James R. Balmforth: Firearms Dealers And Licensing Requirements

Although nearly all firearms in the United States are originally sold by licensed gun dealers, these dealers are subject to very little federal scrutiny. The lack of oversight, due to inadequate funding and gun lobby-backed legislation, too often allows corrupt or irresponsible gun dealers to endanger public safety without any accountability or consequences. Firearms initially enter the consumer market through gun dealers, who are the critical link between manufacturers or distributors and the general public. Even though all guns that are sold to the public, including guns that end up recovered in crimes, originate with dealers, dealers are subject to very little federal oversight. Over 56,600 individuals currently have “Type 1” federal firearms licenses, which allow them to act as firearms dealers, and almost 8,000 individuals have “Type 2” licenses, which allow them to buy and sell guns as pawnbrokers. About 71,452 individuals have other types of federal firearms licenses. Federal dealer licenses are in high demand because a dealer may purchase unlimited quantities of firearms through the mail, at wholesale prices, without being subject to background checks or any state or local waiting periods.

GUN DEALERS AND TRAFFICKING

Oversight of dealers is critical because gun dealers represent a major source of illegally trafficked firearms. Despite the need for strong dealer oversight, ATF faces numerous obstacles that enable corrupt dealers to go undetected and unpunished. For example, ATF may conduct only one unannounced inspection of each dealer per year, the burden of proof for prosecution and revocation are extremely high, and serious violations of firearms laws have been classified as misdemeanors rather than felonies. In addition, ATF has historically been grossly underfunded and understaffed. FFLs must be monitored to ensure that firearms are not stolen or trafficked. Missing guns pose a serious risk to public safety because they may end up in criminal hands and cannot be traced to the initial purchaser. Federal law makes it unlawful for any person except a licensed dealer to “engage in the business” of dealing in firearms. As applied to a firearms dealer, the term “engaged in the business” is defined as: 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, but such term shall 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 his personal collection of firearms. By contrast, a so-called “private seller” (one who is not “engaged in the business”) is exempt from federal licensing requirements. A Federal Firearms License (FFL) is a license in the United States that enables an individual or a company to engage in a business pertaining to the manufacture or importation of firearms and ammunition, or the interstate and intrastate sale of firearms. Holding an FFL to engage in certain such activities has been a legal requirement within the United States since the enactment of the Gun Control Act of 1968. The FFL is issued by the Bureau of Alcohol, Tobacco, Firearms, and Explosives (BATFE, commonly known as the “ATF”).

A gun shop (also known by various other names such as firearm store and gun store) is a business establishment that sells small arms, such as handguns and shotguns, to individuals in an open shopping format. It may also provide repairs for firearms and their parts. Other items such as ammunition and accessories for hunting are frequently sold on the premises as well, even including souvenir t-shirts. Often having designs reminiscent of other establishments such as department stores displaying various items of clothing on racks and grocery stores displaying various foodstuffs on shelves, these firms operate under widely different gun control laws depending on the specific nation-state and locality involved. Some locations may only employ a single gunsmith in a small space while others might have many individuals working in a large space. The arms industry, also known as the defense industry or the arms trade, is a global industry which manufactures and sells weapons and military technology. It consists of a commercial industry involved in the research and development, engineering, production, and servicing of military material, equipment, and facilities.

Arms-producing companies, also referred to as arms dealers, defense contractors, or as the military industry, produce arms for the armed forces of states and for civilians. Departments of government also operate in the arms industry, buying and selling weapons, munitions and other military items. An arsenal is a place where arms and ammunition – whether privately or publicly owned – are made, maintained and repaired, stored, or issued, in any combination. Products of the arms industry include guns, artillery, ammunition, missiles, military aircraft, military vehicles, ships, electronic systems, night-vision devices, holographic weapon sights, laser rangefinders, laser sights, hand grenades, landmines and more. The arms industry also provides other logistical and operational support. A firearms license (also known as a gun license) is a license or permit issued by a government authority (typically by the police) of a, that allows the licensee to buy, own, possess, or carry a firearm, often subject to a number of conditions or restrictions, especially with regard to storage requirements or the completion of a firearms safety course, as well as background checks, etc. Firearms licenses are not required in all jurisdictions. Additionally, some countries or states may require by law a “permit-to-purchase” in order to buy handguns or firearms The permit or license scope varies according to what firearm(s) or activity(s) it allows the holder to legally do with the firearm. Some jurisdictions may require a firearm license to own a firearm, to engage in hunting, target shooting or collecting, or to carry a concealed firearm, or operate a business (such as being a gun dealer or a gunsmith). Some jurisdictions may require separate licenses for rifles, shotguns or handguns. A criminal background check is required if a gun is purchased from a licensed dealer.

STATES WITH STRICT LIABILITY on FIREARMS DEALERS

Two states—Connecticut and Pennsylvania—as well as the District of Columbia, impose strict liability on firearms dealers under certain circumstances. In Connecticut, any person who sells, delivers or otherwise transfers a firearm to a person knowing that person is prohibited from possessing such firearm “shall be strictly liable for damages for the injury or death of another person resulting from the use of such firearm by any person.” Connecticut also provides that any person who sells, delivers or provides any firearm to another person to “engage in conduct which constitutes an offense knowing or under circumstances in which he should know that such other person intends to use such firearm in such conduct shall be criminally liable for such conduct and shall be prosecuted and punished as if he were the principal offender.” The District of Columbia provides that any firearms dealer who can be shown by a preponderance of the evidence to have knowingly and willfully engaged in the illegal sale of a firearm will be strictly liable in tort for all damages caused by the discharge of the firearm in the District, regardless of whether the person operating the firearm is the original, illegal purchaser.

A strict liability action may not be brought, however:
• When the basis of the strict liability is a firearm originally distributed to a law enforcement agency or a law enforcement officer.
• By a person who can be shown by a preponderance of the evidence to have committed a self-inflicted injury or who was injured by a firearm while committing a crime, attempting to commit a crime, engaged in criminal activity, or engaged in a delinquent act.
• By a person who can be shown by a preponderance of the evidence to be engaged in the sale or distribution of illegal narcotics.
• By a person who either assumed the risk of the injury that occurred or negligently contributed to the injury that occurred.
Dealers of assault weapons or machine guns in the District will also, with certain exceptions, be held strictly liable in tort for all direct and consequential damages arising from bodily injury or death if the bodily injury or death proximately results from the discharge of the assault weapon or machine gun in the District.

Federal law requires federally licensed firearms dealers (but not private sellers) to initiate a background check on the purchaser prior to sale of a firearm. Federal law provides states with the option of serving as a state “point of contact” and conducting their own background checks using state, as well as federal, records and databases, or having the checks performed by the FBI using only the federal National Instant Criminal Background Check System (“NICS”) database. (Note that state files are not always included in the federal database.) Utah is a point of contact state for NICS. Utah law provides that, before transferring a firearm, all firearm dealers in Utah must contact the Criminal Investigations and Technical Services Division of the Department of Public Safety (more commonly known as the Bureau of Criminal Identification, or BCI), which conducts the background check referenced above. The dealer must require an individual receiving a firearm to present one form of government-issued photo identification. The individual must consent in writing to the background check and provide personal information on a form provided by BCI. The dealer must then contact BCI by telephone or electronic means.

BCI is required to review criminal history files, including juvenile court records, to determine if the individual is prohibited from purchasing or possessing a firearm by state or federal law, prior to approving a firearm transfer. The dealer may not transfer the firearm until receiving approval from BCI. Federal law does not require dealers to conduct a background check if a firearm purchaser presents a state permit to purchase or possess firearms that meets certain conditions. As a result, Utah concealed handgun license holders are exempt from the federal background check requirement when purchasing a firearm. Utah law also exempts concealed handgun license holders from the state provision requiring a background check. (Note, however, that people who have become prohibited from possessing firearms may continue to hold state firearms licenses if the state fails to remove these licenses in a timely fashion.) Firearms transfers by private sellers (sellers who are not licensed as firearms dealers) are not subject to background checks in Utah.

DEALER DUTIES AND PROHIBITIONS

Once licensed, federal law requires dealers to:
• Initiate background checks on unlicensed firearm purchasers.
• Maintain records of the acquisition and sale of firearms.
• Report multiple sales of handguns (i.e., the sale of two or more pistols or revolvers to an unlicensed person within any five consecutive business days).
• If a licensed dealer in California, Arizona, New Mexico, or Texas, report the sale of two or more of certain semiautomatic rifles to an unlicensed person within any five consecutive business days.
• Report the theft or loss of a firearm within 48 hours after the theft or loss is discovered.
Dealers must also submit to a maximum of one ATF inspection per year to ensure compliance with federal recordkeeping requirements. More frequent inspections are permitted if a federal magistrate has issued a search warrant or if the search is incidental to a criminal investigation. In addition, dealers must respond to requests for information from ATF regarding the disposition of a firearm if such request is made during the course of a bona fide criminal investigation.
A licensed dealer may not sell or deliver:
• A handgun to a resident of another state.
• A handgun or handgun ammunition to a person the dealer knows or has reasonable cause to believe is under the age of 21.
• A shotgun or rifle or ammunition for that firearm to a person the dealer knows or has reasonable cause to believe is under the age of 18.
A dealer may sell a rifle or shotgun to a resident of a different state if the sale is conducted in person at the dealer’s place of business and the sale complies with all of the legal conditions for sale in both states. A dealer may not deliver a handgun to a purchaser through the mail; however, a dealer may mail a handgun in the course of a customary trade shipment to a firearms manufacturer or other FFL. Federal law does not require dealers to conduct business on commercial premises. Dealers may temporarily conduct business at a location other than that specified on the dealer’s license if the temporary location is a gun show in the state specified on the license.