NFA Firearms History (A Brief Synopsis)
Almost everyday we hear someone say “I didn’t even know you could own a machine gun!“
Comments like this often come from collectors, competitive shooters, and casual gun owners, as well those new to the firearms industry, non-firearm owners and, sometimes, even from our own Law Enforcement officers. The fact is, machine guns have always been legal for citizens to own in the U.S. ever since Hiram Maxim invented the first true machine gun in 1884. Granted, some U.S. states have chosen to restrict that ability by passing their own state and jurisdictional laws against such, but federal law has always allowed it in states that do not have otherwise stricter rules (as long as you follow the steps for legal ownership as laid out by federal law).
The following is a very brief summary of the three main U.S. federal laws that are applicable to the private ownership of machine guns and other NFA branded weapons (such as short barreled rifles and shotguns, silencers, destructive devices, and any other weapons), as well as brief discussion on the necessary steps for an individual to purchase a machine gun.
U.S. Legislation Relevant to Machine Gun Ownership
The National Firearms Act of 1934 (NFA) was legislation enacted by Congress on June 26, 1934, which is the primary federal law responsible for regulating both civilian and Law Enforcement/Military requirements for the possession of machine guns, short barreled rifles, short barreled shotguns, sound suppressors, and destructive devices in the United States. This law enacted a $200.00 tax to be paid by civilian purchasers for every NFA listed item at the time of transfer. It also required dealers to become Special Occupational Taxpayers (SOT) by paying a $500.00 annual tax to obtain and sell NFA items. Enforcement of these requirements would fall to the US Treasury Department, which, in turn, created a division later to become the Bureau of Alcohol, Tobacco, Firearms, and Explosives (BATFE) to enforce and regulate all firearm-related laws in the United States. National Firearms Act regulated items are often referred to as “Class Three” weapons, based on the classification assigned to them by BATFE.
A common fallacy is that an individual must have a “Class Three” license to purchase an NFA regulated item. The NFA Act of 1934 does NOT require an individual to have a specific license to purchase or possess an NFA weapon. The $200.00 tax stamp that must be obtained is exactly that, a physical stamp that is proof of the proper tax paid to the US Treasury Department for the transfer of an NFA regulated item. No special licensing is required by the U.S. Government for an individual to own or purchase. This misconception has probably arisen from the existence of the specific licensing a Federal Firearms Dealer must have in order to engage in the business of dealing with NFA regulated items. FFL dealers who choose to deal with NFA items, must become a Special Occupational Taxpayer (SOT), and pay a yearly tax fee to maintain their SOT license status for the privilege of dealing in NFA firearms.
Gun Control Act of 1968 (GCA) This legislation, passed in 1968, is generally the basis for the complete regulation of the firearms industry and firearm ownership in the United States. While its effects on gun ownership are too numerous to go in to in this small blurb, the big takeaway we have here regarding machine guns is that after the GCA was passed, no more foreign manufactured machine guns are allowed to be imported into the United States, except for sale to the Military or Law Enforcement. Licensed FFL/SOT dealers may possess these weapons, however, they are to be used by dealers as Licensed Sales Samples only, and may not be transferred to an individual. Weapons created in this category would later morph into Pre-May Dealer Samples Only after passage of the Firearm Owners Protection Act of 1986.
Firearm Owners Protection Act of 1986 (FOPA). This federal legislation (specifically, the Hughes Amendment 777 to H.R. 4332 authored by Sen. William J. Hughes (D-N.J.)) effectively stopped the creation of machine guns for civilian sale. All machine guns that were already legally registered according to the National Firearms Act of 1934 prior to May 16th, 1986 were allowed to continue to be possessed, sold, and purchased by civilians. However, the legislation effectively banned any machine gun not on that list from ever being possessed by private individuals, including all future productions.
This law effectively limited the supply of machine guns available for civilians to own in the United States to approximately 180,000. As any Macro Economics 101 professor will tell you, when a supply of an item is limited and the demand for that same item increases, so will its price. This is the reason why machine guns command the high prices that they do, and are one of the few items that seem to increase in price even when they don’t sell. A supply constrained market, to say the least.
Prices on machine guns have steadily (and sometimes, rapidly) increased since the signing of the FOPA. While it is impossible to forecast demand for a particular item in the future, NFA transferable machine guns have historically averaged 5-15% increases in price every year over the last three decades. Some years and items have seen greater increases, sometimes smaller ones, but it has been the rare circumstance to not see any increase, and the market, as a whole, has never seen a negative return since passage of the FOPA. This strongly places machine guns as investments right on par, and even ahead of many other long-term investment options. And let’s be frank…owning a machine gun is a lot more satisfying as an appreciable asset than a stock certificate!
The Individual Purchase Process to Acquire an NFA Firearm
To purchase an NFA item, an individual must first meet the requirements under all federal laws to legally possess a firearm. Then, they must reside in a state that allows NFA items, complete two finger print cards, provide two passport style photos, and complete an BATFE Form 4 application. This information will be submitted to the BATFE, along with a check for $200 per item for payment of the tax stamp. In addition, a copy of the paperwork will also be forwarded to the individual’s Chief Law Enforcement Officer for the area in which they reside. Once BATFE has approved and returned the paperwork, the individual make take possession of the item(s). Approval times for the paperwork from BATFE can vary greatly, and can take anywhere from 30 days to as much as a year.
A person may also set-up a NFA Legal Trust and apply for the tax stamps through said trust. In this case, the legal trust actually owns the weapons (sort of like a corporation) and an individual is legally bound as the Responsible Party to the trust, itself. Gun Trusts offer some advantages to individual purchase, namely, the ability to set up other responsible parties who can also possess the approved NFA weapons and a streamlined beneficiary process in the event of person’s passing. However, the application process is slightly more complicated and time consuming, as the law requires all responsible parties on the trust to submit their own individual finger print cards, photos, and paperwork for each NFA purchase. Payment of the tax stamp is the same regardless of whether the NFA weapon is transferred to an individual or a trust.
NFA items can also only be transferred directly to in-state individuals. To import/export an NFA item from out-of-state requires a transfer from a Class Three dealer to another, in-state Class Three dealer, prior to being transferred to an individual. In other words, if you are a resident of Pennsylvania, Chester County Armory can transfer an NFA weapon directly to you. If you are a resident of another state, we must transfer an NFA weapon to a FFL/SOT dealer in your state, who will then transfer the item to you through ATF’s Form 4 process.
A classification structure of firearms created by the National Firearms Act of 1934 and regulated by the Bureau of Alcohol, Tobacco, Firearms, and Explosives.
These categories include: Machine Guns, Short Barrel Rifles (SBR’s), Short Barrel Shotguns, Destructive Devices, Silencers, and AOWs. All items in these categories are commonly referred to as NFA/Class Three weapons.
Any weapon capable of firing more than one round with the single depression of a trigger. This includes full-automatic fire, as well as any burst firing.
(SBR) Any shoulder-fired rifle with a barrel length of less than 16″ or an overall length of less than 26.”
(SBS) Any shoulder-fired shotgun with a barrel length of less than 18″ or an overall length of less than 26.”
These weapons are defined as any firearm with a bore greater than .50 caliber in size and generally recognized to have “no sporting purpose,” as decided by the U.S. Secretary of the Treasury. This category includes grenade launchers, riot control launchers, and shotguns only suitable for military or law enforcement use, with no recognized sporting use. This category also includes explosives devices, such as grenades, bombs, etc.
(Any Other Weapon) This category is basically a catch-all for weapons that don’t fit any of the other definitions defined by U.S. Federal Law. They DO NOT include rifles, handguns, shotguns, machine guns, SBR’s, SBS’s, or BATFE designated “firearms.” Examples include handguns that have a forward grip (making it not designed to be shot with one hand), guns that are designed to look like other objects (pen guns, cane guns, etc.), and handguns that are designed or redesigned to fire smoothbore shotgun shells.
This category of machine guns was created by the FOPA, and consists of machine guns that were held in possession by FFL/SOT dealers on May 16th, 1986, but were not listed on the NFA registry for civilian ownership. The majority of these weapons are machine guns manufactured in other countries that were imported into the U.S. after the GCA limited importation of foreign-manufactured machine guns to Dealer Sales Samples Only. These weapons, by law, may continue to be possessed solely by FFL/SOT dealers or law enforcement. An FFL/SOT licensee may continue to possess these weapons in their individual collection, even after they have ceased any business operations, and have surrendered their license to BATFE.
This consists of all machine guns manufactured, and/or originally purchased after May 16th, 1986. These weapons are only available for law enforcement and military use, and are only available to transfer to an FFL/SOT dealer with a valid demo letter from a law enforcement or military agency. Weapons in this class are not eligible to be personally possessed by an FFL/SOT that has ceased business operations.
This is the category of firearms that are generally considered standard rifles and shotguns. These weapons are all designed to be shoulder-fired, have barrels that are at least 16″ in length for rifles and 18″ in length for shotguns, are at least 26″ in overall length, and fire one round per single trigger pull. Anyone over the age of 18, who is not prohibited by federal or state law, and meets all requirements laid out in BATFE Form 4473, may possess these weapons once a background check is completed.
This is the category of firearms that are generally considered handguns (i.e. pistols, revolvers, derringers, etc.). These are weapons designed to be fired with one hand, and will fire only one round per single trigger pull. Title 1 handguns can be purchased by any individual that is over 21 years of age, can clear a Form 4473, and undergoes a background check. In Pennsylvania, individuals are also required to complete an additional handgun form for the Pennsylvania State Police. For out-of-state sales, handguns require overnight shipping to a valid FFL dealer for private transfer.
This category is for devices that meet the definition of a “firearm” under U.S. law, but do not fall into either of the other Title 1 categories.
A “firearm” is defined as a portable barreled weapon that expels, is designed to expel or may be readily converted to expel a shot, bullet, or projectile by the action of an explosive, excluding antique firearms or their replicas.
Examples of weapons that are firearms, but do not meet the criteria to be considered rifles, shotguns, or handguns are items such as the Mossberg 590 Shockwave or the Remington 870 Tac-14. These weapons are not designed to be shoulder-fired (like as shotgun) nor fired with one hand (like a handgun). They also have overall lengths greater than 26″, therefore, BATFE classifies them as “firearms” requiring an individual to only be 21 years of age or older, clear a Form 4473, and undergo a background check for purchase.