Individual Ownership under the National Firearms Act
There are several ways to acquire Class III (Title II) firearms under the National Firearms Act (“NFA”). Three of the most common are: (1) as an individual; (2) by using an entity such as a corporation or limited liability company; and (3) creating a trust. Each choice has its own advantages and disadvantages that must be weighed before deciding on the route to take. No one option is necessarily better than the other and each person’s circumstances will dictate the route they should take. As always, I recommend conducting thorough research and consulting with a competent attorney before making a decision.
Advantages of the Individual Ownership:
The advantages of acquiring Class III NFA firearms individually are:
- Affordability. There is no entity to create, no fees to pay. You don’t have to be concerned about whether your corporation or trust is properly formed and valid.
- You get possession/ownership, not another entity. Some people feel more comfortable knowing that they own the Class III firearms, not some other entity.
Disadvantages of the Individual Ownership:
There are also some disadvantages with individually owning Class III NFA firearms:
- Possession is limited only to the individual. That means that the individual owner cannot leave the area where the Class III firearm/item is without creating potential liability for those that remain. (Example: the registered owner leaving the range for lunch while the owner’s friends keep on shooting his suppressor without him present).
- Fingerprints and photographs are required.
- Processing times can be excessively more than with a corporation, limited liability company, or trust.
- An individual is required to get their Chief Law Enforcement Officer (“CLEO”) to signoff on each Form 1 or Form 4. Some CLEOs take inordinately long to sign off or downright refuse to sign them at all.
- There are more steps required in order to get the required tax stamp than with an entity.
- There is no disposition of the Class III firearms with an individual owner as would exist with a trust.