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Definition of “Engaged in the Business” as a Dealer in Firearms rule (2024)

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The Definition of “Engaged in the Business” as a Dealer in Firearms is a significant rule issued by the Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF) and the U.S. Department of Justice (DOJ), effective May 20, 2024, that clarifies what it means to be "engaged in the business" of arms dealing, among other definitions and clarifications..[1]

HIGHLIGHTS
  • Name: Definition of “Engaged in the Business” as a Dealer in Firearms
  • Agency: Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF), U.S. Department of Justice (DOJ)
  • Action: Final rule
  • Type of significant rule: Other significant rule

    • Timeline

    The following timeline details key rulemaking activity:

    Background

    The Gun Control Act (GCA) of 1968 made it illegal for any individual to “engage in the business” of selling firearms, except for licensed dealers, but did not define the term “engage in the business.” The Firearms Owners' Protection Act (FOPA ) of 1986 provided a definition to the term. The Bipartisan Safer Communities Act (2022) broadened the definition of “engage in the business” with a requirement that a person's “principal objective” of dealing firearms is “to predominantly earn a profit.”[1]

    Summary of the rule

    The following is a summary of the rule from the rule's entry in the Federal Register:[1]

    “

    The Department of Justice ('Department') is amending Bureau of Alcohol, Tobacco, Firearms, and Explosives ('ATF') regulations to implement the provisions of the Bipartisan Safer Communities Act that broaden the definition of when a person is considered 'engaged in the business' ('EIB') as a dealer in firearms other than a gunsmith or pawnbroker. This final rule incorporates the BSCA's definitions of 'predominantly earn a profit' ('PEP') and 'terrorism,' and amends the regulatory definitions of 'principal objective of livelihood and profit' and 'engaged in the business' to ensure each conforms with the BSCA's statutory changes and can be relied upon by the public. The rule also clarifies what it means for a person to be 'engaged in the business' of dealing in firearms and to have the intent to 'predominantly earn a profit' from the sale or disposition of firearms. In addition, it clarifies the term 'dealer' and defines the term 'responsible person.' These clarifications and definitions assist persons in understanding when they are required to have a license to deal in firearms. Consistent with the Gun Control Act ('GCA') and existing regulations, the rule also defines the term 'personal collection' to clarify when persons are not 'engaged in the business' because they make only occasional sales to enhance a personal collection or for a hobby, or if the firearms they sell are all or part of a personal collection. This rule further addresses the procedures that former licensees, and responsible persons acting on behalf of such licensees, must follow when they liquidate business inventory upon revocation or other termination of their license. Finally, the rule clarifies that a licensee transferring a firearm to another licensee must do so by following the verification and recordkeeping procedures in the regulations, rather than by using a Firearms Transaction Record, ATF Form 4473.[2]

    		”

    Summary of provisions

    The following is a summary of the provisions from the rule's entry in the Federal Register:[1]

    “

    This final rule accomplishes these important public safety goals of the GCA, as amended by the BSCA, in several ways. First, the rule finalizes an amendment to the regulatory definition of 'dealer' to clarify that firearms dealing may occur wherever, or through whatever medium, qualifying domestic or international activities are conducted.

    Second, the rule finalizes an amendment to the regulatory definition of 'engaged in the business' to define the terms 'purchase' and 'sale' as they apply to dealers to include any method of payment or medium of exchange for a firearm, including services or illicit forms of payment ( e.g., controlled substances). For further clarity, this final rule defines the term 'resale' to mean 'selling a firearm, including a stolen firearm, after it was previously sold by the original manufacturer or any other person.' This change aligns the regulatory text with the intent element in 18 U.S.C. 921(a)(21)(C) and makes clear that the term 'resale' refers to the sale of a firearm, including a stolen firearm, any time after any prior sale has occurred.

    Third, because performing services can also be a medium of exchange for firearms, the rule finalizes an amendment to existing regulations that codifies ATF's historical exclusion for auctioneers who provide only auction services on commission to assist in liquidating firearms at an 'estate-type' auction. [2]

    		”

    Significant impact

    See also: Significant regulatory action

    Executive Order 12866, issued by President Bill Clinton (D) in 1993, directed the Office of Management and Budget (OMB) to determine which agency rules qualify as significant rules and thus are subject to OMB review.

    Significant rules have had or might have a large impact on the economy, environment, public health, or state or local governments. These actions may also conflict with other rules or presidential priorities. Executive Order 12866 further defined an economically significant rule as a significant rule with an associated economic impact of $100 million or more. Executive Order 14094, issued by President Joe Biden (D) on April 6, 2023, made changes to Executive Order 12866, including referring to economically significant rules as section 3(f)(1) significant rules and raising the monetary threshold for economic significance to $200 million or more.[1]


    The text of Definition of “Engaged in the Business” as a Dealer in Firearms rule states that OMB deemed this rule significant, but not economically significant:

    “

    OMB has determined that this proposed rule is a 'significant regulatory action' under Executive Order 12866, as amended by Executive Order 14094, though it is not a significant action under section 3(f)(1) of Executive Order 12866. [2]

    		”

    Text of the rule

    The full text of the rule is available below:[1]

    See also

    External links

    Footnotes

    1. ↑ 1.0 1.1 1.2 1.3 1.4 1.5 1.6 1.7 1.8 1.9 Federal Register, “Definition of “Engaged in the Business” as a Dealer in Firearms,” April 19, 2024:
    2. ↑ 2.0 2.1 2.2 Note: This text is quoted verbatim from the original source. Any inconsistencies are attributable to the original source.
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