The selling of firearms by auction is highly regulated. The federal government dictates there is [typically] only one scenario where the auctioneer selling firearms doesn’t need to be a federal firearms licensee (FFL.)
18 U.S.C. § 923(a), ATF Rul. 96-2: Held: Persons who conduct estate-type auctions at which the auctioneer assists the estate in selling the estate’s firearms, and the firearms are possessed and transferred by the estate, do not require a Federal firearms license. Held further: Persons who regularly conduct consignment-type auctions, for example, held every 1-2 months, where the auctioneer takes possession of the firearms pursuant to a consignment contract giving the auctioneer the exclusive right and authority to sell the firearms at a location, time and date to be selected by the auctioneer and providing for a commission to be paid upon sale are required to obtain a license as a dealer in firearms pursuant to 18 U.S.C. § 923(a).
Today, we explore when a 501(c)(3) could conduct an auction with one or more firearms. It seems to us that unless the event is considered a gun show or qualifying event — which it likely isn’t — there are three other options:
The firearm is owned by the auctioneer who is licensed as an FFL. In this case, the firearm is displayed and sold at the event, where the buyer would fill out an ATF Form 4473 and secure possession at the FFL’s licensed premises.
The firearm is owned by the 501(c)(3) that is licensed as an FFL. In this case, the firearm is displayed and sold at the event, where the buyer would fill out an ATF Form 4473 and secure possession at the FFL’s licensed premises.
The firearm is owned by a third-party FFL that displays the firearm at the event. In this case, the firearm is sold at the event, where the buyer would fill out an ATF Form 4473 and secure possession at the FFL’s licensed premises.
What seems clear here is that 501(c)(3)’s could profit from the sale of firearms in “private transactions” (not at auctions,) unless state law prohibited such or required a background check, but certainly once an auction and/or auctioneer is involved, the rules change.
Besides selling firearms for an FFL, there are always auctioneers who say they will “utilize” an FFL for the transfer. The ATF has been very clear that this is not a workaround they endorse:
The ATF posed this question:
Can a licensee conduct background checks and transfer firearms on behalf of an unlicensed auctioneer?
The answer was:
Generally no, because most auctions do not qualify as a gun show or qualifying event and therefore a licensee would not be permitted to conduct business away from the licensed premises.
Besides a licensee (FFL) conducting business away from the licensed premises, a non-FFL auctioneer utilizing an FFL for transfers would be considered engaged in the business — which requires the auctioneer to be an FFL.
Further, when an auctioneer says, “I’m just bid calling and nothing else …” bid calling is quite material. When bid calling, you are inviting offers, accepting offers, creating contracts, and putting the seller and buyer into a contract while in an agency relationship with the owner/seller. Bid calling is commerce.
For auctioneers who continually think “There must be a way I can …” the answer is … https://mikebrandlyauctioneer.wordpress.com/2019/11/08/auctioneers-firearms-and-there-must-be-a-way/.
Mike Brandly, Auctioneer, CAI, CAS, AARE has been an auctioneer and certified appraiser for over 30 years. His company’s auctions are located at Mike Brandly, Auctioneer, Brandly Real Estate & Auction, and Goodwill Columbus Car Auction. He serves as Distinguished Faculty at Hondros College, Executive Director of The Ohio Auction School, and an Instructor at the National Auctioneers Association’s Designation Academy and Western College of Auctioneering. He has served as faculty at the Certified Auctioneers Institute held at Indiana University and is approved by The Supreme Court of Ohio for attorney education.
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