The Transfer: How an Individual Sells (Buys) a Machine Gun.
So you’ve made the deal to sell or buy that machine gun and now it’s time to confront the paperwork involved in the NFA transfer. As you recall, the National Firearms Act of 1934 and subsequent legislation proscribes the manner in which the federal government allows machine guns to transfer among individuals. The key piece of paper is ATF Form 5320.4 or Form 4. This is a tax paid ($200) transfer used if the machine gun is being sold to either an individual or a SOT. There can not be a physical transfer of the machine gun until the NFA Division of ATF approves the Form 4 by attaching a $200 tax stamp and sending it back to the transferor. Two original copies of the Form 4 are required and the following are the instructions for completing them.
This sign-off simply states that they (the CLEO), "...have no information indicating that the transferee will use the firearm or device described on this application for other than lawful purposes. I have no information that the receipt or possession of the firearm or device described in item 4 would place the transferee in violation of State or local law. "
In general a CLEO is the County Sheriff, Chief of Police, District Attorney or Judge of the buyer’s locale. Obtaining this sign-off can be an obstacle in areas that have anti-gun sentiments. If this is the case, other methods such as forming a Trust or a corporation will nullify the CLEO signature requirement. The best advice is to seek competent counsel if these alternate methods are required.
The buyer must also provide his fingerprints on two copies of FBI/NFA fingerprint cards. Typically the Sheriff's office or Police Station can provide this service.
Additionally, the buyer completes ATF Form 5330.20 that certifies US (or other) citizenship.
The two Form 4s, two fingerprint cards, 5330.20 and a $200 transfer tax payment are sent to the NFA tax collection address as shown on the Form 4. If everything goes well, in approximately 8-12+ weeks an approved original copy of the Form 4 is sent back to the seller and the machine gun can be physically transferred to the buyer.
For a SOT buyer in any state or first transfer to an out of state SOT for a subsequent transfer to an individual buyer in that state, the same Form 4s are used, but photos, fingerprint cards, CLEO signature and 5330.20 are not required. The $200 transfer tax is still paid. For the individual buyer in another state, an additional transfer as described above will occur between him and the receiving SOT.
So if a Machine Gun is sold to an individual buyer in another state, the first transfer is to a SOT in the buyer's home state. The buyer's home state SOT then transfers the gun to the buyer in that state. This means there are two transfers with two transfer taxes or $400 total tax.
The NFA Form 4 package is a tax return of the seller with both seller and buyer information. Technically, the seller is required to pay the $200 transfer tax, but in practice it is often the buyer that pays the tax for the seller. ATF/NFA doesn't care who writes the check as long as it is there.
The very first transfer that you do as a buyer/seller will seem very complex, but a machine gun dealer (SOT) should walk you through the process. After a few transfers, you too are an expert and can initiate the process yourself as buyer or seller. Keep in mind that there is no requirement to go through a SOT if the buyer and seller are in the same state. Many of the forms can be completed online, printed and sent to the NFA for transfer approval.
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