Proposed Rule2026-08923
Clarifying Special (Occupational) Tax Payments Per Business Activity
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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") proposes amending Department of Justice ("Department") regulations to clarify that a person engaged in the business of dealing, importing, or manufacturing firearms regulated under the National Firearms Act must pay a special (occupational) tax ("SOT") for each business activity conducted at the same location. However, they are not required to pay a tax for each license they have at that location if the licenses are for the same type of business activity. The rule proposes clarifying that licensees pay one SOT per business activity (manufacturing, importing, or dealing).
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 24478-24485]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2026-08923]
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DEPARTMENT OF JUSTICE
Bureau of Alcohol, Tobacco, Firearms, and Explosives
27 CFR part 479
Docket No. ATF-2026-0331; ATF No.2025R-20P]
RIN 1140-AA76
Clarifying Special (Occupational) Tax Payments Per Business
Activity
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'') proposes amending Department of Justice (``Department'')
regulations to clarify that a person engaged in the business of
dealing, importing, or manufacturing firearms regulated under the
National Firearms Act must pay a special (occupational) tax (``SOT'')
for each business activity conducted at the same location. However,
they are not required to pay a tax for each license they have at that
location if the licenses are for the same type of business activity.
The rule proposes clarifying that licensees pay one SOT per business
activity (manufacturing, importing, or dealing).
DATES: Comments must be submitted in writing, and must be submitted on
or before (or, if mailed, must be postmarked on or before) July 6,
2026. Commenters should be aware that the federal e-rulemaking portal
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-AA76, 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: ATF 1140-AA76.
Instructions: All submissions must include the agency name and
number (RIN 1140-AA76) 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, 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#551a0714153421337b323a23"><span class="__cf_email__" data-cfemail="7b34293a3b1a0f1d551c140d">[email 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 National
Firearms Act (``NFA''), as amended, 26 U.S.C. chapter 53.\1\ Congress
and the Attorney General have delegated the responsibility for
administering and enforcing the NFA 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.
[[Page 24479]]
221(2)(a), (d), 37 FR 11696-97 (June 10, 1972).\2\ Accordingly, the
Department and ATF have promulgated regulations to implement the NFA in
27 CFR part 479.
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\1\ Some NFA 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
NFA, Gun Control Act, and Title XI of the Organized Crime Control
Act. ATF's jurisdiction also includes those portions of sec. 38 of
the Arms Export Control Act pertaining to permanently importing
defense articles and services and the Contraband Cigarette
Trafficking Act.
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Firearms subject to NFA provisions include machine guns, a shotgun
having a barrel or barrels of less than 18 inches in length, a rifle
having a barrel or barrels of less than 16 inches in length, a weapon
made from a rifle, a weapon made from a shotgun, silencers, destructive
devices, and any other weapon as defined by the NFA (``NFA firearms'').
26 U.S.C. 5845(a).
Section 5801(a) requires that every importer, manufacturer, and
dealer in firearms pay a special (occupational) tax (``SOT'') for each
place of business on or before July 1 of each year. Importers and
manufacturers generally pay $1,000 a year or a fraction thereof,\3\ and
dealers pay $500 a year or a fraction thereof. Federal regulations at
27 CFR 479.31 do not permit the SOT to be prorated. For purposes of the
NFA, a ``dealer'' is any person, who is not also a manufacturer or
importer, ``engaged in the business of selling, renting, leasing, or
loaning firearms, and includes pawnbrokers who accept firearms as
collateral for loans.'' 26 U.S.C. 5845(k). An ``importer'' is ``any
person who is engaged in the business of importing or bringing firearms
into the United States,'' 26 U.S.C. 5845(l), and a ``manufacturer'' is
``any person who is engaged in the business of manufacturing
firearms.'' 26 U.S.C. 5845(m).
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\3\ Under certain circumstances, an importer or manufacturer can
pay a reduced rate. See 27 CFR 479.32a.
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Regulations implementing 26 U.S.C. 5801 are set forth in 27 CFR
part 479, subpart D--Special (Occupational) Tax. The regulations
provide that, if more than one ``business taxable'' under section 5801
(hereinafter ``taxable business'' for easier reading) is carried on at
the same location during a taxable year, the licensee, generally
recognized by their IRS-issued individual employer identification
number, must pay the SOT imposed on each such business. 27 CFR 479.39.
For example, if the licensee engages in the business of manufacturing
NFA firearms, they must pay a SOT for the manufacturing business. If,
at the same business premises, they also engage in the business of
importing NFA firearms, they must also pay a SOT for the importing
business, therefore paying two SOTs for business activities at that
premises. However, this regulatory provision does not require a
qualified \4\ manufacturer or importer to pay a SOT for dealing at the
same premises if such manufacturer or importer also engages in business
as a dealer. Id. In other words, manufacturers can also deal in
firearms while paying a SOT only for the manufacturing business, and
the same for importers. But a qualified dealer is not entitled to
engage in business as a manufacturer or importer without paying a SOT
for the manufacturing or importing business. Id. The regulations do not
authorize a qualified importer to engage in the business of
manufacturing without also becoming a qualified manufacturer. See 27
CFR part 479, subpart D.
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\4\ A manufacturer, importer, or dealer is ``qualified'' under
the NFA if they have paid the SOT for that business activity.
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ATF realizes the existing regulations regarding SOT are complex.
The relationship between licenses and taxable business activities is
also complicated because each person engaging in the business of
manufacturing, importing, or dealing in firearms must also have a
license under the Gun Control Act (``GCA'') licensing scheme, which
requires different types of licenses based on the type of item.\5\
Licensees that engage in one or more of these licensed business
activities and handle NFA firearms must both obtain the license and pay
the appropriate NFA SOT. However, the relationship is further
complicated by the fact that, unlike the NFA, licenses issued under the
GCA distinguish between sub-types of manufacturing and importing, such
as manufacturing firearms (Type 07) and manufacturing destructive
devices (Type 10) or importing firearms (Type 08) and importing
destructive devices (Type 11). Licensees may have more than one of
these types of licenses for business at a given premises, but this
licensing scheme is more divided than the taxable business divisions
for SOT payments. Essentially, while there are three taxable business
activities under the NFA, seven of the nine licenses under the GCA fall
within those three taxable activities.\6\ People have been confused
about whether they must pay a SOT for each such GCA license (which, if
it were the case, would treat them as seven taxable business
activities).
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\5\ <a href="http://ATF.gov">ATF.gov</a>, Types of Federal Firearms Licenses (FFL), <a href="https://www.atf.gov/resource-center/infographics/types-federal-firearms-licensees-ffls">https://www.atf.gov/resource-center/infographics/types-federal-firearms-licensees-ffls</a> [ <a href="https://perma.cc/LH8M-4M8N">https://perma.cc/LH8M-4M8N</a>].
\6\ Of the nine GCA licenses, there are three types of dealer
licenses: Type 01 for firearms, Type 02 for pawnbrokers, and Type 09
for destructive devices. In addition, there are two types of
manufacturer licenses, noted in the text above: Type 07 for
firearms, and Type 10 for destructive devices. And there are two
types of importer licenses, also noted in the text: Type 08 for
firearms and Type 11 for destructive devices. See <a href="http://ATF.gov">ATF.gov</a>, Federal
Firearms Licenses, <a href="https://www.atf.gov/firearms/federal-firearms-licenses">https://www.atf.gov/firearms/federal-firearms-licenses</a> for details. The other two GCA licenses, Type 03 for
collectors of curios and relics and Type 06 for ammunition, do not
fall within the categories of NFA dealer, manufacturer, or importer
taxable business activities, and are thus not relevant to this rule.
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In addition, while manufacturers must obtain a GCA manufacturing
license for the type of firearms they manufacture, if they also deal in
those same types of firearms, they do not have to obtain a separate
dealer's license. The same is true for licensed importers who deal in
the same types of firearms they import. But if licensed manufacturers
or importers deal in a different type of firearm from those they
manufacture or import, they must obtain a separate dealer's license for
the different type of firearms. For example, a Type 07 manufacturer of
NFA firearms who also wants to deal in destructive devices, would be
required to first obtain a Type 09 dealer in destructive devices
license, then obtain the separate SOT, as destructive devices are a
specific type of NFA item. In addition, dealers who are not
manufacturers or importers must obtain separate dealer's licenses for
the different types of firearms in which they deal.
ATF previously advised federal firearms licensees (``FFLs'' or
``licensees'') in a June 2021 FFL Newsletter that a person who
maintains a manufacturer's and a dealer's license at the same business
premises and engages in the business of NFA firearms from both licenses
would need to pay a separate SOT for each license under the NFA (a SOT
for manufacturing and a SOT for dealing).\7\ In the newsletter, ATF
noted that 27 CFR 479.39 permits a qualified manufacturer of NFA
firearms to also deal in NFA firearms. As such, ``the only exception to
paying SOT for every business activity carried on at the same location
is when a manufacturer or importer also engages in business as a dealer
on the qualified premises.'' \8\ However, the newsletter clarified that
a manufacturer that holds two separate licenses (manufacturer and
dealer) would need to pay SOT for both
[[Page 24480]]
the manufacturer and dealer licenses.\9\ Similarly, an importer that
holds two licenses (importer and dealer) would need to pay SOT for both
the importer and dealer licenses.\10\ In other words, the manufacturer
is not required to obtain a separate license for dealing in the same
type of firearms they manufacture at the same premises, but if they do
obtain a separate dealer's license (for example, they decide to deal in
firearms other than the type they manufacture), they must pay a SOT for
manufacturing and for dealing. The same holds true for an importer who
also obtains a separate dealer's license.
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\7\ ATF, Special Occupational Tax Requirements--Business
Locations, FFL Newsletter at 10-11 (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/9BGZ-">https://perma.cc/9BGZ-</a> DHE8].
\8\ Id. at 10.
\9\ Id.
\10\ Id.
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II. Proposed Rule
This rule proposes to amend 27 CFR 479.39 by clarifying that
licensees conducting business involving NFA firearms pay the SOT one
time during the taxable year for each taxable business under 26 U.S.C.
5801, regardless of how many licenses the FFL has. As mentioned above,
the NFA requires a person to pay the SOT for every taxable business
conducted at the same business premises during a taxable year. 26
U.S.C. 5801(a). A taxable business is one of three distinct types of
taxable NFA business activities conducted by a person at a business
premises--importing, manufacturing, or dealing NFA firearms.\11\ The
NFA regulations allow a person to engage in more than one taxable
business at the same business premises, provided they pay SOT on ``each
such business.'' 27 CFR 479.39. As an example, an FFL importing and
manufacturing NFA firearms at the same business premises is engaged in
two separate types of NFA business activities or taxable businesses.
Thus, the FFL must submit a SOT payment for each taxable business
(i.e., a SOT payment to import NFA firearms and a SOT payment to
manufacture NFA firearms), in order to engage in both activities at the
same business premises. However, the NFA does not further divide these
taxable business activities--importing, manufacturing, dealing--into
more specific business activities, nor does it align with the licensing
scheme under the GCA.
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\11\ 26 U.S.C. 5801(a): See also ATF, When must firearms special
(occupational) taxes be paid and how much are the taxes?, <a href="https://www.atf.gov/firearms/qa/when-must-firearms-special-occupational-taxes-be-paid-and-how-much-are-taxes">https://www.atf.gov/firearms/qa/when-must-firearms-special-occupational-taxes-be-paid-and-how-much-are-taxes</a> [<a href="https://perma.cc/3BZU-YUBA">https://perma.cc/3BZU-YUBA</a>].
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The NFA statute and regulation clearly provide that the SOT
payments required to engage in NFA business activity are ``for each
place of business,'' 26 U.S.C. 5801(a), and for each taxable business
taking place at that business premises, 27 CFR 479.39. The NFA requires
SOT payment based on the three taxable business activities listed
above. Therefore, the relevant inquiry is not the number of licenses
used to conduct the NFA business activity. Rather, it is whether the
GCA licenses indicate that an individual engages in the business of the
taxable activity (i.e., importing, dealing, or manufacturing).
For example, Type 10 (Manufacturer of Destructive Devices,
Ammunition for Destructive Devices, or Armor-Piercing Ammunition) and
Type 07 (Manufacturer of Firearms Other Than Destructive Devices)
licenses under the GCA are of the same ``type'' of NFA business
activity because both are manufacturing licenses. However, the
manufacturing activity sub-type authorized under each license differs.
The Type 10 license authorizes the person to manufacture destructive
devices, and the Type 07 license authorizes them to manufacture
firearms. Nevertheless, it is clear from the NFA that the licensee must
make only one SOT payment for the overall NFA manufacturing business
activity because manufacturing is the sole NFA taxable business
occurring. In other words, the person does not need to make two SOT
payments for manufacturing activity merely because the person holds two
licenses for different manufacturing sub-types (i.e., Type 10 and Type
07). The person would obtain two licenses, Type 07 and Type 10,
authorizing them to manufacture two types of NFA firearms, but would
pay one Class 2 SOT (Manufacturing NFA firearms) that would cover both.
Moreover, as permitted under the statute and regulation, firearms
manufacturers can deal in firearms without obtaining a separate Type 01
dealer license at the same business premises because the GCA licensing
scheme allows licensed manufacturers and importers to also deal in the
same type of firearms they manufacture or import at the same premises
without obtaining a separate dealer's license. In this scenario, the
applicable SOT would still be a Class 2 SOT (Manufacturing NFA
firearms), and the licensee would still pay only one SOT, because the
Class 2 SOT also allows a manufacturer to deal in NFA firearms without
paying a separate SOT for dealing (the Class 1 SOT (Importing NFA
firearms). Thus, the manufacturer would have two licenses, Types 07 and
10, and pay one Class 2 SOT, covering manufacturing both NFA firearms
and destructive devices, and dealing in NFA firearms, at the same
business premises.
However, if the licensee also imports firearms at the same
premises, they would have to also obtain a Type 08 license (Importer of
Firearms Other than Destructive Devices or Ammunition for Firearms
Other than Destructive Devices, or Ammunition Other than Armor-Piercing
Ammunition). In addition, they would have to pay a second SOT because
importing is a different NFA taxable business activity. In this
scenario, the licensee would have three licenses (Types 07, 08, and
10), engage in three taxable NFA business activities (manufacturing,
importing, and dealing in the same type of firearms they manufacture or
import), but would pay only two SOTs (a Class 2 SOT for NFA
manufacturing and a Class 1 SOT NFA importing) because the license
types do not affect the SOT and because dealing would be included under
both the manufacturing and importing SOTs. However, manufacturers or
importers that choose to engage in the business of dealing in firearms
that are not of the same type as those they manufacture, or import must
obtain a dealer's license. If those other types of firearms are NFA
firearms, the separate dealer's license means they hold themselves out
as dealers in NFA firearms and they thus must pay a separate
occupational tax for the business of dealing. That would not be
affected by this rule if the licensee obtains only one type of dealer's
license. This proposed rule would impact only manufacturers, importers,
and dealers who maintain two or more manufacturer, importer, or dealer
licenses relating to NFA firearms at the same premises (e.g., Types 07
and 10 at the same business premises; Types 08 and 11 at the same
business premises; or Types 01 (for firearms) and 09 (for destructive
devices) dealer's licenses at the same premises) because it would
clarify that they would need to pay only one SOT for all manufacturing
licenses combined, one SOT for all importing licenses combined, and one
SOT for all dealing licenses combined.
ATF proposes clarifying Sec. 479.39 to address the source of
confusion about whether a SOT is required for each license a person has
at the same business premises. ATF proposes amending 27 CFR 479.39 by
clarifying that only one SOT payment is required for each taxable
business at the same location (notwithstanding the number of licenses
under the GCA that they need to conduct that taxable business
activity). The proposed clarification to Sec. 479.39 does not
supersede the analysis in ATF's June 2021 FFL Newsletter.\12\
[[Page 24481]]
While an FFL who manufactures or imports firearms does not need a
separate license to deal in those same firearms, some FFLs choose to
also acquire a separate dealer's license for other types of firearms.
If an FFL chooses to use a separate dealer's license to deal NFA
firearms, then that FFL will also need to pay the SOT on the dealer's
license because it is a separate taxable business under the NFA (even
if they can lawfully engage in this activity under the manufacturer's
license they maintain).
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\12\ See footnote 7, supra.
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In addition, the current provision already provides that a
qualified manufacturer who engages in business as an importer must also
qualify as an importer. The proposed rule would clarify that a
qualified importer engaged in the business of manufacturing must also
qualify as a manufacturer.
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 rule proposes to amend 27 CFR part 479 to clarify the number
of SOTs that licensees must pay for each taxable business conducted at
the same business premises during a taxable year. The proposed rule
clarifies that a person needs only one SOT per taxable business
(importing, manufacturing, or dealing) at a licensee's business
premises, regardless of the number of GCA licenses they have to carry
out that one business activity.
The Office of Management and Budget (``OMB'') has determined that
this rule would not be a ``significant regulatory action'' under
Executive Order 12866. Therefore, it did not review this rule. ATF
provides the following analysis to comply with Executive Orders 12866
and 13563.
1. Need Statement
The need for this regulatory action is to reduce the overall burden
on businesses, particularly small businesses, without any impact to
public safety. As currently written, the regulation is confusing and
some licensees pay for more SOTs than required. Because multiple
license types are available for each business activity--manufacturing,
importing, and dealing--persons who manufacture, import, or deal in NFA
firearms would be affected by this proposed rule.
2. Transfers
Under the existing regulations, licensees have been paying for more
SOTs than required. Manufacturer and importer FFLs generally must pay a
$1,000 or $500 SOT per NFA taxable manufacturing business or importing
business at a given business premises, depending on class status, and
dealer FFLs pay a $500 SOT for the dealing taxable business if they
obtain a dealer's license. A single SOT covers all licenses the FFL has
at one location for a specific taxable business activity. For example,
a licensee that has two different manufacturing licenses, such as a
Type 07 for manufacturing firearms and a Type 10 for manufacturing
destructive devices, would pay only one SOT for manufacturing. The
manufacturer would also be able to deal in NFA firearms without paying
a separate SOT, as long as they did not have a separate dealer's
license. Similarly, a licensee with a Type 08 license to import
firearms and a Type 11 license to import destructive devices would also
pay one SOT, for the importing taxable business activity. This licensed
importer would also be able to deal in NFA firearms without having to
pay a second SOT, as long as they did not have a separate dealer's
license. However, many licensees are currently paying for two
manufacturing SOTs, two importing SOTs, or, at a lower frequency, two
dealing SOTs.\13\ Assuming a licensee maintaining multiple licenses is
paying twice as many SOTs as required for a taxable business activity,
this proposed rule would result in affected licensees reducing the
number of SOTs they pay by half.
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\13\ See footnote 5, supra, for a list of the types of licenses.
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Based on 2025 data from ATF's National Firearms Act Division, there
are approximately 496 FFLs with multiple SOTs of the same business
activity at the same location. Because a SOT is either $500 or $1,000,
depending on class, ATF used a weighted average by SOT class to
determine the estimated savings this rule would have on the overall
industry. Based on information gathered from ATF's National Firearms
Act Division, 13 percent of all active FFLs with SOT status pay a SOT
of $1,000 and 87 percent pay $500. The weighted average is lower than a
midpoint (which would be 750) due to the population of dealers who pay
only $500, making the weighted average $565.<SUP>14 15</SUP> As a
result, the cost savings from avoided SOTs would total $280,240
annually.\16\ Therefore, the annual transfer, representing savings for
affected FFLs under this rulemaking and lost revenue for the
government, would be $280,240, or nearly $3 million over the course of
ten years.
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\14\ While Class 1 and 2 SOTs are $1,000 for importers and
manufacturers, taxes assessed may be $500 (or the same amount as
Class 3 dealers) depending on the overall revenue of the FFL.
\15\ $565 weighted average SOT = ($500 reduced/dealer SOT * 87
percent) + ($1,000 SOT * 13 percent).
\16\ $372,000 annual savings = $750 savings per FFL * 496 FFLs
with multiple licenses.
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3. Benefits
The proposed rule would result in additional benefits to licensees
because, by paying fewer SOTs, they would also reduce the amount of
time they would spend completing and submitting SOT returns.\17\ It
takes licensees 15 minutes (0.25 hours) to complete and submit ATF Form
5630.7, Special Tax Registration and Return National Firearms Act (NFA)
form (now changing to NFA Special Occupational Tax (SOT) Registration/
Return) (``Form 5630.7''). For purposes of this analysis, ATF assumes
that a retail salesperson at the FFL would complete and submit the
return. According to the Bureau of Labor Statistics (``BLS''), an FFL
retail salesperson handles these tasks and is paid an hourly wage rate
of $17.64 per hour.\18\ To account for fringe employment benefits such
as insurance, ATF determined the average load rate based on BLS's
calculated national hourly compensation (salaries/wages plus paid
benefits) for all private-sector occupations (average of $44.20 for
2024) \19\ divided by the national average hourly wages and salaries
without benefits (average of $31.95 for 2024),\20\ making a load rate
of 1.42.\21\ ATF then applied this load rate to the FFL retail
salesperson wage to calculate their total compensation. Multiplying
BLS's estimated hourly wage rate for an FFL salesperson ($17.64) by the
load rate of
[[Page 24482]]
1.42, ATF estimated that an FFL would save $25.05 in loaded monetized
time per hour under this rule. Applied to the 496 affected FFLs, this
15-minute time burden would result in 124 hours of saved time annually
for the affected FFLs in total. At the $25.05 wage rate, the monetized
value of the saved time would be $3,106 per year, or $31,062 over ten
years.
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\17\ NFA Special Occupational Tax (SOT) Registration/Return, ATF
Form 5630.7. NFA licensees use this form to pay their SOT and
register as a SOT payer.
\18\ U.S. Bureau of Labor Statistics, Occupational Employment
and Wages, May 2023, for 41-2031 Retail Salespersons, <a href="https://www.bls.gov/oes/2023/may/oes412031.htm">https://www.bls.gov/oes/2023/may/oes412031.htm</a> [<a href="https://perma.cc/V5T8-T455">https://perma.cc/V5T8-T455</a>].
\19\ U.S. Bureau of Labor Statistics, Total compensation cost
per hour worked for private industry workers (2023-2025), <a href="https://data.bls.gov/dataViewer/view/timeseries/CMU2010000000000D">https://data.bls.gov/dataViewer/view/timeseries/CMU2010000000000D</a> [<a href="https://perma.cc/T2ZL-2UUB">https://perma.cc/T2ZL-2UUB</a>].
\20\ Id.
\21\ 1.4 load rate = $44.20 total hourly compensation/31.95
hourly wages and salaries.
---------------------------------------------------------------------------
4. Costs
This proposed rule would not result in quantifiable costs. The
proposed changes might be thought to result in ATF losing information
about FFLs also manufacturing or importing other types of firearms by
no longer receiving returns (which accompany the SOT payments) for
other manufacturing or importing types. However, in reality, the
information gleaned from SOT returns submitted by the same licensee on
the same taxable business at the same location is duplicative for ATF
purposes. ATF notes that the public savings arising from this proposed
rule's reduced SOT payments would be a transfer from the government to
the public, as discussed in section A.2 of this part.
5. Regulatory Alternatives
Alternative 1. Maintaining the Status Quo (No Action Alternative)
Under current regulations, many FFLs are confused about how many
SOTs they must pay when they have multiple licenses for types of
manufacturing, types of importing, and dealing. As a result,
maintaining the status quo would allow this problem to continue. The
results would be that this segment of the firearms industry would
continue making double payments and expending twice the amount of time
to complete the accompanying returns. The costs of maintaining the
status quo would be equivalent to the savings identified in the
sections above: $280,240 in extra SOT payments per year, or nearly $3
million over the course of ten years, and 124 hours of extra time
annually for the affected FFLs in total. At the $25.05 wage rate, the
monetized value of the extra time would be $3,106 per year, or $31,062
over ten years.
Alternative 2. Rulemaking (Proposed Alternative)
This proposed rule would clarify existing regulations so that
licensees would no longer be confused about how many SOTs they must
pay. It would reduce the number of SOT payments they make when they
have multiple manufacturing or multiple importing licenses by half,
thereby saving the affected population of licensees nearly $3 million
over the course of ten years, and saving them $31,060 in monetized time
burdens. It would create no risk to public safety and would not entail
any additional costs or burdens to industry. This alternative was
accepted because of the benefits accrued to the public.
Alternative 3. Issuing Guidance
Under this alternative, the existing regulation would remain and
would continue to be confusing to licensees. Although guidance might
serve to alleviate some of that confusion, ATF has already issued some
forms of guidance, such as the 2021 FFL newsletter, in which it has
clarified the requirements for paying SOTs. However, the guidance has
not resulted in the desired outcome. As the regulatory text would
remain, ATF does not think this option would result in effective
clarification for licensees. Guidance also does not have the same force
and effect as a regulation, so this option would present a risk that
courts would not accord it the same weight as the existing regulation.
As a result, ATF rejected this alternative.
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 because it is not a
significant regulatory action as defined by Executive Order 12866 and
it would not impose total costs greater than zero. This proposed rule
would simply clarify that licensees do not have to pay for additional
SOTs when they have multiple licenses for the same kind of business
activity, thereby saving licensees approximately $280,240 annually or
nearly $3 million over the course of ten years, as well as $31,060 in
monetized time burdens over ten years. In addition, ATF 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 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 because it would merely clarify
[[Page 24483]]
that a person must pay the NFA-required SOT one time for every taxable
business, thus reducing confusion and simplifying compliance. This
proposed rule is deregulatory and would not impose any additional
costs.
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, record-keeping, monitoring, posting,
labeling, or other similar actions an agency requires of the public.
See 5 CFR 1320.3(c). This proposed rule would impact one existing
information collection approved by OMB. The information collection is
OMB control number 1140-0090: ATF Form 5630.7, Special Tax Registration
and Return National Firearms Act (NFA) form (now changing to NFA
Special Occupational Tax (SOT) Registration/Return) (``Form 5630.7'').
This proposed rule would clarify that applicants need pay only one SOT
per taxable business activity occurring at the same business premises,
thus reducing the number of FFLs who erroneously pay two SOTs for the
same business activity. As a result of this change, the time burden for
this collection would be reduced by 124 hours per year, if this
proposed rule becomes final. ATF will provide more details about the
information collection in any resulting final rule.
I. Congressional Review Act
This proposed rule would not be a major rule as defined by the
Congressional Review Act, 5 U.S.C. 804.
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 appropriate methodology and data for calculating those costs and
benefits.
All comments must reference this document's RIN 1140-AA76 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-AA76. 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 it will 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,
[[Page 24484]]
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.''
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-AA76).
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 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 479
Administrative practice and procedure, Arms and munitions, Exports,
Imports, Military personnel, Penalties, Reporting and record-keeping
requirements, Seizures and forfeitures, Taxes, Transportation.
For the reasons discussed in the preamble, ATF proposes to amend 27
CFR part 479 as follows:
PART 479--MACHINE GUNS, DESTRUCTIVE DEVICES, AND CERTAIN OTHER
FIREARMS
0
1. The authority citation for 27 CFR part 479 continues to read as
follows:
Authority: 26 U.S.C. 5801-5822; 26 U.S.C. 7801; 26 U.S.C. 7805.
0
2. Revise Sec. 479.39 to read as follows:
Sec. 479.39 Engaging in more than one business at the same location.
(a) If a person engages in more than one taxable business under 26
U.S.C. 5801 at the same location during a taxable year, the person must
pay the special (occupational) tax imposed on each such taxable
business.
(1) A taxable business is one of three distinct types of NFA
business activity conducted by a person at a business premises:
importing, manufacturing, or dealing in firearms regulated by this
part.
(2) During a taxable year, a person must pay only once for each
type of business activity conducted at the business premises
(notwithstanding the number of licenses under the GCA that the person
needs to conduct that taxable business activity).
Example 1 for paragraph (a)(2)
A person obtains a Type 07 (to manufacture firearms other than
destructive devices, etc) license and a Type 10 (to manufacture
destructive devices, etc) license under the GCA and engages in both
types of manufacturing activities for NFA firearms at the same business
premises. Both licenses fall under the same NFA business activity
because both are manufacturing licenses, and manufacturing is one of
the three NFA taxable business activities. Therefore, the licensee must
pay only one Class 2 SOT (manufacturing NFA firearms). The person does
not need to make two SOT payments for manufacturing activity merely
because the person holds two licenses for different manufacturing sub-
types (i.e., Type 10 and Type 07).
Example 2 for paragraph (a)(2)
The person in example 1 also engages in the business of dealing in
NFA firearms at the same premises, but does not obtain a separate
dealer license because the GCA licensing scheme allows licensed
manufacturers to also deal in the same types of firearms they
manufacture at the same premises without obtaining a separate dealer's
license. The Class 2 SOT also allows a manufacturer to deal in NFA
firearms without paying a separate SOT for dealing (the Class 1 SOT
(importing NFA firearms) does the same for importing and dealing).
Therefore, the manufacturer would have two licenses, Type 07 and 10,
and pay one Class 2 SOT, covering manufacturing both NFA firearms and
destructive devices, and dealing in NFA firearms, at the same business
premises.
Example 3 for paragraph (a)(2)
The person in example 2 decides to also obtain a Type 08 (to import
firearms other than destructive devices, etc) license under the GCA.
The person would have three licenses (Types 07, 08, and 10), engage in
three taxable NFA business activities (manufacturing, importing, and
dealing), but would pay only two SOTs (Class 1 for importing, and Class
2 for manufacturing); dealing would be included under both the
manufacturing and importing SOTs. If the person also obtained a Type 11
license (to import destructive devices, etc), the result would be the
same because both importing licenses would be covered by the Class 1
SOT, as would dealing in the imported items.
Example 4 for paragraph (a)(2)
A person obtains a Type 10 (to manufacture destructive devices,
etc) license under the GCA. Destructive devices are NFA firearms. This
person thus pays a Class 2 SOT for manufacturing. The person also deals
in destructive devices, but does not obtain a GCA Type 09 (to deal in
destructive devices) license because this is the same type of firearms
the person manufactures. The manufacturing licenses allow a licensee to
also deal in the same type of firearms without a separate dealer's
license, as do the importing licenses. The Class 2 SOT also allows a
manufacturer to deal in NFA firearms without paying a separate SOT for
dealing (the Class 1 SOT (importing NFA firearms) does the same for
importing and dealing). However, later the person also decides to deal
in NFA firearms other than destructive devices, but does not
manufacture them. As a result, the person must obtain a Type 01 (to
deal in firearms) license. The person now has two licenses, Type 07 for
manufacturing and Type 01 for dealing, and must pay two SOTs (Class 2
for manufacturing and Class 3 for dealing).
Example 5 for paragraph (a)(2)
A person obtains a Type 10 license to manufacture NFA destructive
devices. The person must therefore also pay a Class 2 SOT for
manufacturing. The person also deals in the same destructive devices
they manufacture, so does not obtain a dealer's license because the
Type 10 license permits dealing in the destructive devices the person
manufactures. Similarly, they do not pay a SOT for dealing because the
Class 2 SOT permits dealing if the person does not have a separate
dealer's license. However, later, the person decides to deal in NFA
firearms and destructive devices at the same premises. The person would
have three licenses, Type 10 (to manufacture destructive devices), Type
01 (to deal in firearms), and Type 09 (to deal in
[[Page 24485]]
destructive devices), but the person would pay only two SOTs (Class 2
for manufacturing, and Class 3 for dealing) because both dealing
licenses fall under the same NFA taxable business (dealing). The person
does not need to make two SOT payments for dealing activity merely
because the person holds two licenses for different dealing sub-types
(i.e., Type 01 and Type 09).
(b) This section does not require a manufacturer or importer to
also qualify as a dealer if such manufacturer or importer also engages
in business on their qualified premises as a dealer (unless they obtain
a separate dealer's license). However, a qualified manufacturer who
engages in business as an importer must also qualify as an importer.
Similarly, a qualified importer who engages in business as a
manufacturer must also qualify as a manufacturer. Further, a qualified
dealer is not entitled, merely by virtue of being a qualified dealer,
to engage in business as a manufacturer or importer.
Robert Cekada,
Director.
[FR Doc. 2026-08923 Filed 5-5-26; 8:45 am]
BILLING CODE 4410-FY-P
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This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.