Few things are discussed more by auctioneers than when an Federal Firearms License (FFL) is or is not required.
Typically, non-FFL’s are concerned that something they do will trigger the requirement to either become an FFL, or utilize an FFL. Rightly so.
We outlined the basics of when an auctioneer needs (and doesn’t need) an FFL here: http://mikebrandlyauctioneer.wordpress.com/2010/01/17/a-guide-for-auctioneers-selling-guns/
Today we look at one particular paragraph from the ATF‘s ruling on auctioneers:
In the case of estate-type auctions, the auctioneer acts as an agent of the executor and assists the executor in finding buyers for the estate’s firearms. The firearms are possessed by the estate, and the sales of firearms are made by the estate. In these cases, the auctioneer does not meet the definition of “engaging in the business” as a dealer in firearms and would not require a license. An auctioneer engaged in estate-type auctions, whether licensed or not, may perform this function, including delivery of the firearms, away from the business premises.
Given the common interpretation of this paragraph, an FFL with a licensed location could act like he or she didn’t have an FFL, and assist a seller at an estate-type (onsite, single seller in-state sales) auction with no background checks or similar paperwork otherwise required when he or she acts as an FFL.
In a scenario where an auctioneer had an auction near a state line, likely attracting out-of-state interest, but a substantial distance from his or her licensed location, thus inconvenient to take back all the guns to transfer there, could the auctioneer selectively manage these purchases?
In other words, at an estate-type auction, could some guns be transferred to in-state buyers without a background check, but any out-of-state buyers be required to fill out an ATF Form 4473 and pass the background check? And further, those out-of-state buyer’s guns be taken back to the licensee’s location for transfer?
Certainly the ATF suggests an auction is the entire event — and it’s generally either an estate-type auction or a consignment-type auction. However, the UCC 2-328 considers an auction to be each lot. For example, per the UCC 2-328, one gun could be sold without reserve, and another could be sold with reserve.
If each gun could be treated individually, the local buyers would not be inconvenienced by the trip back to the licensee’s location, and the seller would benefit from out-of-state interest since the auctioneer was an FFL.
“Sold! for $875 to bidder number 74. Do you live in this state or out-of-state? In state? Here’s your gun?” “Sold! for $1,150 to bidder number 127. Do you live in this state or out-of-state? Out-of-state? We’ll now take possession of the gun and you will need to fill out the ATF Form 4473? You can pickup at our facility or we can ship to an FFL near you?”
If these guns could be managed in this fashion, maybe a nearby FFL could assist so out-of-state buyers could pickup locally? Of course, if there’s an FFL nearby, it might be better to have that FFL handle all the transfers. However, there’s not always a nearby FFL. Relatedly, maybe give in-state bidders green bidder cards, and out-of-state bidders red ones?
The safe way for auctioneers to act when selling guns? Get an FFL or work with an FFL, and not look for ways to circumvent current law. Here we suggest more questions than answers, in an effort to explore possibly a quite legitimate way for auctioneers to manage a particular circumstance.
Mike Brandly, Auctioneer, CAI, AARE has been an auctioneer and certified appraiser for over 30 years. His company’s auctions are located at: Mike Brandly, Auctioneer, Keller Williams Auctions and Goodwill Columbus Car Auction. He serves as Adjunct Faculty at Columbus State Community College, Executive Director of The Ohio Auction School and Faculty at the Certified Auctioneers Institute held at Indiana University.
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