Michael D. Faucette is a partner at Wiley Rein LLP. He specializes in regulatory compliance matters related to export controls, sanctions, federal firearms law, and national security policy.
There is a common misconception amongst many in the firearms community that any machine gun registered on or before May 19, 1986, may be possessed by individuals upon the payment of the $200 tax and approval of an ATF Form 4 (“fully transferable” machine guns). But this is not entirely correct. There is a separate sub class of pre-1986 machine guns that can only be possessed by Federal Firearms Licensees (FFLs) and Special Occupational Taxpayers (SOTs).
Sales Sample Exemption
Prior to the Gun Control Act of 1968 (GCA), there was no prohibition on the importation of National Firearms Act (NFA) firearms. Companies such as Sam Cummings’ Interarms in Alexandria, Virginia, would import surplus machine guns by the container load and register them on ATF Forms 2. This ended in 1968 when Congress passed the GCA that effectively banned the importation of NFA firearms, with limited exceptions. One exemption allowed for importation of NFA firearms if the importer could establish that the firearm was “being imported or brought in . . . solely for use as a sample by a registered importer or registered dealer.” 26 U.S.C. § 5844(3).
Three years after the 1968 NFA import ban, ATF decided that one of the import ban exemptions could be met if the importer presented a letter from a government entity establishing by “specific information . . . that the firearm is suitable or potentially suitable for use by such entities.” 27 CFR § 479.112(c). The regulation limited this importation exemption to two samples per model, provided a justification for two samples can be provided to ATF.
Concerned with the idea that importers could circumvent the 1968 import ban by bringing in NFA sales samples and then reselling them to the general public, in 1971, ATF placed a restriction on the transfer of NFA sales samples: While these sales samples could be transferred without a government demonstration letter, their possession was limited to FFL/SOT holders. (Sole proprietor FFL/SOTs can continue to possess these NFA weapons once their FFL is surrendered. But the firearm can still only be transferred within the FFL/SOT community.).
In 1986, Congress passed the Firearms Owners Protection Act (FOPA) that generally banned the possession of any machine guns registered on or after May 19, 1986, without a government nexus. However, ATF interpreted this statute to allow FFL/SOT manufacturers to continue to manufacture machine guns for future government sales, and to allow FFLs going out of business to transfer post-1986 machine guns to FFL/SOT manufacturers or importers without a government letter. Machine guns registered prior to May 19, 1986, could continue to be sold as any other NFA firearm and became known as “fully transferable” machine guns. However, all machine guns imported prior to that same date under one of the NFA import exemptions still retain the NFA sales sample restriction that limits possession to FFL/SOTs. This class of machine guns imported between 1968 and 1986 are commonly referred to as “pre-86 dealer samples” or “pre-samples.”
Government Use Exemption
The 1968 amendment to the NFA provided for other import exemptions. 26 U.S.C. § 5844(1) allowed for NFA firearms to be imported “for the use of the United States or any department, independent establishment, or agency thereof or any State or possession or any political subdivision thereof.” In other words, if a police department placed an order for a foreign machine gun, an FFL/SOT importer could import and register the firearm for transfer to the police department. Provided the firearm was registered before May 19, 1986, the police department was free to later sell the machine gun to an FFL/SOT (provided ATF was satisfied the department was not using the exemption to circumvent the import ban). Although not imported as such, ATF, by default, placed the sales sample restrictions on all of these imported NFA firearms.
Recent Reclassifications by ATF
Recently, ATF became aware that all imported NFA firearms had been assigned a restricted “sales sample” status, even if imported under the “government use” exemption. Because machine guns imported prior to May 19, 1986, in furtherance of a government purchase order were not “sales samples,” ATF determined that the sales sample restriction should be removed from these firearms. ATF proceeded to do a sweep of the National Firearms Registration and Transfer Record (NFRTR) to identify machine guns that had been misclassified. Any machine gun imported before May 19, 1986, registered on a Form 2, and subsequently transferred to a government entity on a Form 5 has been reclassified by ATF as a “fully transferable” machine gun. Although some internet sources estimated the number of reclassified guns to be around 4,000, ATF has confirmed that the actual number is closer to 1,200. Although some have reported color coding in their eForms system to have changed to reflect this change in status, this has turned out not to always be reliable. FFL/SOTs that possess a pre-86 sales sample restricted machine gun that they think may have actually been imported for sale a government agency can reach out to the NFA Division to confirm the status of their weapon.
