The two preeminent federal firearms acts are the Gun Control Act of 1968 and the National Firearms Act of 1934. The Gun Control Act is an exercise of Congress’s power “To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes” applying to most firearms. In contrast, the National Firearms Act of 1934 (NFA) regulates only certain firearms and is an exercise of Congress’s power “To lay and collect Taxes, Duties, Imposts and Excises.” A deeper analysis on the above can be found in Stephen P. Halbrook’s The Power to Tax, The Second Amendment, and the Search for Which “‘Gangster’ Weapons” to Tax or my article The National Firearms Act is an Unconstitutional Tax.
The Constitution also empowers Congress to exercise power incidental to its enumerated powers via the Necessary and Proper Clause. For instance, Congress may adopt legislation that does not itself lay or collect taxes, but aids in the collection of revenue, such as requiring taxpayers to submit tax returns calculating the amount of tax due, requiring taxpayers to keep and produce tax stamps to show proof of payment, and requiring sellers of taxable items to register and report sales.
The NFA, an exercise of Congress’s taxing power, regulates eight categories of firearms, including short-barreled rifles, suppressors, machine guns, and destructive devices. It regulates them differently than the GCA regulates other firearms. Among other things, the NFA imposes a $200 tax on the transfer or making of NFA-regulated firearms. This is more of a regulatory tax that discourages the activity being taxed than a revenue-producing tax. It also prohibits transferring or making NFA-regulated firearms without prior permission from ATF. The applicant for permission must inform ATF of the firearm’s serial number, and the application serves to register the firearm in ATF’s registry of NFA-regulated firearms. Transferring, making, or possessing an NFA-regulated firearm in violation of these requirements is a crime punishable by up to 10 years in prison and a $250,000 fine. The parts of the NFA that do not “lay and collect Taxes” are justifiable, if at all, as the exercise of Congress’s power under the Necessary and Proper Clause.
This summer, Congress amended the NFA to lower the $200 transfer and making tax on NFA-regulated firearms (other than machine guns and destructive devices) to zero dollars, effective January 1, 2026. The other requirements remain. For instance, Americans still may not transfer or make NFA-regulated weapons such as suppressors or short-barreled rifles without applying for and receiving ATF’s prior permission.
But since the tax is reduced to zero, does that mean that the NFA is no longer a constitutional exercise of Congress’s power under the Taxing Clause or the Necessary and Proper Clause? Is compliance with the zero-dollar tax impossible and therefore void? Since the NFA no longer imposes taxes, are the statute’s other requirements no longer even arguably necessary and proper to carry legislation laying and collecting taxes into execution)?
Those questions are the subject of at least three lawsuits, two in Texas, and one in Missouri. All three lawsuits argue that (1) the NFA’s zero-tax provision means that the NFA exceeds Congress authority to enact under the Taxing Clause and (2) the NFA violates the Second Amendment. Taxing-power issues are distinct from Second Amendment issues. The distinction derives from the Constitution’s internal limits and external limits on Congress’s exercise of legislative power.
External limits are more familiar. They are affirmative prohibitions on Congress, such as the First Amendment, e.g. “Congress shall make no law . . . abridging the freedom of speech, or of the press.” United States v. Rahimi was an external-limits case. It concerned whether a federal statute—18 U. S. C. § 922(g)(8), which prohibits individuals subject to a domestic violence restraining order from possessing a firearm—violated the Second Amendment.
Internal limits, on the other hand, are limits of grants of power taken on their own terms. For instance, Congress’s power to “exercise exclusive Legislation in all Cases whatsoever, over [the District of Columbia]”) does not authorize Congress to enact legislation regulating firearm or tobacco use in Texas. United States v. Lopez was an internal-limits case. The case concerned the Gun-Free School Zones Act of 1990, which amended the GCA to prohibit “any individual knowingly to possess a firearm at a place that [he] knows . . . is a school zone.” The Court held that the statute exceeded the internal limits of power granted to Congress under the Commerce Clause and could not be enforced. Presumably, the result would have also been the same even if the statute had no conceivable Second Amendment angle—for instance, if it prohibited knowingly possessing cigarettes in a school zone. (The statute has since been amended to comply with current Commerce Clause doctrine. Possessing firearms in school zones is once again a federal crime.)
The distinction is between “without authority” (an internal limit) and “with authority but prohibited by other authority” (an external limit). Lopez would have been an external-limits case if Mr. Lopez had argued that the Gun-Free School Zones Act violated the Second Amendment. And Rahimi would have been an internal-limits case if Mr. Rahimi had argued that 18 U. S. C. § 922(g)(8) was not a proper exercise of Congress’s power under the Commerce Clause. Likewise, the NFA (or particular parts of it) can be challenged as violating the Second Amendment (an external limit), as exceeding Congress’s taxing power (an internal limit), or both.
In 1937, the Supreme Court upheld part of the original version of NFA against an internal-limits challenge that it exceeded Congress’s taxing power. Since then, courts have assumed that the entire NFA complies with the internal limits of the taxing power. But the NFA has been amended since 1934 and I argue that many parts of the 2024 version of the NFA—such as the application requirement—exceed the Constitution’s internal limits on Congress’s taxing power since they neither lay taxes, collect taxes, nor aid in the collection of revenue. The NFA is also potentially vulnerable to an external-limits attack under New York State Rifle & Pistol Ass’n v. Bruen as violating the Second Amendment, to the extent that its regulatory scheme does not have a historical analogue.
Since my article was published, the NFA has been amended once again to reduce the $200 tax on transferring and making NFA-regulated firearms (other than machine guns and destructive devices) to zero. What is the legal effect of that amendment?
Congress did this once before. In 2010, Congress enacted the Patient Protection and Affordable Care Act (“ACA,” also known as “Obamacare”). Among many other things, it required every American to purchase a certain amount of health insurance or pay a $200 “penalty.” The Supreme Court eventually ruled that Congress lacked power under the Commerce Clause to require Americans to buy health insurance but upheld the $200 “penalty” since it could “reasonably be characterized as a tax” on failing to purchase health insurance. The minimum-health-insurance requirement had the “essential feature of any tax: It produces at least some revenue for the Government.” In other words, an internal limit on the taxing power is that it must produce some revenue for the Government.
In 2017, after the Presidency and Congress changed parties, Congress reduced the ACA tax to zero but did not eliminate the ACA’s requirement that Americans buy a certain level amount of health insurance and did not eliminate the ACA’s many other requirements. A coalition of conservative states and two individuals then sued.[i] They argued that, without the penalty, the ACA’s minimum-health-insurance requirement was an unconstitutional exercise of the taxing power because the requirement longer produced any revenue for the Government—an “essential feature of any tax.” That was an internal-limits challenge. They did not directly challenge the many other requirements and enforcement mechanisms in the ACA but argued that they were not severable from the minimum-health-insurance requirement, so they were unconstitutional as well.
The first Trump Administration declined to defend the ACA, and a group of liberal states then intervened to defend it. Thus, the case is now known as California v. Texas. (As of October 14, 2025, the second Trump Administration is defending the NFA in the three lawsuits linked above. If it eventually declines to defend it, liberal states may intervene to do so, as they did in the ACA case.)
The Supreme Court eventually ruled that the challengers lacked standing to challenge the minimum-health-insurance requirement because it had “no means of enforcement. With the penalty zeroed out, the IRS can no longer seek a penalty from those who fail to comply.” And “the States have not demonstrated that an unenforceable mandate will cause their residents to enroll in valuable benefits programs that they would otherwise forgo.”
In his concurring opinion rejecting the challenge, Justice Thomas explained that the conservative states argued that “given that the [minimum-health-insurance] mandate is unconstitutional, other portions of the Act that actually harm the plaintiffs must fall with it.” But “the individual plaintiffs allege only harm caused by the bare existence of an unlawful statute that does not impose any obligations or consequences,” and the states do not “claim harms flowing from enforcement of certain parts of the Act, they attack only the lawfulness of a different provision [the zero-dollar tax provision].” He explained that the Court only “adjudicate[ed] the particular claims the plaintiffs chose to bring,” and the plaintiffs only challenged the zero-dollar tax, which did not harm anyone.
Similarly, although the NFA’s zero-dollar tax is arguably unconstitutional on the grounds that it violates the internal limits of the taxing power and is impossible to pay, the Court’s logic suggests that nobody ever has standing to challenge a zero-dollar “tax” when neither compliance with nor defiance of the law is possible and cannot cause harm. But the NFA’s application, registration, and serialization requirements remain enforceable. Violators face up to 10 years in prison and up to a $250,000 fine. To get Justice Thomas’s vote, challengers may need to directly attack those provisions and not simply rely on the potential unconstitutionality of the zero-dollar tax to do all their work for them. One argument to attack those provisions is that statutes requiring application, registration, and serialization cannot be necessary and proper to carry legislation laying and collecting taxes into execution since taxes are no longer laid or collected.
Although seven members of the Court did not opine on whether the ACA’s zero-dollar tax provision was a proper exercise of the taxing power, Justice Gorsuch, joined by Justice Alito, thought that the challengers did have standing and would have found that because “the ‘tax’ imposed by the individual mandate is set at $0, the mandate cannot be sustained under the taxing power. As a result, it is clearly unconstitutional.” Presumably, they would hold the same opinions about the NFA’s zero-dollar “tax.”
The liberal states’ defense of the constitutionality of the minimum-health-insurance requirement on the merits may preview arguments that will be made in defense of the NFA in the pending cases. They argued that the zero-dollar tax provision can be “read as presenting Americans with a choice between buying health insurance or paying a tax of zero dollars [and] may be upheld either as a precatory provision or as a suspended exercise of the taxing power.”
The ”precatory” argument runs as follows:
- [The ACA’s zero-dollar tax provision] at most encourages Americans to purchase health insurance—without commanding them to do so or imposing any legal consequences on those who choose to forgo it.
- Congress routinely adopts provisions that encourage or exhort but do not impose any enforceable requirement or mandatory duty [citing statutes which encourage Americans to do things but do not punish failure to do those things].
- No one has ever seriously questioned the constitutionality of this type of precatory provision, even where it addresses a subject on which Congress could not legislate with binding effect. Footnote: To be sure, Congress could not adopt even a precatory provision if it violated one of the Constitution’s express prohibitions. But [the minimum-insurance-requirement] does not contravene any such prohibition.[ii]
- By enacting the TCJA and reducing the alternative tax to zero, Congress turned [the minimum-insurance-requirement] into an unobjectionable provision along the same lines.
The liberal states’ “precatory” reading of the zero-dollar tax is not the best reading. The statute does not say that Americans are encouraged to purchase health insurance. The more obvious best reading is that the zero-dollar tax is a logically impossible regulatory tax that neither regulates nor produces income. It is not like other “precatory” legislation. It does not read, “Americans are encouraged to buy a particular minimum level health insurance.”
The liberal states’ other argument is that a zero-dollar “tax” is an exercise of the taxing power after all. For instance, they assert that “the greater power to enact a statute imposing a tax surely includes a lesser power to reduce the tax to zero while leaving its structure in place.” But this ignores the internal limitation on the exercise of taxing power that it must raise some revenue. It also implies that Congress has plenary power, not a list of enumerated powers, so long as it links the exercise of the plenary power to a logically impossible zero-dollar “tax.” That is not our law.
The liberal states also argued that zero-dollar taxes as “standard congressional practice in the tax arena. Congress routinely adopts taxes with delayed start dates or temporarily suspends the collection of certain taxes…. No one has ever contended that [such] taxes [are] unconstitutional, rather than simply immaterial, in the years when [they were] not generating revenue.” The same objection to the supposed “power to reduce the tax to zero while leaving its structure in place” applies.
Both arguments rely on a supposed failure to challenge zero-dollar tax statutes in the past. But the Supreme Court has never adopted an “adverse possession” theory of Congressional power. Congress’s unchallenged, open and notorious exercise of power for some time does not justify eternal exercise of that power. And in any event, there is no long history of unchallenged zero-dollar tax provisions. Both zero-dollar tax provisions were immediately challenged.
The reduction of the tax on distributing and making NFA-regulated weapons (other than machine guns and destructive devices) to zero opens the NFA’s regulations on distributing and making such weapons to attack because they exceed the internal limits of the taxing power. But perhaps the defenders of the statute will argue that the regulations can nevertheless be “fairly characterized” as an exercise of the commerce power and therefore still are valid. The liberal states could not make that argument in California v. Texas because the Court had already held that the commerce power did not include the power to require Americans to buy a minimum level of health insurance. But the GCA already regulates all firearms under the commerce power. If such an argument is made and accepted, the NFA will live on as a commerce regulation. Any victory in the pending cases may be Pyrrhic.
(Stephen Halbrook also has written on this issue.)
[i] I worked for the Attorney General of Texas during this litigation, but I never worked on the case.
[ii] Note that this asserts that there are no internal limits on precatory legislation, only external limits.