Firearms Dealers Engaged in the Business




Updated February 9, 2024
Firearms Dealers Engaged in the Business
On June 25, 2022, President Joe Biden signed into law the
(A) any person engaged in the business of selling
Bipartisan Safer Communities Act (BSCA; P.L. 117-159).
firearms at wholesale or retail [i.e., firearms
Section 12002 of P.L. 117-159 amends definitions related
dealers],
to firearms dealer licensure in the Gun Control Act of 1968
(B) any person engaged in the business of repairing
(GCA, 18 U.S.C. §§921 et seq.). Under the GCA, the
firearms or of making or fitting special barrels,
definition of engaged in the business undergirds provisions
stocks, trigger mechanism to firearms [i.e.,
that require persons buying and selling firearms at the
wholesale or retail level to be federally licensed as firearms
gunsmiths], or
dealers. Section 12002 of P.L. 117-159 amends a
(C) any person who is a pawnbroker.
subparagraph of the GCA definition of engaged in the
The term “licensed dealer” means any dealer who is
business as it pertains to federally licensed firearms dealers
licensed under the provision of this chapter.
by striking the language “with the principal objective of
livelihood and profit,” and replacing it with “to
It is notable that the subparagraph (18 U.S.C.
predominantly earn a profit.” As amended, the definition at
§921(a)(21)(C)) that defines engaged in the business for
federally licensed firearms dealers only refers to
18 U.S.C. §921(a)(21)(C) reads as follows:
subparagraph (11)(A) of the GCA definition of dealer. The
subparagraph does not refer to subparagraphs (11)(B) and
[Engaged in the business,] as applied to a dealer in
(11)(C) of the definition of dealer. Hence, gunsmiths and
firearms, as defined in section 921(a)(11)(A),
pawnbrokers must be federally licensed as gun dealers,
[means] a person who devotes time, attention, and
even if they do not meet the conditions set out in the
labor to dealing in firearms as a regular course of
definition of engaged in the business for federally licensed
trade or business to predominantly earn a profit
firearms dealers at 18 U.S.C. §921(a)(21)(C).
through the repetitive purchase and resale of
firearms, but such term shall not include a person
Defining “To Predominantly Earn a Profit”
who makes occasional sales, exchanges, or
The amendment to P.L. 117-159 further emphasizes a profit
purchases of firearms for the enhancement of a
motive as a factual circumstance requiring federal licensure
personal collection or for a hobby, or who sells all
as a gun dealer by defining “to predominantly earn a profit”
or part of his collection of firearms.
to mean
As discussed below, Section 12002 also amends the GCA
that the intent underlying the sale or disposition of
to define the clause “to predominantly earn a profit” as
firearms is predominantly one of obtaining
specifically excepting firearms transfers made to improve
or liquidate a personal firearms collection. Notably, Section
pecuniary gain, as opposed to other intents, such as
12002 does not amend the parallel GCA subparagraphs
improving or liquidating a personal firearms
defining engaged in the business for firearms and
collection.
ammunition manufacturers, gunsmiths, and importers at 18
Again, this definition reiterates a personal firearms
U.S.C. §921(a)(21)(A), (B), (D), (E), and (F).
collection exception included in the definition of engaged in
the business. On the other hand, in regard to firearms
Engaged in the Business and Licensure
transfers related to terrorism and other criminal conduct,
The GCA requires all persons engaged in the business of
this definition includes the following proviso:
importing, manufacturing, and dealing firearms to be
licensed as federal firearms licensees (FFLs) (18 U.S.C.
That proof of profit shall not be required as to a
§923). Any person who imports or manufactures
person who engages in the regular and repetitive
ammunition must also be licensed, but a federal dealer’s
purchase and disposition of firearms for criminal
license is not required to deal in ammunition. Under Section
purposes or terrorism. For purposes of this
922(a)(1)(A) of Title 18 of the U.S. Code, it is unlawful to
paragraph, the term ‘terrorism’ means activity,
engage in the business of importing, manufacturing, or
directed against United States persons, which—
dealing in firearms without a federal license. Offenses are
punishable by up to five years’ imprisonment.
(A) is committed by an individual who is not a
The Bureau
national or permanent resident alien of the United
of Alcohol, Tobacco, Firearms and Explosives (ATF) is the
States;
federal agency that administers and enforces the GCA and
licenses FFLs. Section 921(a)(11) of the GCA defines the
(B) involves violent acts or acts dangerous to
term dealer to mean:
human life which would be a criminal violation if
committed within the jurisdiction of the United
States; and
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Firearms Dealers Engaged in the Business
(C) is intended—
some, but not all, intrastate private firearm transfers subject
(i) to intimidate or coerce a civilian population;
to GCA recordkeeping and background check requirements,
if those transfers are made by profit-oriented, repetitive
(ii) to influence the policy of a government by
firearms buyers and sellers. Arguably, such transfers were
intimidation or coercion; or
not covered under previous law, if the firearms transfers in
(iii) to affect the conduct of a government by
question were not also made for the “principal objective” of
assassination or kidnapping.
one’s “livelihood.” According to the sponsors of P.L. 117-
This new provision is designated in the GCA as Section
159, there was confusion about the GCA’s definition of
922(a)(22) of Title 18 of the U.S. Code, moving and re-
engaged in the business as it pertained to individuals who
designating to Section 922(a)(23) the definition of “with the
bought and resold firearms repetitively for profit, but
principal objective of livelihood and profit” as it still
possibly not as the principal source of their livelihood. They
applies to licensed manufacturers and importers. The
maintain that these changes clarify who should be licensed,
terrorism/criminal purposes proviso is, and was previously,
eliminating a gray area in the law, ensuring that one aspect
included in the latter provision as well.
of firearms commerce is more adequately regulated.
GCA Recordkeeping and Background Checks
Implementation of P.L. 117-159
To deter unlawful firearms commerce and gun trafficking,
Prior to P.L. 117-159, there had been disagreement and
the GCA generally prohibits anyone who is not licensed as
confusion between ATF, courts, and legislators on how to
an FFL from acquiring a firearm from an out-of-state
interpret who is required to be a registered FFL. As noted,
source, requiring that such transfers be facilitated through
P.L. 117-159 codified a broader interpretation of what it
an FFL in the state where the transferee resides. The GCA
means to be engaged in the business than interpretations
requires FFLs to maintain records on all commercial
before the legislation was enacted. On December 7, 2023,
firearms transactions. The act also requires an FFL to
the period for comments ended on a September 8, 2023,
initiate a background check through the National Instant
proposed rule. ATF further clarified their interpretation by
Criminal Background Checks System (NICS) on any
publishing a notice of proposed rulemaking in the Federal
unlicensed person who seeks to acquire a firearm from the
Register that explained a person is a firearms dealer if they
FFL through a sale, trade, or redemption of firearms
meet any of six criteria:
exchanged for collateral (18 U.S.C. §922(t)). In the case of

a NICS system “proceed” response, the FFL may complete
The person sells or offers for sale firearms and
the transfer. In the case of a system “delayed” response, the
represents or demonstrates to potential buyers a
FFL is permitted to proceed with the transfer at their
willingness to purchase and sell additional firearms.
discretion after three business days have elapsed if the FFL

has not received a final NICS eligibility determination.
The person spends more money or its equivalent on
purchases of firearms for the purpose of resale than their
Intrastate private transfers between unlicensed persons not
reported taxable gross income during the applicable
engaged in the business of dealing in firearms “to
period of time.
predominantly earn a profit” are not covered by the
• The person “repetitively sells or offers for sale firearms”
recordkeeping or the background check provisions of the
GCA, as amended by P.L. 117-159. However, such
through straw or sham businesses or straw purchasers,
transfers and other matters such as possession, registration,
or that cannot be lawfully purchased or possessed.
and the issuance of licenses to firearms owners may be

covered by state laws or local ordinances. Some gun control
The person “repetitively sells or offers for sale firearms

advocates refer to intrastate private firearm transfers as the
within 30 days after they were purchased; that are new
gun show loophole and call for comprehensive/universal
or like new in their original packaging; or are of the
background checks. Related legislation has been introduced
same or similar kind (i.e., make/manufacturer, model,
in the 118th Congress (see H.R. 3122).
caliber/gauge, and action) and type (i.e., the
classification of a firearm as a rifle, shotgun, revolver,
Shift in Focus from Livelihood to Profit
pistol, frame, receiver, machinegun, silencer, destructive
device, or other firearm).”
Amendments to P.L. 117-159 shift the focus of the GCA

dealer licensing requirement onto an intent to seek a profit
by eliminating the “principal objective of livelihood” as a
• The person sells firearms that were in their business
condition for licensure. For federally licensed firearms and
inventory before their license was terminated.
ammunition manufacturers and importers, the “principal

objective of livelihood and profit” remains a central
The person sells or offers for sale firearms that were
condition requiring licensure. For federally licensed gun
transferred to a personal collection prior to the time
dealers, “to predominantly earn a profit” is now the central
someone lost their license.
condition requiring licensure.
ATF has estimated that the final action on this proposed
The amendments to P.L. 117-159 are intended to require
rule will take place in April 2024.
persons who buy and resell firearms repetitively for profit
to be licensed federally as gun dealers, even if they do not
Jordan B. Cohen, Analyst in Firearms Policy
do so with “the principal objective of livelihood.” As a
IF12197
result, the definitional changes in P.L. 117-159 could make
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Firearms Dealers Engaged in the Business


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https://crsreports.congress.gov | IF12197 · VERSION 3 · UPDATED