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Whether you want to sell a shotgun to a local pawn shop, trade handguns with a friend or start your own business buying and selling firearms, there are laws governing these transactions. If you are unsure how to proceed, it is best to contact local law enforcement. Gun dealerships must acquire proper licensing and pay certain taxes to operate lawfully.
Items you will need
Receipt book (optional)
Bound book for transactions (as required by law)
Types 1, 2, 7, 8, 9, 10 or 11 Federal Firearms Licenses (FFL) (as required by law)
Class 3 Special Occupation Tax (SOT) (as required by law)
Private Sale, Trade or Purchase
Determine if the gun transaction is considered a private sale or trade. In other words, be sure you are only conducting a private sale or trade between two people -- yourself and the buyer. An example of a private sale or trade is when someone purchases a rifle from you or trades a firearm with you at your yard sale. An example of a non-private trade or sale is if you were to list and sell your rifle on an online gun auction site, such as Gun Broker. You would have to ship the rifle to a licensed dealer near the buyer's place of residence, and he would only be able to pick up the rifle after he passes a background check.
Understand that you cannot sell or trade a gun to anyone outside of the state in which you live, unless you have first transferred the firearm to a licensed gun dealer in the buyer’s/trader’s state of residence. He will then be able to pick up the gun, once he passes a background check performed by the licensed dealer.
Know the laws for selling or trading firearms in your state, as you may trade or sell a firearm to someone in your state only if you believe that person is not restricted by law from owning a gun. For example, if you know the interested party is a convicted felon, do not sell him a gun. The National Riffle Association (NRA) lists state laws on their website.
Keep a bill of sale as proof you sold or traded the gun, on the off chance it ends up being used for a crime. A proper bill of sale should indicate the purchaser’s name and driver’s license number.
Dealer Sale, Trade or Purchase
Contact the ATF to determine the type of FFL (Federal Firearms License) you will need in order to trade or sell guns as a store owner. To acquire a Class 3 SOT (Special Occupation Tax) status you will first need a dealer or manufacturer FFL – Types 1, 2, 7, 8, 9, 10 or 11. You also will be required to pay a yearly tax due every July 1. The Class 3 allows you to buy and sell NFA or National Firearms Act firearms, such as silencers, machine guns, shotguns and short-barreled rifles.
Know the law with regard to buying, selling and trading firearms in your state. If you are unsure, consult the ATF or the National Riffle Association.
Run background checks on everyone who wants to buy a gun from your shop. It is not only illegal not to run a background check or sell to someone who did not pass a background check, but you can lose your FFL and be prosecuted for breaking the law.
Send the firearm to a licensed dealer in the purchaser’s state if an out-of-state buyer purchases a gun from you. Unless an out-of-state buyer is standing in your shop at the time of purchase -- and he is only purchasing a long-barreled firearm, such as a rifle -- you cannot sell a firearm to him outright. Rather, the transaction has to occur through the purchaser’s local FFL dealer.
Keep a bound book listing each and every transaction you make in regards to the sale, trade or purchase of firearms. You will need to turn this over to the ATF (Bureau of Alcohol, Tobacco, Firearms and Explosives) should you ever go out of business.
April Fidler has been a copy editor and writer for newspapers and textbook publishers for more than 10 years. She was also a program coordinator for the economics department at Purdue University for nine years. Fidler graduated from Purdue University in 1999 with three bachelor's degrees, two in writing and one in psychology.