Type 7 FFL and ITAR registration

[Darren M]

I've been giving the Type 7 FFL some serious thought lately. However, I've come across an odd scenario that states ITAR registration, $2,250!, is a requirement. Is this something that is still valid?

I'm hoping we have some current Type 7 FFL's on the board that would be willing to clear this up.
Thanks
Darren

[Pokulski-Blatz]

Yes, it is 100 percent required.

[Darren M]

That's freak'n insane. Talk about killing small business. Thanks for the input!

[likeitfast55]

Yes that is accurate. Phaux is an 07. I have an 01 with an SOT.

[YALE]

That's freak'n insane. Talk about killing small business. Thanks for the input!

They want a barrier to entry for people that are doing it as a hobby, and they want people manufacturing ammo to be able to export. They don't want people that are just pussy footing around.

[Pokulski-Blatz]

Yes that is accurate. Phaux is an 07. I have an 01 with an SOT.

There is one other 07 FFL/02 SOT on here but I don't want to out him. If he feels like it he can chime in.

[Moose242]

There is one other 07 FFL/02 SOT on here but I don't want to out him. If he feels like it he can chime in.

Checking in.




**Disclaimer- My situation and legal circumstances may be different than yours. Contact a lawyer for a final opinion**

I have discussed this with various subject matter experts in depth and my conclusion on this topic is below.

As I read it the regulation, you must register ONLY if you manufacture a firearm or regulated part. As an 07, I have the ABILITY to but do not HAVE to manufacture a firearm for resale.

My intent in the short-term is to use the 07 for R&D and thus do not have to register under Sec. 122.1 (b) exemption.

"""
Sec. 122.1 Registration requirements:

(a) General. Any person who engages in the United States in the business
of either manufacturing or exporting defense articles or furnishing
defense services is required to register with the Office of Munitions
Control. Manufacturers who do not engage in exporting must nevertheless
register.

(b) Exemptions. Registration is not required for: ...

(2) Persons whose pertinent business activity is confined to the
production of unclassified technical data only. ...

(4) Persons who engage only in the fabrication of articles for
experimental or scientific purposes, including research and development.

(c) Purpose. Registration is primarily a means to provide the U.S.
Government with necessary information on who is involved in certain
manufacturing and exporting activities. Registration does not confer any
export rights or privileges. It is generally a precondition to the
issuance of any license or other approval under this subchapter.
""""

At the point in time that I create a firearm that will not be used for just R&D I will HAVE to register for ITAR. I will then pay registration fee in anticipation of larger revenues.

During my R&D phase, I will have to keep detailed records of the creation, use, and disposition of any prototypes, etc. Obviously, any lapse in this will open me up to significant fines, etc.

So, what does this ultimately mean for me?
1. I CANNOT build on stripped lowers and resell them (ATF classifies this as "manufacturing") This means NO custom guns for friends or online customers unless they provide the parts (which qualifies as "gunsmithing").
2. I CANNOT build a demonstration (even if its not to be sold) firearm or regulated part without paying ITAR registration.
3. I can ONLY create "firearms" (or other regulated parts) IF they are used ONLY for R&D.

[Darren M]

They want a barrier to entry for people that are doing it as a hobby, and they want people manufacturing ammo to be able to export. They don't want people that are just pussy footing around.

I guess that makes some sense. It is a hell of a leap for folks who want to turn a hobby into a business though.

[Moose242]

I guess that makes some sense. It is a hell of a leap for folks who want to turn a hobby into a business though.

So is a proper mill and lathe for making firearms.

[Darren M]

That is VERY true. However, those are tools that will pay for themselves, if used properly. What does the ITAR fee pay for?
(Edit, other than staying out of jail. )

[Pokulski-Blatz]

I guess that makes some sense. It is a hell of a leap for folks who want to turn a hobby into a business though.

$2300 is a drop in a bucket compared to the other costs involved.

[David]

That is VERY true. However, those are tools that will pay for themselves, if used properly. What does the ITAR fee pay for?

Jackboots.

[Moose242]

That is VERY true. However, those are tools that will pay for themselves, if used properly. What does the ITAR fee pay for?

Just a DoS fee they can tac on because they can. It's the government; If they can add a chickenshit tax or fee, then they will add a chickenshit tax or fee. Hell, the ITAR fee is hella cheap compared to other industries.

[YALE]

The ITAR fee can pay for itself, if you intend to export.

[Darren M]

The ITAR fee can pay for itself, if you intend to export.

Intro a slew of additional issues. Jeez, I can't even imagine the amount of whiskey required to get a fire arm through customs in the inbound country. You'd need to be a freak'n international attorney, or have one (or more), on retainer..... And I've worked in logistics (domestic and international) for the last 20+ years!