,993
2022.................................... 5,619 52,173
2023.................................... 4,544 50,314
2024.................................... 4,350 47,776
2025.................................... 4,160 46,072
------------------------------------------------------------------------

As Table 1 indicates, since FY 2021, there has been a decrease in
both applications for Type 01 licenses and the total number of Type 01
licensees in each fiscal year. The EIB rule was intended to facilitate
the recognition by more people that they must acquire a license, which
ATF expected would increase the number of persons becoming licensed as
dealers. However, that expected outcome has not occurred since the EIB
rule became effective. Instead, the number of Type 01 applications
filed after the EIB rule continued to decline, as did the number of
Type 01 licensees. In FY 2024, ATF received 4,350 Type 01 applications
and listed 47,776 Type 01 licensees. In FY 2025, ATF received a total
of 4,160 Type 01 applications and listed 46,072 Type 01 licensees. As a
result, contrary to ATF's intended expectation from the EIB rule, the
EIB rule did not result in an increase in Type 01 licensees.
Personal Collection
The EIB rule created a general definition of ``personal
collection'' in 27 CFR 478.11 to identify the kinds of firearms that
fall into the statutory exception to the definition of engaged in the
business. Section 478.13(a) states that the term ``engaged in the
business'' does not ``include a person who makes occasional sales,
exchanges, or purchases of firearms for the enhancement of a personal
collection or for a hobby, or who sells all or part of the person's
personal collection of firearms.'' This exception mirrors the statutory
text, which created this narrow, predetermined exception to the general
rule that applies to all firearms (and which still only requires a
license if a person devotes time, attention, and labor to repetitively
purchasing and reselling firearms in the regular course of business
with predominant intent to profit). This narrow statutory exception to
the general rule was created by Congress to recognize that persons who
collect firearms or own them for hobby purposes might occasionally
purchase and resell those firearms to enhance or liquidate their
collection and would be unlikely to be doing so as a profit-making
course of business.
The general rule in the statute sets out a test for determining
when firearms are being sold in such a manner as to qualify as being
engaged in the business. That test includes, as a key element,
intending predominantly to earn a profit from purchasing and reselling
firearms--without distinguishing what kind of firearm, who owns the
firearm, or listing all the other reasons persons might own the
firearms. It is only in the exception that Congress specified a
particular set of firearms owned for particular purposes--personal
collecting or hobbies--which, if resold only occasionally, would
automatically be treated as not being engaged in the business.
The EIB rule added two parts to the definition of ``personal
collection'' in Sec. 478.11. First, the rule defined ``personal
collection'' to mean ``[p]ersonal firearms that a person accumulates
for study, comparison, exhibition (e.g., collecting curios or relics,
or collecting unique firearms to exhibit at gun club events), or for a
hobby (e.g., noncommercial, recreational activities for personal
enjoyment, such as hunting, skeet, target, or competition shooting,
historical re-enactment, or noncommercial firearms safety
instruction).'' Second, the rule provided: ``In addition, the term
shall not include firearms accumulated primarily for personal
protection: Provided, that nothing in this definition shall be
construed as precluding a person from lawfully acquiring firearms for
self-protection or other lawful personal use.'' There are strong
arguments that the rule improperly attempted to narrow the categories
of accumulated firearms that would constitute a collection.
The EIB rule adopted a narrower conception of what purposes in
gathering firearms might qualify for a ``personal collection'' by
reading ``personal collection'' in 18 U.S.C. 921(a)(21)(C) with
reference to the definition of ``collector'' in section 921(a)(13). On
reflection, ATF believes that that interpretation overreads section
921(a)(13). Although the words have the same root (``collect''), the
definition of ``personal collection'' in section 921(a)(21)(C)
materially differs from the definition of ``collector'' in section
921(a)(13) because of the separate functions that each provision
serves. The function of ``collector'' and ``licensed collector'' in
paragraph (a)(13) is to designate a person who collects a limited class
of historical firearms (those defined as ``curios or relics''), for
which the GCA establishes special licensing rules to facilitate

[[Page 24430]]

noncommercial interstate buying and selling. In contrast, the function
of ``personal collection'' in section 921(a)(21)(C) is to create a safe
harbor for when an individual sells multiple firearms that he had
previously accumulated for personal, noncommercial use--with for
personal, noncommercial use being the key distinction. Consequently,
there is no inconsistency between understanding ``personal collection''
to mean firearms held by a person for private, noncommercial purposes,
while recognizing that certain types of collectors do not qualify as
statutory ``collectors'' and, thus, cannot utilize the special
licensing provisions for those who collect curio and relic firearms.
This definition also harmonizes the GCA provision for licensees to have
a ``personal collection of firearms,'' 18 U.S.C. 923(c)--that is,
firearms the licensee maintains for personal, noncommercial use.
The EIB rule rested its amendments, in part, on narrow definitions
of ``collection.'' See 89 FR 28980 and n.88 (relying on Merriam-
Webster's definition to restrict a personal collection to only those
objects ``gathered for study, comparison, or exhibition or as a
hobby''); 89 FR 29038, n.216 (relying on Encyclopedia Britannica's
definition, ``a group of interesting or beautiful objects brought
together in order to show or study them or as a hobby''). Given these
narrow definitions, the Department previously concluded that a personal
collection is limited to firearms ``that a person accumulates for
study, comparison, exhibition . . . , or for a hobby.'' 27 CFR 478.11.
Indeed, the Department specifically excluded ``firearms accumulated
primarily for personal protection'' as not part of a personal
collection. Id.
ATF now believes that the definitions identified by the EIB rule
are too restrictive. Individuals are engaged in the business when their
relationship with the firearms is primarily commercial--they are buying
and selling for profit rather than for personal, noncommercial use for
self-defense, target shooting, gun collecting, hunting, and other
lawful uses. To avoid any contrary suggestion, ATF proposes rescinding
subsection (1) of the definition.
Although ATF proposes rescinding subsection (1) of the definition
of ``personal collection,'' ATF believes subsection (2) of the
definition, which defines licensee personal collections, clearly and
informatively sets out the actions licensees can take to distinguish a
personal firearm from a business one and comply with 18 U.S.C.
921(a)(21)(C). This aspect of the definition provides greater clarity
that aids the public in complying with the statute, and ATF is
therefore proposing to retain this portion of the definition.
Former Licensee Inventory
In conjunction with the licensee personal collection definition,
the EIB rule also added a definition in Sec. 478.11 for ``former
licensee inventory'' and set out guidelines a licensee must follow to
dispose of its firearms inventory when it is discontinuing business,
particularly if its license is revoked. The regulation treats all
firearms purchased as part of a licensee's business inventory while
licensed as retaining that classification indefinitely because ``they
were purchased repetitively before the license was terminated as part
of a licensee's business inventory with the predominant intent to earn
a profit.'' This definition, together with Sec. Sec. 478.57
(discontinuance of business) and 478.78 (operations by licensee after
notice), limits a former licensee to disposing of the inventory within
30 days after it discontinues business and effectively prevents former
licensees from reclassifying inventory purchased repetitively with the
intent to resell for profit while licensed as personal firearms in a
``personal collection'' after they become unlicensed. See 27 CFR
478.57(b)(2) (providing that a licensee may ``[t]ransfer the former
licensee inventory to a responsible person of the former licensee to
whom the receipt, possession, sale, or other disposition is not
prohibited by law,'' but that any such transfer ``does not negate the
fact that the firearms were repetitively purchased, and were purchased
with the predominant intent to earn a profit by repetitive purchase and
resale''). The EIB rule explicitly authorized former licensees to sell
firearms only (1) ``within 30 days [of termination of a license], or
such additional period approved by the Director for good cause,'' or
(2) on an ``occasional'' basis ``thereafter to a licensee.'' 27 CFR
478.78(b)-(c). In other words, outside the 30-day window (and barring
an extension for good cause), former licensees were restricted from
selling business inventory to anyone, except for occasional sales to
current FFLs.
Although some process for addressing the inventory of former
licensees is appropriate, the effectively permanent restraint on
firearms sales after the 30-day period is arguably unlawful. For
example, upon winding down operations, a former licensee could absorb
twenty firearms from his business inventory into his personal
collection in good faith. A former licensee who sold one or two such
firearms years later to a non-licensee would not be engaged in the
business under the statutory definition, and the GCA does not by its
terms restrict occasional sales of such firearms only to other FFLs.
Such conduct stands in contrast to a former licensee who immediately
continues selling firearms acquired as business inventory in repeated
transactions after his license is discontinued. ATF recognizes concerns
about former licensees attempting to hold ``fire sales'' of large
swathes of inventory without adhering to recordkeeping and background
check requirements. However, such scenarios are clearly covered by
statutory language, which prohibits engaging in the business without a
license.\24\ By contrast, a situation where a former licensee sells an
occasional firearm in a private sale years later does not constitute
the repetitive purchasing and selling that the GCA was intended to
cover. The GCA does not authorize former licensees to engage in the
business. But it also does not impose encumbrances on all firearms that
were previously part of a business's inventory.
---------------------------------------------------------------------------

\24\ See Gilbert v. Bangs, 481 F. App'x 52 (4th Cir. 2012);
United States v. Kish, 424 F. App'x 398 (6th Cir. 2011).
---------------------------------------------------------------------------

For all these reasons, this rule proposes to amend regulations in
27 CFR part 478 that were created or changed by the EIB rule as
described below.

B. Proposed Revisions

For the reasons discussed above, ATF is proposing the following
regulatory changes related to the definition of engaged in the business
as a dealer as implemented in Sec. Sec. 478.11 and 478.13 via the EIB
rule. ATF proposes to (1) move the current definition of ``engaged in
the business as a dealer in firearms other than a gunsmith or
pawnbroker,'' set forth in Sec. Sec. 478.13(a) to 478.11, and (2)
rescind Sec. 478.13(b)-(h). Paragraphs (b) through (h) of Sec. 478.13
include: (b) a statement that whether a person is engaged in the
business as a dealer in firearms other than a gunsmith or a pawnbroker
is a fact-specific inquiry, (c) specific fact-patterns establishing
presumption that a person is engaged in the business as a dealer, (d)
the definition of ``predominantly earn a profit,'' (e) a list of
conduct that does not support a presumption, (f) evidence that may be
used to rebut a presumption, (g) clarification that itemized
presumptions, conduct, and rebuttal evidence are not exhaustive

[[Page 24431]]

lists, and (h) clarification that the rebuttable presumptions do not
apply to criminal proceedings.
ATF also proposes to retain the definition of ``predominantly earn
a profit'' from Sec. 478.13, with some revisions, and move it to Sec.
478.11. The rest of Sec. 478.13 would be removed, except as provided
in the following paragraph. ATF is also proposing to change the
definition of ``personal collection'' and remove the definition of
``former licensee inventory,'' both in Sec. 478.11. These proposed
changes are described in detail below.
ATF proposes removing all of Sec. 478.13 except: (1) the portion
of the definition of ``engaged in the business as dealer in firearms
other than gunsmith or pawnbroker'' that duplicates statutory language
in 18 U.S.C. 921(a)(21)(C); (2) the added exception for auctioneers who
provide only auction services on a commission by assisting persons to
liquidate firearms in an estate-type sale; \25\ and (3) a revised
version of the definition of ``predominantly earn a profit.'' Because
these remaining portions of Sec. 478.13 would no longer be long enough
to warrant a separate definition section, ATF proposes moving all three
of these remaining portions from Sec. 478.13 to Sec. 478.11 (meaning
of terms), where other relatively short definitions are located.
---------------------------------------------------------------------------

\25\ See ATF, Does an Auctioneer Who Is Involved in Firearms
Sales Need a Dealer's License?, <a href="https://www.atf.gov/firearms/questions-and-answers?page=2">https://www.atf.gov/firearms/questions-and-answers?page=2</a> (last reviewed July 10, 2020); ATF, ATF
Federal Firearms Regulations Reference Guide, ATF Publication
5300.4, Q&A L1, at 207-08 (2014), <a href="https://www.atf.gov/firearms/docs/guide/federal-firearms-regulations-reference-guide-2014-edition-atf-p-53004/download">https://www.atf.gov/firearms/docs/guide/federal-firearms-regulations-reference-guide-2014-edition-atf-p-53004/download</a> [<a href="https://perma.cc/KD35-AEXU">https://perma.cc/KD35-AEXU</a>]; ATF, FFL Newsletter
at 3 (May 2001), <a href="https://www.atf.gov/media/28811/download">https://www.atf.gov/media/28811/download</a> [<a href="https://perma.cc/46KY-3VUM">https://perma.cc/46KY-3VUM</a>] ; ATF Ruling 96-2, Engaging in the Business of
Dealing in Firearms (Auctioneers) (Sept. 1996), <a href="https://www.atf.gov/file/55456/download">https://www.atf.gov/file/55456/download</a> [<a href="https://perma.cc/RCJ2-QA9H">https://perma.cc/RCJ2-QA9H</a>]; ATF, FFL
Newsletter at 7 (1990), <a href="https://www.atf.gov/media/28756/download">https://www.atf.gov/media/28756/download</a>
[<a href="https://perma.cc/L8QT-VTX6">https://perma.cc/L8QT-VTX6</a>]; Letter for Editor, CarPac Publishing
Company, from Acting Assistant Director (Regulatory Enforcement),
ATF, at 1-2 (July 26, 1979).
---------------------------------------------------------------------------

ATF would place the definition of engaged in the business as a
dealer under paragraph (3) in the definition of ``engaged in the
business,'' and the existing language in paragraph (3), which
references Sec. 478.13, would be removed. The paragraph would retain
the same heading and would read, ``A person who devotes time,
attention, and labor to dealing in firearms as a regular course of
trade or business to predominantly earn a profit through the repetitive
purchase and resale of firearms. The term does not include a person who
makes occasional sales, exchanges, or purchases of firearms to enhance
a personal collection or for a hobby, or who sells all or part of the
person's personal collection of firearms.''
ATF would also move the auctioneer exception to paragraph (3)
within the definition of ``engaged in the business'' under Sec.
478.11, at the end of the new paragraph described above. Historically,
licensees and non-licensees seeking guidance on the proper and lawful
way to liquidate firearms, both in the regular course of their business
or as an isolated occurrence, have commonly raised questions about
auctioneers. Because ATF has regularly provided consistent guidance on
what type of auction activity crosses the threshold to constitute
engaging in the business of dealing in firearms, the portion of the
definition that incorporates that exception into the regulation
provides definitional clarity to the public and licensed community.
Therefore, ATF proposes retaining the portion of Sec. 478.13 that
codifies ATF's historical position, thus ensuring consistency for
industry members. Modifying or removing this part of the definition
would likely cause undue and unnecessary confusion. This proposed
change would therefore add the following text to the end of paragraph
(3): ``In addition, the term does not include an auctioneer who
provides only auction services on commission to assist in liquidating
firearms at an estate-type auction, as long as the auctioneer does not
purchase the firearms or take possession of the firearms for sale or
consignment.''
ATF would move the text of the definition in Sec. 478.13 of
``predominantly earn a profit'' to a location under the same
definitional heading in Sec. 478.11, and it would remove the text
currently under that heading, which references Sec. 478.13. It is
necessary to retain this definition to distinguish between, on the one
hand, what constitutes engaging in the business as a dealer in firearms
other than a gunsmith or pawnbroker; and, on the other hand, engaging
in the business as a gunsmith, pawnbroker, manufacturer, or importer--
all of which continue to require the ``principal objective of
livelihood and profit'' that applied to dealers prior to BSCA. The
definition of ``predominantly earn a profit'' tracks the statutory
definition; however, ATF proposes making a minor change to one sentence
of the definition, so it is easier to read, without changing the
meaning. Specifically, ATF proposes changing the sentence, ``Provided,
that proof of profit, including the intent to profit, shall not be
required as to a person who engages in the regular and repetitive
purchase and disposition of firearms for criminal purposes or
terrorism,'' to ``However, proof of profit, including the intent to
profit, is not required in cases in which the person engaged in regular
and repetitive purchase and disposition of firearms for criminal
purposes or terrorism.'' This change is in line with one of the
purposes for ATF's implementing regulations, which is to aid the public
in understanding and complying with statutory provisions, and it is
consistent with laws requiring plain writing. It does not modify or
expand on the statutory meaning.
In addition, ATF proposes to remove the last sentence of the
definition as it currently exists in Sec. 478.13, which reads, ``For
purposes of this section, a person may have the intent to profit even
if the person does not actually obtain the intended pecuniary gain from
the sale or disposition of firearms,'' because this sentence is not in
the statutory definition. The proposed new definition of
``predominantly earn a profit'' would thus be ``The intent underlying
the sale or disposition of firearms is predominantly one of obtaining
pecuniary gain, as opposed to other intents, such as improving or
liquidating a personal firearms collection. However, proof of profit,
including the intent to profit, is not required in cases in which the
person engaged in the regular and repetitive purchase and disposition
of firearms for criminal purposes or terrorism.''
In addition to the above changes to Sec. 478.13, ATF proposes two
changes directly to Sec. 478.11. Specifically, for the reasons
discussed in section II.A of this preamble, ATF proposes removing
paragraph (1) of the definition of ``personal collection (or personal
collection of firearms, or personal firearms collection),'' moving
paragraph (2) up to replace paragraph (1) with changes necessary to
conform it to regulatory paragraph designations, changing the
definition's title to reflect the remaining content, and removing the
definition ``former licensee inventory'' entirely. The proposed heading
for the definition of ``personal collection (or personal collection of
firearms, or personal firearms collection)'' would instead be
``licensee personal collection (or personal collection of licensee).''
The rest of the definitional text would remain the same as currently in
Sec. 478.13, but the paragraph designation would change because it
would no longer be paragraph (2).
In addition, the rule proposes to make changes to Sec. 478.57
(Discontinuance of business). The proposed rule would

[[Page 24432]]

remove from paragraphs Sec. 478.57(b)(2) and (c) the relevant
sentences that effectively restrict former licensees from reselling
their firearms without being presumed to be engaged in the business.
Specifically, it would remove from Sec. 478.57(b)(2) the sentence that
reads: ``Any such transfer, however, does not negate the fact that the
firearms were repetitively purchased, and were purchased with the
predominant intent to earn a profit by repetitive purchase and
resale.'' And it would remove from Sec. 478.57(c) the second sentence
that provides that a former FFL who resells any of its former business
inventory is subject to the provisions of Sec. 478.13. Because this
rule proposes to remove Sec. 478.13, the provisions in these
paragraphs would no longer be relevant. And because these provisions
are also found in Sec. 478.78 (Operations by licensee after notice),
this rule proposes to remove from Sec. 478.78(b)(2) and (c) the same
sentences.

III. Statutory and Executive Order Review

A. Executive Orders 12866 and 13563

Executive Order 12866 (Regulatory Planning and Review) directs
agencies to assess the costs and benefits of available regulatory
alternatives and, if regulation is necessary, to select regulatory
approaches that maximize net benefits.
Executive Order 13563 (Improving Regulation and Regulatory Review)
emphasizes the importance of agencies quantifying both costs and
benefits, reducing costs, harmonizing rules, and promoting public
flexibility.
This proposed rule would retain the definition of ``engaged in the
business'' as specifically revised and defined in BSCA. In addition,
this proposed rule would revise 27 CFR 478.13 to rescind paragraphs
(b)-(h), which includes rebuttable presumption fact patterns as to
whether a person is engaged in the business as a dealer and whether a
person has predominant intent to profit, a list of conduct that does
not support a presumption, evidence that may be used to rebut a
presumption, and other provisions related to applying the presumptions.
In addition, the rule also proposes to retain the definition of
``predominantly earn a profit'' with some revisions, to change the
definition of ``personal collection'' to apply only to licensee
personal collections and remove the definition of ``former licensee
inventory.'' These provisions were included in the EIB rule to aid
persons in understanding and applying the statutory change from BSCA.
In addition, the EIB rule did not result in the anticipated increase in
the number of licensees. As a result, removing or revising these
additional provisions does not generate a cost to the public.
The Office of Management and Budget (``OMB'') has determined that,
although this rule would not be economically significant under section
(3)(f)(1) of Executive Order 12866, it would be a ``significant
regulatory action'' under the Order. OMB has therefore reviewed this
rule. ATF provides the following analysis to comply with Executive
Orders 12866 and 13563. This proposed rule would revert the definition
of ``engaged in the business'' to the one outlined specifically by
statute, without the additional provisions added by the previous rule.
As a result, this proposed rule would provide qualitative benefits to
the public in the form of reduced confusion and reduced concerns about
perceived risk of over-enforcement, as well as qualitative costs in the
form of potential increase in persons who should be licensed remaining
unlicensed. This rule would not create quantifiable costs or burdens
for the public.
1. Need Statement
The EIB rule included provisions in addition to the statutory
definitional change from BSCA, and those provisions did not result in
the projected increase in licensees. As illustrated in Table 2, the
number of all FFL applications has been decreasing since 2021. Between
the time the NPRM for the EIB rule was published in 2023 and was later
finalized in 2024, the number of applications for all FFLs decreased
overall.

Table 2--Number of FFL Applications by Year
------------------------------------------------------------------------
FFL
Year applications
------------------------------------------------------------------------
2020.................................................... 12,537
2021.................................................... 13,879
2022.................................................... 10,811
2023.................................................... 9,237
2024.................................................... 8,679
2025.................................................... 8,648
------------------------------------------------------------------------

The intended clarifying provisions instead created confusion and
raised concerns by commenters on the rule that the provisions could be
misapplied and misunderstood in ways that would constitute violations
of law. As a result, ATF has determined that these provisions should be
removed or revised and that the definition of engaged in the business
as a dealer should be primarily limited to the statutory definition.
The only way to make these regulatory adjustments is through a
rulemaking.
2. Cost Savings
This proposed rule would align with the definition of ``engaged in
the business'' as defined in the statute. As discussed in section II.A
of this preamble, many firearms sales fall outside the GCA's definition
of being engaged in the business. Nor are persons engaged in the
business if they repeatedly buy and sell primarily in order to maintain
and enhance their personal firearms collection rather than for profit.
One of the qualitative cost savings of the proposed rule is that it
would reduce confusion and reduce the perceived risk of over-
enforcement. ATF, however, lacks the data necessary to quantify such
savings.
Based on the historical data in Table 1 above, there were no
incremental increases in FFL dealer applications in the year and a half
since the EIB rule was published; therefore, the projected costs of
that original rule, see 89 FR 29072-73 (analyzing expected costs for
unlicensed persons to become licenses), were not incurred. Furthermore,
this rule would maintain the minimum definitions as required by the
statute. Costs arising from these statutory definitions were already
accounted for in the EIB rule. As a result, this proposed rule would
not have any quantifiable monetary cost savings.
3. Disbenefits
Potential qualitative disbenefits (i.e., adverse impacts) to this
proposed rule may include a de minimis increase in risk to public
safety. In the EIB rule, ATF described conditions in which an
individual might be considered ``engaged in the business'' of selling
firearms. Some individuals who might have been active firearms sellers
prior to the EIB rule might have refrained from selling firearms after
the EIB rule out of concern that their conduct rose to the level of
being ``engaged in the business'' because it would subject them to the
GCA's requirements (e.g., record-keeping, conducting background checks,
inspections). If parts of the regulations implemented by the EIB rule
are rescinded, these persons might resume selling firearms actively
without becoming licensed, just as they had prior to publication of the
EIB rule. This could mean that any risks regarding unlicensed sellers
that Congress perceived when initially enacting the GCA would not be
addressed through regulations clarifying the GCA's requirements.

[[Page 24433]]

4. Regulatory Alternatives
Alternative 1. Maintaining the Status Quo (the No-Action Alternative)
During the previous Administration, ATF published the EIB rule, in
which ATF included the statutorily revised definition of engaged in the
business as a dealer and additional regulatory provisions to further
define and clarify the term and how persons could determine its
application. Upon further consideration, ATF has determined that the
ensuing confusion from these additional provisions may impose
additional risks on members of the public, who might interpret the rule
as prohibiting them from purchasing firearms for self-defense or
protection and might make them feel chilled in purchasing and reselling
personal firearms occasionally without predominant intent to profit, as
intended by Congress. Because these provisions were added to ATF's
regulations, they would remain in effect unless ATF were to engage in
rulemaking to revise them. Therefore, ATF rejects maintaining the
status quo as an alternative due to the risk of chilling lawful
firearms activities.
Alternative 2. Rulemaking (the Proposed Alternative)
ATF considered the alternative of rulemaking to revise or remove
non-statutorily required provisions in the current regulatory
definition of engaged in the business as a dealer. This would cause the
regulatory definition to consist primarily of the statutory definition
as revised by Congress in BSCA. Based on historical data, there would
be no additional quantifiable costs or benefits incurred to the public
from this proposed alternative. Revising these regulatory provisions
may reduce confusion that the added regulatory provisions may have
caused; however, it could conversely increase risk from active sellers,
who are not licensed, who resume sales and thus do not conduct
background checks to ensure that prohibited persons do not acquire
firearms on the secondary market. Nevertheless, ATF believes that the
potential impact on public safety is de minimis. A solution, such as
guidance, would not have the same effect on existing regulatory
provisions, as guidance cannot contradict the regulations. As a result,
ATF has determined that rulemaking is the best alternative and the only
way to remove the provisions that were causing confusion.
Alternative 3. Issuing Guidance
This alternative was considered but rejected. While this
alternative would not impose any additional costs, it would not rescind
the presumptions currently published in regulation or correct the other
issues with the regulatory supplement to the ``engaged in the
business'' definition. As mentioned above, maintaining the legal
presumptions in regulations would continue to create concerns among the
regulated public that ATF is illegitimately attempting to relieve the
Government of its burden of proof in civil and administrative
proceedings. One court has already opined that the presumptions are
highly problematic because ``they flip the statute on its head by
requiring that firearm owners prove innocence rather than the
government prove guilt.'' \26\ Thus, ATF has determined that removing
presumptions from the regulations avoids the risk that, in real-world
practice, the presumptions could have been used to relieve the
Government of its burden of proof. Leaving the presumptions in the
regulations while issuing guidance alone would not remedy the problems
as discussed. Therefore, issuing guidance as an alternative in lieu of
removing the regulatory language at issue was rejected.
---------------------------------------------------------------------------

\26\ Texas v. ATF, 737 F. Supp. 3d at 442.
---------------------------------------------------------------------------

B. Executive Order 14192

Executive Order 14192 (Unleashing Prosperity Through Deregulation)
requires an agency, unless prohibited by law, to identify at least ten
existing regulations to be repealed or revised when the agency publicly
proposes for notice and comment or otherwise promulgates a new
regulation that qualifies as an Executive Order 14192 regulatory action
(defined in OMB Memorandum M-25-20 as a final significant regulatory
action under section 3(f) of Executive Order 12866 that imposes total
costs greater than zero). In furtherance of this requirement, section
3(c) of Executive Order 14192 requires that any new incremental costs
associated with such new regulations must, to the extent permitted by
law, also be offset by eliminating existing costs associated with at
least ten prior regulations. However, this proposed rule would not be
an Executive Order 14192 regulatory action. Although it would be a
significant regulatory action as defined by Executive Order 12866, it
would not impose total costs greater than zero. This proposed rule
would provide qualitative benefits by reducing confusion and concerns
about perceived over-enforcement, specifically entailing qualitative
benefits to current and future firearm owners. Although it is possible
that removing the proposed provisions would result in some risk to
public safety from persons who would no longer feel constrained in
dealing in firearms without a license, such a risk is qualitative and
speculative, imposing no quantifiable costs. Therefore, as discussed
above, this rule would not impose any additional quantifiable monetized
costs, and total costs would be less than zero. ATF therefore expects
this rule, if finalized as proposed, to qualify as an Executive Order
14192 deregulatory action (defined by OMB Memorandum M-25-20 as a final
action that imposes total costs less than zero).

C. Executive Order 14294

Executive Order 14294 (Fighting Overcriminalization in Federal
Regulations) requires agencies promulgating regulations with criminal
regulatory offenses potentially subject to criminal enforcement to
explicitly describe the conduct subject to criminal enforcement, the
authorizing statutes, and the mens rea standard applicable to each
element of those offenses. This proposed rule would not create a
criminal regulatory offense and is thus exempt from Executive Order
14294 requirements.

D. Executive Order 13132

This proposed rule would not have substantial direct effects on the
states, the relationship between the federal Government and the states,
or the distribution of power and responsibilities among the various
levels of government. Therefore, in accordance with section 6 of
Executive Order 13132 (Federalism), the Director has determined that
this proposed rule would not impose substantial direct compliance costs
on state and local governments, preempt state law, or meaningfully
implicate federalism. It thus does not warrant preparing a federalism
summary impact statement.

E. Executive Order 12988

This proposed rule meets the applicable standards set forth in
sections 3(a) and 3(b)(2) of Executive Order 12988 (Civil Justice
Reform).

F. Regulatory Flexibility Act

Under the Regulatory Flexibility Act (``RFA''), 5 U.S.C. 601-612,
agencies are required to conduct a regulatory flexibility analysis of
any proposed rule subject to notice-and-comment rulemaking requirements
unless the agency head certifies, including a

[[Page 24434]]

statement of the factual basis, that the proposed rule would not have a
significant economic impact on a substantial number of small entities.
Small entities include certain small businesses, small not-for-profit
organizations that are independently owned and operated and are not
dominant in their fields, and governmental jurisdictions with
populations of less than 50,000.
The Director certifies, after consideration, that this proposed
rule would not have a significant economic impact on a substantial
number of small entities. This proposed rule is deregulatory and would
not impose any additional costs, including on small entities. The
proposed rule would remove or amend certain provisions related to the
definition of engaged in the business as a dealer, the provisions of
which expanded the scope of the definition beyond the statute. The
confusion and perceptions about these provisions have caused many
individuals to believe they might have to obtain a license in order to
sell personal firearms from their personal collections, for example.
Although the EIB rule anticipated that the rule would cause some
persons operating unlicensed small businesses to become licensed as
dealers of firearms, ATF--as explained above in section II.A of this
preamble--has not observed an actual increase in the rate of licensure
since the issuance of the EIB rule. In light of the EIB rule's apparent
lack of effect on the operation of small businesses, ATF does not
believe that repealing certain provisions of EIB rule as proposed in
this rule would affect such businesses. Therefore, ATF does not believe
that this proposed rule, if finalized, would have a significant
economic impact on a substantial number of small entities. ATF
nonetheless welcomes comments on any potential effects of this proposed
rule on small entities.

G. Unfunded Mandates Reform Act of 1995

This proposed rule does not include a federal mandate that might
result in the expenditure by state, local, and tribal governments, in
the aggregate, or by the private sector, of $100 million or more in any
one year, and it would not significantly or uniquely affect small
governments. Therefore, ATF has determined that no actions are
necessary under the provisions of the Unfunded Mandates Reform Act of
1995.

H. Paperwork Reduction Act of 1995

Under the Paperwork Reduction Act of 1995 (``PRA''), 44 U.S.C.
3501-3521, agencies are required to submit to OMB, for review and
approval, any information collection requirements a rule creates or any
impacts it has on existing information collections. An information
collection includes any reporting, recordkeeping, monitoring, posting,
labeling, or other similar actions an agency requires of the public.
See 5 CFR 1320.3(c). This proposed rule would impact four existing
information collections covered under the PRA. Although this rule
involves the existing information collections, the proposed changes to
the rule would not add to or change the burden imposed on the
information collection respondent as compared to existing, OMB-approved
requirements.
Licensing Information Collection Requirements (``ICRs'')
Numbers and titles: OMB control number 1140-0018, Application for a
Federal Firearms License, ATF Form 5310.12/5310.16 (``Form 7/7CR''),
and OMB control number 1140-0019, Application for a Federal Firearms
License--Renewal Application, ATF Form 5310.11 (``Form 8'').
Abstract: 18 U.S.C. chapter 44 prohibits any person from engaging
in the business of importing, manufacturing, or dealing in either
firearms or ammunition without first obtaining a license to do so.
These activities are licensed for a specific period. The statute also
provides for a collector's license. Persons who need to obtain a
license submit Form 7/7CR to ATF, and licensees who wish to continue to
engage in the aforementioned firearms activities without interruption,
must renew their license by filing Form 8 before the current license
period expires.
Purpose: ATF uses Form 7 to identify the applicant and determine
eligibility to obtain a firearms license, and ATF uses Form 8 to
identify the applicant and determine eligibility to retain the license.
Without these information collections, ATF would not be able to issue
or renew licenses to persons required by law to have a license to
engage in the business of dealing in firearms or shipping or
transporting firearms in interstate or foreign commerce in support of
that business, or acquire curio and relic firearms from out of state.
The proposed rule does not change the requirements or purposes covered
under these information collections.
Recordkeeping ICRs
Numbers and titles: OMB control number 1140-0020, Firearms
Transaction Record, ATF Form 5300.9 (``Form 4473''), and OMB control
number 1140-0032, Records of Acquisition and Disposition, Dealers of
Type 01/02 Firearms, and Collectors of Type 03 Firearms.
Abstract: 18 U.S.C. 922 and 923, and implementing regulations at 27
CFR 478.124, prohibit certain persons from shipping, transporting,
receiving, or possessing firearms. All persons, including FFLs, are
therefore prohibited from transferring firearms to such persons. FFLs
are also subject to additional restrictions on disposing of a firearm
to an unlicensed person under the GCA. For example, age and State of
residence also determine whether a person may lawfully receive a
firearm. Form 4473 enables FFLs to determine if they may lawfully sell
or deliver a firearm to the prospective transferee, and to alert the
buyer or other transferee of certain restrictions on receiving and
possessing firearms. The licensee must determine the transaction's
lawfulness and maintain proper records of the transaction. The GCA, 18
U.S.C. 923, also requires that licensees must keep records of each
firearm they acquire and dispose of, and ATF implementing regulations
in 27 CFR 478.23(c)(1) and (2) set forth the details required for those
records, which are in addition to the Form 4473, the purpose of which
is primarily for a licensee to determine whether the requested sale is
lawful.
Purpose: The Form 4473 information collection aids licensees in
obtaining the necessary information from which to make that
determination and to use when submitting a required NICS background
check, and also serves as a record of the transaction, all of which are
necessary for the licensee to comply with the statutory requirements.
The acquisition and disposition record-keeping requirements ICR permits
ATF to examine records during inspections to ensure that licensees are
complying with statutory and regulatory requirements, and also serve as
records licensees may search in response to a crime-gun trace request
from law enforcement agencies conduction investigations into crimes in
which a firearm was used.

IV. Public Participation

A. Comments Sought

ATF requests comments on the proposed rule from all interested
persons. ATF specifically requests comments on the clarity of this
proposed rule and how it may be made easier to understand. In addition,
ATF requests comments on the costs or benefits of the proposed rule and
on the

[[Page 24435]]

appropriate methodology and data for calculating those costs and
benefits.
All comments must reference this document's RIN 1140-AB01 and, if
handwritten, must be legible. If submitting by mail, you must also
include your complete first and last name and contact information. If
submitting a comment through the federal e-rulemaking portal, as
described in section IV.C of this preamble, you should carefully review
and follow the website's instructions on submitting comments. Whether
you submit comments online or by mail, ATF will post them online. If
submitting online as an individual, any information you provide in the
online fields for city, state, zip code, and phone will not be publicly
viewable when ATF publishes the comment on <a href="https://www.regulations.gov">https://www.regulations.gov</a>.
However, if you include such personally identifying information
(``PII'') in the body of your online comment, it may be posted and
viewable online. Similarly, if you submit a written comment with PII in
the body of the comment, it may be posted and viewable online.
Therefore, all commenters should review section IV.B of this preamble,
``Confidentiality,'' regarding how to submit PII if you do not want it
published online. ATF may not consider, or respond to, comments that do
not meet these requirements or comments containing excessive profanity.
ATF will retain comments containing excessive profanity as part of this
rulemaking's administrative record, but will not publish such documents
on <a href="https://www.regulations.gov">https://www.regulations.gov</a>. ATF will treat all comments as
originals and will not acknowledge receipt of comments. In addition, if
ATF cannot read your comment due to handwriting or technical
difficulties and cannot contact you for clarification, ATF may not be
able to consider your comment.
ATF will carefully consider all comments, as appropriate, received
on or before the closing date.

B. Confidentiality

ATF will make all comments meeting the requirements of this
section, whether submitted electronically or on paper, and except as
provided below, available for public viewing on the internet through
the federal e-rulemaking portal, and subject to the Freedom of
Information Act (5 U.S.C. 552). Commenters who submit by mail and who
do not want their name or other PII posted on the internet should
submit their comments with a separate cover sheet containing their PII.
The separate cover sheet should be marked with ``CUI//PRVCY'' at the
top to identify it as protected PII under the Privacy Act. Both the
cover sheet and comment must reference this RIN 1140-AB01. For comments
submitted by mail, information contained on the cover sheet will not
appear when posted on the internet but any PII that appears within the
body of a comment will not be redacted by ATF and may appear on the
internet. Similarly, commenters who submit through the federal e-
rulemaking portal and who do not want any of their PII posted on the
internet should omit such PII from the body of their comment and any
uploaded attachments. However, PII entered into the online fields
designated for name, email, and other contact information will not be
posted or viewable online.
A commenter may submit to ATF information identified as proprietary
or confidential business information by mail. To request that ATF
handle this information as controlled unclassified information
(``CUI''), the commenter must place any portion of a comment that is
proprietary or confidential business information under law or
regulation on pages separate from the balance of the comment, with each
page prominently marked ``CUI//PROPIN'' at the top of the page.
ATF will not make proprietary or confidential business information
submitted in compliance with these instructions available when
disclosing the comments that it receives, but will disclose that the
commenter provided proprietary or confidential business information
that ATF is holding in a separate file to which the public does not
have access. If ATF receives a request to examine or copy this
information, it will treat it as any other request under the Freedom of
Information Act (5 U.S.C. 552). In addition, ATF will disclose such
proprietary or confidential business information to the extent required
by other legal process.

C. Submitting Comments

Submit comments using either of the two methods described below
(but do not submit the same comment multiple times or by more than one
method). Hand-delivered comments will not be accepted.
<bullet> Federal e-rulemaking portal: ATF recommends that you
submit your comments to ATF via the federal e-rulemaking portal at
<a href="https://www.regulations.gov">https://www.regulations.gov</a> and follow the instructions. Comments will
be posted within a few days of being submitted. However, if large
volumes of comments are being processed simultaneously, your comment
may not be viewable for up to several weeks. Please keep the comment
tracking number that is provided after you have successfully uploaded
your comment.
<bullet> Mail: Send written comments to the address listed in the
ADDRESSES section of this document. Written comments must appear in
minimum 12-point font size, include the commenter's first and last name
and full mailing address, and may be of any length. See also section
IV.B of this preamble, ``Confidentiality.''

D. Request for Hearing

Any interested person who desires an opportunity to comment orally
at a public hearing should submit his or her request, in writing, to
the Director within the 90-day comment period. The Director, however,
reserves the right to determine, in light of all circumstances, whether
a public hearing is necessary.

Disclosure

Copies of this proposed rule and the comments received in response
to it are available through the federal e-rulemaking portal, at <a href="https://www.regulations.gov">https://www.regulations.gov</a> (search for RIN 1140-AB01).

Severability

Consistent with the Administrative Procedure Act, the issues raised
in this proposed rule may be finalized, or not, independently of each
other, after consideration of comments received. ATF has determined
that this proposed rule implements and is fully consistent with
governing law. However, in the event this proposed rule is finalized,
if any provision of that final rule, an amendment or revision made by
that rule, or the application of such provision or amendment or
revision to any person or circumstance, is held to be invalid or
unenforceable by its terms, the remainder of that final rule, the
amendments or revisions made by that rule, and application of the
provisions of the rule to any person or circumstance shall not be
affected and shall be construed so as to give them the maximum effect
permitted by law.

List of Subjects in 27 CFR Part 478

Administrative practice and procedure, Arms and munitions, Exports,
Freight, Imports, Intergovernmental relations, Law enforcement
officers, Military personnel, Penalties, Reporting and recordkeeping
requirements, Research, Seizures and forfeitures, Transportation.

For the reasons discussed in the preamble, ATF proposes to amend 27
CFR part 478 as follows:

[[Page 24436]]

PART 478--COMMERCE IN FIREARMS AND AMMUNITION

0
1. The authority citation for 27 CFR part 478 continues to read as
follows:

Authority: 5 U.S.C. 552(a); 18 U.S.C. 847, 921-931; 44 U.S.C.
3504(h).

0
2. Amend Sec. 478.11 by:
0
a. Revising paragraph (3) of the definition of ``engaged in the
business'' (``dealer in firearms other than a gunsmith or a
pawnbroker''); the definition of ``personal collection (or personal
collection of firearms, or personal firearms collection)'', including
its title; and the definition of ``predominantly earn a profit''; and
0
b. Removing the definition of ``former licensee inventory''.
The revisions read as follows:

Sec. 478.11 Meaning of Terms

Engaged in the business-- * * *
* * * * *
(3) Dealer in firearms other than a gunsmith or a pawnbroker. A
person who devotes time, attention, and labor to dealing in firearms as
a regular course of trade or business to predominantly earn a profit
through the repetitive purchase and resale of firearms. The term does
not include a person who makes occasional sales, exchanges, or
purchases of firearms to enhance a personal collection or for a hobby,
or who sells all or part of the person's personal collection of
firearms. In addition, the term does not include an auctioneer who
provides only auction services on commission to assist in liquidating
firearms at an estate-type auction, as long as the auctioneer does not
purchase the firearms or take possession of the firearms for sale or
consignment.
* * * * *
Licensee personal collection (or personal collection of licensee).
In the case of a firearm imported, manufactured, or otherwise acquired
by a licensed manufacturer, importer, or dealer, the personal
collection includes only firearms that were:
(a) Acquired or transferred without the intent to willfully evade
the restrictions placed upon licensees by 18 U.S.C. chapter 44;
(b) Recorded by the licensee as an acquisition in the licensee's
acquisition and disposition record in accordance with Sec. Sec.
478.122(a), 478.123(a), or 478.125(e) (unless acquired prior to
licensure and not intended for sale);
(c) Recorded as a disposition from the licensee's business
inventory to the licensee's personal collection or otherwise as a
personal firearm in accordance with Sec. Sec. 478.122(a), 478.123(a),
or 478.125(e) (unless acquired prior to licensure and not intended for
sale);
(d) Maintained in such personal collection or otherwise as a
personal firearm (whether on or off the business premises) for at least
one year from the date the firearm was so transferred, in accordance
with 18 U.S.C. 923(c) and 27 CFR 478.125a; and
(e) Stored separately from, and not commingled with, the business
inventory. When stored or displayed on the business premises, the
personal collection and other personal firearms must be appropriately
identified as ``not for sale'' (e.g., by attaching a tag).
* * * * *
Predominantly earn a profit. The intent underlying the sale or
disposition of firearms is predominantly one of obtaining pecuniary
gain, as opposed to other intents, such as improving or liquidating a
personal firearms collection. However, proof of profit, including the
intent to profit, is not required in cases in which the person engaged
in the regular and repetitive purchase and disposition of firearms for
criminal purposes or terrorism.
* * * * *

Sec. 478.13 [Removed and Reserved]

0
3. Remove and reserve Sec. 478.13.

Sec. 478.57 [Amend]

0
4. Amend Sec. 478.57 by removing from paragraphs (b)(2) and (c) the
second sentence.
The revisions read as follows:

Sec. 478.57 Discontinuance of business.

* * * * *
(b) * * * * *
(2) Transfer the former licensee inventory to a responsible person
of the former licensee to whom the receipt, possession, sale, or other
disposition is not prohibited by law.
(c) Transfers of former licensee inventory to a licensee or
responsible person in accordance with paragraph (b)(1) or (2) of this
section shall be appropriately recorded as dispositions, in accordance
with Sec. Sec. 478.122(b), 478.123(b), or 478.125(e), prior to
delivering the records after discontinuing business consistent with
Sec. 478.127.
* * * * *

Sec. 478.78 [Amend]

0
5. Amend Sec. 478.78 by removing from paragraphs (b)(2) and (c) the
second sentence.
The revisions read as follows:

Sec. 478.78 Operations by licensee after notice.

Robert Cekada,
Director.
[FR Doc. 2026-08919 Filed 5-5-26; 8:45 am]
BILLING CODE 4410-FY-P

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