Revising Regulations Defining “Engaged in the Business” as a Dealer in Firearms

7801(a)(2); 28 U.S.C. 599A(c)(1). Thus, for ease of reference, this proposed rule refers to the Attorney General where relevant.

2 In Attorney General Order Number 6353-2025, the Attorney General delegated authority to the Director to issue regulations pertaining to matters within ATF's jurisdiction, including under the National Firearms Act, GCA, and Title XI of the Organized Crime Control Act. ATF's jurisdiction also includes those portions of section 38 of the Arms Export Control Act pertaining to the permanent import of defense articles and defense services and the Contraband Cigarette Trafficking Act.

The GCA, at 18 U.S.C. 922(a)(1)(A) and as implemented at 27 CFR 478.41(a), makes it unlawful for any person, except a federal firearms licensee (“FFL” or “licensee”)—that is a licensed dealer, manufacturer, or importer—to “engage in the business” of dealing in, manufacturing, or importing firearms. A person may file an application with and receive such a license from ATF, to which the Attorney General has delegated the licensing function. See 18 U.S.C. 923(a); 27 CFR 478.41(b). Licensees are generally required to conduct background checks on prospective firearm recipients through the Federal Bureau of Investigation's National Instant Criminal Background Check System (“NICS”) to prevent prohibited persons from receiving firearms. See 18 U.S.C. 922(t). Licensees also must maintain firearms transaction records for crime-gun tracing purposes. See 18 U.S.C. 923(g)(1)(A).

In 1986, Congress passed the Firearms Owners' Protection Act (“FOPA”), Public Law 99-308 (1986), in which it defined the term “engaged in the business” for purposes of the GCA as applied to a dealer. 3 The statute defined a dealer engaged in the business as “a person who devotes time, attention, and labor to dealing in firearms as a regular course of trade or business with the principal objective of livelihood and profit through the repetitive purchase and resale of firearms.” 18 U.S.C. 921(a)(21)(C) (2020)

ined the term “engaged in the business” for purposes of the GCA as applied to a dealer. 3 The statute defined a dealer engaged in the business as “a person who devotes time, attention, and labor to dealing in firearms as a regular course of trade or business with the principal objective of livelihood and profit through the repetitive purchase and resale of firearms.” 18 U.S.C. 921(a)(21)(C) (2020). FOPA also defined the phrase “with the principal objective of livelihood and profit” to mean “that the intent underlying the sale or disposition of firearms is predominantly one of obtaining livelihood and pecuniary gain, as opposed to other intents, such as improving or liquidating a personal firearms collection.” FOPA, Public Law 99-308, sec. 101 (adding paragraphs (21)(C) and (22) to 18 U.S.C. 921(a)); see also 18 U.S.C. 921(a)(22) (2020). FOPA's definition of “engaged in the business” as a dealer was incorporated into ATF's implementing regulations at 27 CFR 178.11 4 (now § 478.11) as “Dealer in firearms other than a gunsmith or a pawnbroker.” 27 CFR 478.11.

3 ATF notes that there is there is some overlap in statutory control of firearms for purposes of the GCA and for purposes of section 38 of the Arms Export Control Act. Any person (1) who “engages in the business of” manufacturing, exporting, or temporarily importing defense articles and defense services related to certain firearms on the United States Munitions List and designated in the International Traffic in Arms Regulations (“ITAR”), 22 CFR parts 120-130, at 22 CFR 121.1, or (2) who engages in the brokering of firearms designated at that section and those firearms designated as defense articles on the U.S. Munitions Import List at 22 CFR 447.21, is required to register with the Department of State and pay a fee. These requirements are prescribed at sections 122.1 and 129.3 of the ITAR and are distinct from the requirements discussed in this proposed rule and the definition of “engaged in the business” at 18 U.S.C. 921(a)(21)

that section and those firearms designated as defense articles on the U.S. Munitions Import List at 22 CFR 447.21, is required to register with the Department of State and pay a fee. These requirements are prescribed at sections 122.1 and 129.3 of the ITAR and are distinct from the requirements discussed in this proposed rule and the definition of “engaged in the business” at 18 U.S.C. 921(a)(21).

4 Commerce in Firearms and Ammunition, 53 FR 10480, 10491 (Mar. 31, 1988).

On June 25, 2022, Congress passed the Bipartisan Safer Communities Act (“BSCA”), Public Law 117-159. Among other provisions, section 12002 of BSCA broadened the statutory definition of “engaged in the business” by eliminating the requirement that a person's “principal objective” of purchasing and reselling firearms must include both “livelihood and profit” and replacing it with a requirement that the person must intend “to predominantly earn a profit.” The statute now provides that, as applied to a dealer in firearms, the term “engaged in the business” means “a person who devotes time, attention, and labor to dealing in firearms as a regular course of trade or business to predominantly earn a profit through the repetitive purchase and resale of firearms.” 18 U.S.C. 921(a)(21)(C) (emphasis added). BSCA defined the term “predominantly earn a profit” to mean that the intent underlying the sale or disposition of a firearm is for pecuniary gain rather than for other purposes, such as selling a personal firearms collection. 18 U.S.C. 921(a)(22). Prior to BSCA, this term required the principal objective of selling or disposing firearms to be both for profit and, in addition, maintaining a livelihood. BSCA's statutory amendment to the term “predominantly earn a profit” shifts the primary focus to the intended pecuniary gain from selling or disposing firearms even when such activity is not the person's main source of income

.S.C. 921(a)(22). Prior to BSCA, this term required the principal objective of selling or disposing firearms to be both for profit and, in addition, maintaining a livelihood. BSCA's statutory amendment to the term “predominantly earn a profit” shifts the primary focus to the intended pecuniary gain from selling or disposing firearms even when such activity is not the person's main source of income.

When drafting regulations to implement BSCA, the Biden Administration directed the Department to further clarify, through rulemaking, the meaning of the term “engaged in the business.” Specifically, President Biden issued Executive Order 14092, which required the Attorney General to develop and implement a plan to, in relevant part, “clarify the definition of who is engaged in the business of dealing in firearms, and thus required to become [FFLs], in order to increase compliance with the federal background check requirement for firearm sales, including by considering a rulemaking, as appropriate and consistent with applicable law; [and] prevent former FFLs whose licenses have been revoked or surrendered from continuing to engage in the business of dealing in 5 The Biden Administration attempted to implement policy changes that went far beyond the regulatory changes necessary to implement BSCA.

5 Reducing Gun Violence and Making Our Communities Safer, E.O. 14092, sec. 3(a)(i), 88 FR 16527, 16527-28 (Mar. 14, 2023).

The Department published a final rule, titled “Definition of `Engaged in the Business' as a Firearms Dealer,” 89 FR 28968 (Apr. 19, 2024) (“EIB rule”), which became effective on May 20, 2024. The EIB rule amended the regulations in 27 CFR part 478 to (1) incorporate BSCA's definition of the term “engaged in the business,” (2) provide clarification and guidance on what it means to be “engaged in the business” and to have the requisite intent to “predominantly earn a profit,” and (3) identify conduct that was presumed to constitute “dealing” and to show relevant intent. See 89 FR 28968

e States of Texas, Mississippi, Louisiana and Utah—for the pendency of the litigation. 6 In addition, the district court found that several regulatory presumptions in the EIB rule conflict with the statute. 7 In particular, it found that ATF had no authority to use administrative regulations to expand the zone of firearms-dealing subject to regulation beyond that which Congress statutorily created. In subsequent litigation, the United States District Court for the District of Kansas denied a motion for preliminary injunction, on both standing and the merits, 8 as did the United States District Court for the Northern District of Alabama with respect to standing. 9 However, on September 30, 2025, the Northern District of Alabama granted the plaintiff's motion for summary judgment. The Northern District of Alabama found that the plaintiffs had established standing. On the merits, the court determined that ATF exceeded its statutory authority in issuing the final rule and that the rule improperly expanded the statutory definition of “engaged in the business.” 10

6 See Texas. v. ATF, 737 F. Supp. 3d 426 (N.D. Tex. 2024).

7 See id. at 442 (stating that “several presumptions conflict with the statutory text. Two of them, for example, provide that a person is presumptively `engaged in the business' if the person `demonstrates a willingness and ability to purchase and resell' firearms or `purchases. . . or . . . resells' firearms”).

8 See Kansas v. Garland, 2024 WL 3360533, at *9 (D. Kan. July 10, 2024) (finding “serious issues appear in Plaintiffs' standing and merits arguments that prevent them from making the strong showing necessary to obtain injunctive relief”).

9 Butler v. Garland, 2024 WL 5424418 (N.D. Ala. Nov. 4, 2024).

10 Butler v. Bondi, 805 F. Supp. 3d 1175 (N.D. Ala. 2025).

II. Proposed Rule

On further review, ATF agrees that the EIB rule is replete with procedural and substantive problems

r example, a person would be presumed to be engaged in the business when a person repetitively resells or offers for resale firearms—

(i) within 30 days after the person purchased the firearms; or

(ii) within one year after the person purchased the firearms if they are—

(A) new, or like new in their original packaging; or

(B) the same make and model, or variants thereof.

27 CFR 478.13(c). Additionally, 27 CFR 478.13(d)(2) identified seven circumstances that create a presumption of intent to predominantly earn a profit, which included, for example, when a person “[p]urchases or otherwise secures merchant services as a business ( e.g., credit card transaction services, digital wallet for business) through which the person intends to repetitively accept payments for firearms transactions.” The EIB rule's stated intent was to (1) license more persons; (2) deter others from engaging in the business without a license; (3) increase the number of background checks by increasing the licensed population; and (4) expand the reach of crime-gun trace requests by increasing the licensed population. See 89 FR 28968.

With respect to the first two purposes, ATF's position is the presumptions created by the EIB rule were largely unnecessary because the statutory definition is readily comprehensible. For dealers, the core of being engaged in the business requires the intent to profit from the repeated buying and selling of firearms. In other words, a person must be a wholesaler or retailer of new or used goods. For example, a person who buys ten models of the same handgun, with the predominant intent to resell for a profit, and then proceeds to sell any number of them repetitively three days later at a flea market is engaged in the business within the statutory definition. See 18 U.S.C. 921(a)(21)(C) (applying the definition of “engaged in the business” as a dealer). That person would be engaged in the business from the moment he made repetitive sales with the intent to profit

sufficient facts to explain the plaintiff's case. Switching only the burden of production would have had no further effect. In light of the foregoing, the rule could be reasonably perceived as shifting the burden to the individual to disprove the presumption. At minimum, even if the EIB rule truly meant to shift only the burden of production—and nothing else—then the presumptions were unnecessary.

To be clear, discarding the presumptions does not mean that a person who engages in behavior identified by the presumptions will not be found to be engaged in the business. The actions identified by the presumptions in EIB provide circumstantial evidence from which a fact finder could potentially find that a person was engaged in the business. Removing the EIB rule's legal presumptions simply prevents this evidence from being given dispositive effect unless the firearm seller can carry the burden of disproving that he was engaged in the business.

Furthermore, ATF has not used the EIB rule's presumptions in civil proceedings, showing they were in fact unnecessary in practice. An anecdotal survey of ATF's field divisions uncovered no instances in which the presumptions were cited in civil proceedings in the time since the EIB rule became effective. ATF may revoke a license or deny a renewal application in a civil administrative proceeding if the licensee willfully violated 18 U.S.C. 922(a)(1)(A), which prohibits a person from engaging in the business as a dealer without a license, or aided and abetted others in willfully engaging in the business of dealing in firearms without a license. Since publishing the EIB rule in April 2024, ATF has brought two such proceedings against licensees. A review of these proceedings reflects that none of the presumptions set forth in 27 CFR 478.13 were cited or referenced by ATF in support of these actions

ness as a dealer without a license, or aided and abetted others in willfully engaging in the business of dealing in firearms without a license. Since publishing the EIB rule in April 2024, ATF has brought two such proceedings against licensees. A review of these proceedings reflects that none of the presumptions set forth in 27 CFR 478.13 were cited or referenced by ATF in support of these actions. Given that the presumptions have not actually proven to be significant to or applied in ATF proceedings, and likewise do not appear to have had the expected effect of increasing the number of licensees, see infra, rescinding the presumptions is warranted to preserve public confidence in ATF proceedings and avoid a perception that such proceedings are or may be biased.

Moreover, mandatory presumptions have little role in the enforcement of the GCA's provisions against dealing without a license. The EIB rule suggested that the presumptions could be used “to determine whether to deny or revoke a federal firearms license.” 89 FR 28969. But ATF's administrative adjudications, which usually involve license revocations, operate only on those who are already licensed. The EIB rule also suggested that they might have application “in civil asset forfeiture proceedings,” 89 FR 28969, but ATF has no anecdotal or statistical information that indicates it has used any of the presumptions in a civil forfeiture matter involving dealing without a license since the EIB rule was published. As a matter of policy, ATF has concerns about seizing property through the use of regulatory presumptions.

Individuals who engage in dealing without a license are primarily subject to criminal sanction. In criminal proceedings, the presumptions were intended to be useful to courts to the extent that jury instructions could incorporate permissible inferences if the case involved a fact pattern that matched one of the presumptions. 89 FR 28976, 28982, 29014. But ATF is not aware of the presumptions facilitating criminal enforcement

aling without a license are primarily subject to criminal sanction. In criminal proceedings, the presumptions were intended to be useful to courts to the extent that jury instructions could incorporate permissible inferences if the case involved a fact pattern that matched one of the presumptions. 89 FR 28976, 28982, 29014. But ATF is not aware of the presumptions facilitating criminal enforcement. As the EIB rule recognized, see 27 CFR 478.13(h), mandatory presumptions cannot be employed in criminal proceedings. See Sandstrom v. Montana, 442 U.S. 510 (1979). Further, as with the civil revocation proceedings mentioned above, ATF is not aware of any criminal proceedings where presumptions have been invoked as permissible inferences since the EIB rule was published. Instead of presumptions or permissive inferences, judges may simply instruct jurors on the factors relevant to determining whether someone is engaged in the business—an instruction that judges already give. See, e.g., Pattern Jury Instruction, 5th Circuit, 2024 922(a)(1)(A) “engaged in the business”; 14 Pattern Jury Instructions, 9th Circuit, 14.3—922(a)(1)(A). 15

14 A number of factors may be considered in determining whether a defendant was “engaged in the business” of dealing in firearms, including: (1) the quantity and frequency of sales; (2) the location of the sales; (3) conditions under which the sales occurred; (4) the defendant's behavior before, during, and after the sales; (5) the price charged; (6) the characteristics of the firearms sold; and (7) the intent of the seller at the time of the sales. United States v. Brenner, 481 F. App'x 124, 127 (5th Cir. 2012) (explaining that “the jury must examine all circumstances” in determining whether the defendant was “engaged in the business” of dealing in firearms); see also United States v. Garcia, No. 21-51065, 2023 WL 116727, *1 (5th Cir. Jan. 5, 2023) (for recent application)

FL Newsletter at 8 (June 2021), https://www.atf.gov/firearms/docs/newsletter/federal-firearms-licensee-ffl-newsletter-june-2021/download [ https://perma.cc/H5KY-5G9T ] (addressing internet sales of firearms); ATF, FFL Newsletter at 3 (Sept. 2016), https://www.atf.gov/media/28906/download [ https://perma.cc/KY89-FRMZ ] (addressing brokering firearms for exportation); ATF, FFL Newsletter at 6-7 (Mar. 2023); ATF, FFL Newsletter at 9 (June 2021), https://www.atf.gov/firearms/docs/newsletter/federal-firearms-licensee-ffl-newsletter-june-2021/download (discussing social media gun raffles) [ https://perma.cc/H5KY-5G9T ]; Letter for Outside Counsel to National Association of Arms Shows, from Chief, Firearms and Explosives Division, ATF, Re: Request for Advisory Opinion on Licensing for Certain Gun Show Sellers at 1 (Feb. 17, 2017); ATF, ATF Federal Firearms Regulations Reference Guide, ATF Publication 5300.4, Q&A L1, at 207-08 (2014), https://www.atf.gov/firearms/docs/guide/federal-firearms-regulations-reference-guide-2014-edition-atf-p-53004/download [ https://perma.cc/KD35-AEXU ]; ATF, FFL Newsletter at 3 (May 2001), https://www.atf.gov/media/28811/download [ https://perma.cc/46KY-3VUM ] [ (addressing auctioning firearms); ATF, FFL Newsletter at 7 (1990), https://www.atf.gov/media/28756/download [ https://perma.cc/L8QT-VTX6 ] (addressing auctioning firearms); and Letter for Editor, CarPac Publishing Company, from Acting Assistant Director (Regulatory Enforcement), ATF, at 1-2 (July 26, 1979).

ATF recognizes that there is no bright line at which a person may cross the threshold from engaging in personal sales to being engaged in the business of dealing firearms. The GCA's definition of “engaged in the business” is a standard, not a rule. The standard must be applied to the factual scenario of each case. And as with any standard, there are paradigm cases on either side, but no perfectly defined line between them. Nor is there any magic number of sales that can make a person “engaged in the business.” 89 FR 29016

engaged in the business of dealing firearms. The GCA's definition of “engaged in the business” is a standard, not a rule. The standard must be applied to the factual scenario of each case. And as with any standard, there are paradigm cases on either side, but no perfectly defined line between them. Nor is there any magic number of sales that can make a person “engaged in the business.” 89 FR 29016. Persons who sell two firearms can be engaged in the business, if they couple that sale with labor and intent to engage in repeated commercial transactions for profit. 18 Persons who sell 50 firearms may not be engaged in the business if they are liquidating their personal collections, at least in the absence of facts militating in the opposite direction. 19 As the Supreme Court has recognized, Congress may legislate “us[ing] imprecise terms,” Sessions v. Dimaya, 548 U.S. 148, 159 (2018), or a “qualitative standard,” Johnson v. United States, 576 U.S. 591, 604 (2015).

18 See King, 735 F.3d at 1107.

19 See 18 U.S.C. 921(a)(22); see also, e.g., United States v. Mulholland, 702 F. App'x 7, 12 (2d Cir. 2017) (“The definition does not extend to a person who makes occasional sales for a personal collection or hobby, id., and the government need only prove that a person was `ready and able to procure [firearms] for the purpose of selling them from time to time.' ” (quoting United States v. Nadirashvili, 655 F.3d 114, 199 (2d Cir. 2011)). But see United States v. Brenner, 481 F. App'x 124, 127 (5th Cir. 2012) (defendant argued he was liquidating personal collection, but court held engaged in the business due to facts on sales frequency, location, profit margins, secretive sales and payments, and references to firearms “coming in” or as “brand new.”).

The core concept of being engaged in the business is clear: the intent to engage in a course of repeated buying and selling predominantly motivated by profit. 18 U.S.C. 921(a)(21)(C)

dating personal collection, but court held engaged in the business due to facts on sales frequency, location, profit margins, secretive sales and payments, and references to firearms “coming in” or as “brand new.”).

The core concept of being engaged in the business is clear: the intent to engage in a course of repeated buying and selling predominantly motivated by profit. 18 U.S.C. 921(a)(21)(C). Individuals often meet this standard without question, particularly in cases that lead to criminal prosecutions. In addition, criminal prosecutions under the GCA require a showing of a willfulness mens rea, 18 U.S.C. 924(a)(1)(D), which requires showing that an individual acted with knowledge that the individual's conduct was unlawful. See Bryan v. United States, 524 U.S. 184, 189 (1998) (maintaining that “the willfulness requirement of § 924(a)(1)(D) requires knowledge that the conduct is unlawful”). With respect to EIB, Congress's preference for an effort- and intent-based definition, over a bright numerical threshold, does not merit retaining these presumptions as part of the definition or other supposed clarifications in the EIB rule.

Increasing Licensees and Background Checks

Some critics incorrectly suggested that the prior Administration used the EIB rule to try to establish “universal background checks” by expanding the statutory definition to capture additional transactions as retail sales requiring a license. 20 But, the GCA allows a non-licensee to transfer a firearm to another non-licensee within the same state without conducting a background check. 21 Both the GCA and FOPA left the noncommercial, intrastate market primarily regulated by state law. BSCA did not change that basic decision. BSCA was designed to provide clarification by changing the wording of the statutory definition about when a person should be licensed

ws a non-licensee to transfer a firearm to another non-licensee within the same state without conducting a background check. 21 Both the GCA and FOPA left the noncommercial, intrastate market primarily regulated by state law. BSCA did not change that basic decision. BSCA was designed to provide clarification by changing the wording of the statutory definition about when a person should be licensed. According to BSCA's sponsors, the Act's change to the definition was driven by “confusion about the GCA's definition of `engaged in the business,' as it pertained to individuals who bought and resold firearms repetitively for profit, but 22 The sponsors “maintain[ed] that these changes clarif[ied] who should be licensed, eliminating a `gray' area in the law, ensuring that one aspect of firearms commerce is more adequately regulated.” 23

20 See Devan Cole & Hannah Rabinowitz, Biden administration finalizes rule to close `gun show loophole' in effort to combat gun violence, CNN Politics (Apr. 11, 2024), https://www.cnn.com/2024/04/11/politics/gun-show-loophole-rule-finalized-biden-admin; see also Martha Minow, Not Born a Democracy: Constitutional Preconditions, 67 Wm. & Mary L. Rev. 135, 172 n.176 (2025) (explaining that the Biden Administration intended the executive order “to move the United States as close to universal background checks as possible without additional legislation”).

21 18 U.S.C. 922(a)(3), (5) (requiring license to sell out of State); 922(t) (requiring licensees to conduct a background check).

22 William J. Krouse, Cong. Rsch. Serv., IF12197, Firearms Dealers “Engaged in the Business” 2 (2022).

23 Id.; 168 Cong. Rec. H5906 (daily ed. June 24, 2022) (Statement of Rep. Jackson Lee) (“[O]ur bill would . . . further strengthen the background check process by clarifying who is engaged in the business of selling firearms and, as a result, is required to run background checks.”); 168 Cong. Rec. S3055 (daily ed. June 22, 2022) (Statement of Sen

earms Dealers “Engaged in the Business” 2 (2022).

23 Id.; 168 Cong. Rec. H5906 (daily ed. June 24, 2022) (Statement of Rep. Jackson Lee) (“[O]ur bill would . . . further strengthen the background check process by clarifying who is engaged in the business of selling firearms and, as a result, is required to run background checks.”); 168 Cong. Rec. S3055 (daily ed. June 22, 2022) (Statement of Sen. Murphy) (“We clarify in this bill the definition of a federally licensed gun dealer to make sure that everybody who should be licensed as a gun owner is. . . . [The definition] is admittedly confusing. So we simplified that definition and hope that will result—and I believe it will result—in more of these frequent online gun sellers registering, as they should, as federally licensed gun dealers which then requires them to perform background checks.”); see also Letter for Director, ATF, et al., from Sens. John Cornyn and Thom Tillis at 2-3 (Nov. 1, 2022) (“BSCA provides more clarity to the industry for when someone must obtain a federal firearms dealers license. In Midland and Odessa, Texas, for example, the shooter—who at the time was prohibited form possessing or owning a firearm under federal law—purchased a firearm from an unlicensed firearms dealer.”).

The EIB rule thus could not, and did not, impose universal background check requirements. And, as discussed, in light of Congress' changes to carefully crafted clarifications of the statutory language through BSCA's amendments, it is unnecessary to supplement or confuse the statutory language with further regulatory language.

Additionally, ATF has determined that the rule proved ineffective in its attempt to increase the number of dealer licenses. In the time since the EIB rule went into effect, ATF has not seen an increase in licenses and background checks

fications of the statutory language through BSCA's amendments, it is unnecessary to supplement or confuse the statutory language with further regulatory language.

Additionally, ATF has determined that the rule proved ineffective in its attempt to increase the number of dealer licenses. In the time since the EIB rule went into effect, ATF has not seen an increase in licenses and background checks. ATF has reviewed the number of new applications the Federal Firearms Licensing Center received for Type 01 licenses (Dealer in Firearms Other Than Destructive Devices) for fiscal years (“FYs”) 2021 through 2025, the four years preceding the EIB rule, and the one year since the rule was published. See Table 1. Once issued, a federal firearms license is valid for a three-year period unless terminated sooner, so there are more total Type 01 licensees in each year than the number of applications persons submit to ATF in the same year. 18 U.S.C. 923(c), 27 CFR 478.49.

Table 1—Number of Type 01 Dealer Applications 2021-2025 Fiscal year Type 01 applications Total type 01 licensees 2021 7,445 52,993 2022 5,619 52,173 2023 4,544 50,314 2024 4,350 47,776 2025 4,160 46,072 As Table 1 indicates, since FY 2021, there has been a decrease in both applications for Type 01 licenses and the total number of Type 01 licensees in each fiscal year. The EIB rule was intended to facilitate the recognition by more people that they must acquire a license, which ATF expected would increase the number of persons becoming licensed as dealers. However, that expected outcome has not occurred since the EIB rule became effective. Instead, the number of Type 01 applications filed after the EIB rule continued to decline, as did the number of Type 01 licensees. In FY 2024, ATF received 4,350 Type 01 applications and listed 47,776 Type 01 licensees. In FY 2025, ATF received a total of 4,160 Type 01 applications and listed 46,072 Type 01 licensees

rom lawfully acquiring firearms for self-protection or other lawful personal use.” There are strong arguments that the rule improperly attempted to narrow the categories of accumulated firearms that would constitute a collection.

The EIB rule adopted a narrower conception of what purposes in gathering firearms might qualify for a “personal collection” by reading “personal collection” in 18 U.S.C. 921(a)(21)(C) with reference to the definition of “collector” in section 921(a)(13). On reflection, ATF believes that that interpretation overreads section 921(a)(13). Although the words have the same root (“collect”), the definition of “personal collection” in section 921(a)(21)(C) materially differs from the definition of “collector” in section 921(a)(13) because of the separate functions that each provision serves. The function of “collector” and “licensed collector” in paragraph (a)(13) is to designate a person who collects a limited class of historical firearms (those defined as “curios or relics”), for which the GCA establishes special licensing rules to facilitate

The EIB rule rested its amendments, in part, on narrow definitions of “collection.” See 89 FR 28980 and n.88 (relying on Merriam-Webster's definition to restrict a personal collection to only those objects “gathered for study, comparison, or exhibition or as a hobby”); 89 FR 29038, n.216 (relying on Encyclopedia Britannica's definition, “a group of interesting or beautiful objects brought together in order to show or study them or as a hobby”). Given these narrow definitions, the Department previously concluded that a personal collection is limited to firearms “that a person accumulates for study, comparison, exhibition . . . , or for a hobby.” 27 CFR 478.11. Indeed, the Department specifically excluded “firearms accumulated primarily for personal protection” as not part of a personal collection. Id.

ATF now believes that the definitions identified by the EIB rule are too restrictive

However, such scenarios are clearly covered by statutory language, which prohibits engaging in the business without a license. 24 By contrast, a situation where a former licensee sells an occasional firearm in a private sale years later does not constitute the repetitive purchasing and selling that the GCA was intended to cover. The GCA does not authorize former licensees to engage in the business. But it also does not impose encumbrances on all firearms that were previously part of a business's inventory.

24 See Gilbert v. Bangs, 481 F. App'x 52 (4th Cir. 2012); United States v. Kish, 424 F. App'x 398 (6th Cir. 2011).

For all these reasons, this rule proposes to amend regulations in 27 CFR part 478 that were created or changed by the EIB rule as described below.

B. Proposed Revisions

For the reasons discussed above, ATF is proposing the following regulatory changes related to the definition of engaged in the business as a dealer as implemented in §§ 478.11 and 478.13 via the EIB rule. ATF proposes to (1) move the current definition of “engaged in the business as a dealer in firearms other than a gunsmith or pawnbroker,” set forth in §§ 478.13(a) to 478.11, and (2) rescind § 478.13(b)-(h). Paragraphs (b) through (h) of § 478.13 include: (b) a statement that whether a person is engaged in the business as a dealer in firearms other than a gunsmith or a pawnbroker is a fact-specific inquiry, (c) specific fact-patterns establishing presumption that a person is engaged in the business as a dealer, (d) the definition of “predominantly earn a profit,” (e) a list of conduct that does not support a presumption, (f) evidence that may be used to rebut a presumption, (g) clarification that itemized presumptions, conduct, and rebuttal evidence are not exhaustive

ATF also proposes to retain the definition of “predominantly earn a profit” from § 478.13, with some revisions, and move it to § 478.11. The rest of § 478.13 would be removed, except as provided in the following paragraph

not support a presumption, (f) evidence that may be used to rebut a presumption, (g) clarification that itemized presumptions, conduct, and rebuttal evidence are not exhaustive

ATF also proposes to retain the definition of “predominantly earn a profit” from § 478.13, with some revisions, and move it to § 478.11. The rest of § 478.13 would be removed, except as provided in the following paragraph. ATF is also proposing to change the definition of “personal collection” and remove the definition of “former licensee inventory,” both in § 478.11. These proposed changes are described in detail below.

ATF proposes removing all of § 478.13 except: (1) the portion of the definition of “engaged in the business as dealer in firearms other than gunsmith or pawnbroker” that duplicates statutory language in 18 U.S.C. 921(a)(21)(C); (2) the added exception for auctioneers who provide only auction services on a commission by assisting persons to liquidate firearms in an estate-type sale; 25 and (3) a revised version of the definition of “predominantly earn a profit.” Because these remaining portions of § 478.13 would no longer be long enough to warrant a separate definition section, ATF proposes moving all three of these remaining portions from § 478.13 to § 478.11 (meaning of terms), where other relatively short definitions are located.

25 See ATF, Does an Auctioneer Who Is Involved in Firearms Sales Need a Dealer's License?, https://www.atf.gov/firearms/questions-and-answers?page=2 (last reviewed July 10, 2020); ATF, ATF Federal Firearms Regulations Reference Guide, ATF Publication 5300.4, Q&A L1, at 207-08 (2014), https://www.atf.gov/firearms/docs/guide/federal-firearms-regulations-reference-guide-2014-edition-atf-p-53004/download [ https://perma.cc/KD35-AEXU ] ; ATF, FFL Newsletter at 3 (May 2001), https://www.atf.gov/media/28811/download [ https://perma.cc/46KY-3VUM ] ; ATF Ruling 96-2, Engaging in the Business of Dealing in Firearms (Auctioneers) (Sept

e, ATF Publication 5300.4, Q&A L1, at 207-08 (2014), https://www.atf.gov/firearms/docs/guide/federal-firearms-regulations-reference-guide-2014-edition-atf-p-53004/download [ https://perma.cc/KD35-AEXU ] ; ATF, FFL Newsletter at 3 (May 2001), https://www.atf.gov/media/28811/download [ https://perma.cc/46KY-3VUM ] ; ATF Ruling 96-2, Engaging in the Business of Dealing in Firearms (Auctioneers) (Sept. 1996), https://www.atf.gov/file/55456/download [ https://perma.cc/RCJ2-QA9H ] ; ATF, FFL Newsletter at 7 (1990), https://www.atf.gov/media/28756/download [ https://perma.cc/L8QT-VTX6 ] ; Letter for Editor, CarPac Publishing Company, from Acting Assistant Director (Regulatory Enforcement), ATF, at 1-2 (July 26, 1979).

ATF would place the definition of engaged in the business as a dealer under paragraph (3) in the definition of “engaged in the business,” and the existing language in paragraph (3), which references § 478.13, would be removed. The paragraph would retain the same heading and would read, “A person who devotes time, attention, and labor to dealing in firearms as a regular course of trade or business to predominantly earn a profit through the repetitive purchase and resale of firearms. The term does not include a person who makes occasional sales, exchanges, or purchases of firearms to enhance a personal collection or for a hobby, or who sells all or part of the person's personal collection of firearms.”

ATF would also move the auctioneer exception to paragraph (3) within the definition of “engaged in the business” under § 478.11, at the end of the new paragraph described above. Historically, licensees and non-licensees seeking guidance on the proper and lawful way to liquidate firearms, both in the regular course of their business or as an isolated occurrence, have commonly raised questions about auctioneers

so move the auctioneer exception to paragraph (3) within the definition of “engaged in the business” under § 478.11, at the end of the new paragraph described above. Historically, licensees and non-licensees seeking guidance on the proper and lawful way to liquidate firearms, both in the regular course of their business or as an isolated occurrence, have commonly raised questions about auctioneers. Because ATF has regularly provided consistent guidance on what type of auction activity crosses the threshold to constitute engaging in the business of dealing in firearms, the portion of the definition that incorporates that exception into the regulation provides definitional clarity to the public and licensed community. Therefore, ATF proposes retaining the portion of § 478.13 that codifies ATF's historical position, thus ensuring consistency for industry members. Modifying or removing this part of the definition would likely cause undue and unnecessary confusion. This proposed change would therefore add the following text to the end of paragraph (3): “In addition, the term does not include an auctioneer who provides only auction services on commission to assist in liquidating firearms at an estate-type auction, as long as the auctioneer does not purchase the firearms or take possession of the firearms for sale or consignment.”

ATF would move the text of the definition in § 478.13 of “predominantly earn a profit” to a location under the same definitional heading in § 478.11, and it would remove the text currently under that heading, which references § 478.13. It is necessary to retain this definition to distinguish between, on the one hand, what constitutes engaging in the business as a dealer in firearms other than a gunsmith or pawnbroker; and, on the other hand, engaging in the business as a gunsmith, pawnbroker, manufacturer, or importer—all of which continue to require the “principal objective of livelihood and profit” that applied to dealers prior to BSCA

essary to retain this definition to distinguish between, on the one hand, what constitutes engaging in the business as a dealer in firearms other than a gunsmith or pawnbroker; and, on the other hand, engaging in the business as a gunsmith, pawnbroker, manufacturer, or importer—all of which continue to require the “principal objective of livelihood and profit” that applied to dealers prior to BSCA. The definition of “predominantly earn a profit” tracks the statutory definition; however, ATF proposes making a minor change to one sentence of the definition, so it is easier to read, without changing the meaning. Specifically, ATF proposes changing the sentence, “ Provided, that proof of profit, including the intent to profit, shall not be required as to a person who engages in the regular and repetitive purchase and disposition of firearms for criminal purposes or terrorism,” to “However, proof of profit, including the intent to profit, is not required in cases in which the person engaged in regular and repetitive purchase and disposition of firearms for criminal purposes or terrorism.” This change is in line with one of the purposes for ATF's implementing regulations, which is to aid the public in understanding and complying with statutory provisions, and it is consistent with laws requiring plain writing. It does not modify or expand on the statutory meaning.

In addition, ATF proposes to remove the last sentence of the definition as it currently exists in § 478.13, which reads, “For purposes of this section, a person may have the intent to profit even if the person does not actually obtain the intended pecuniary gain from the sale or disposition of firearms,” because this sentence is not in the statutory definition. The proposed new definition of “predominantly earn a profit” would thus be “The intent underlying the sale or disposition of firearms is predominantly one of obtaining pecuniary gain, as opposed to other intents, such as improving or liquidating a personal firearms collection

to make changes to § 478.57 (Discontinuance of business). The proposed rule would

III. Statutory and Executive Order Review

A. Executive Orders 12866 and 13563

Executive Order 12866 (Regulatory Planning and Review) directs agencies to assess the costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits.

Executive Order 13563 (Improving Regulation and Regulatory Review) emphasizes the importance of agencies quantifying both costs and benefits, reducing costs, harmonizing rules, and promoting public flexibility.

This proposed rule would retain the definition of “engaged in the business” as specifically revised and defined in BSCA. In addition, this proposed rule would revise 27 CFR 478.13 to rescind paragraphs (b)-(h), which includes rebuttable presumption fact patterns as to whether a person is engaged in the business as a dealer and whether a person has predominant intent to profit, a list of conduct that does not support a presumption, evidence that may be used to rebut a presumption, and other provisions related to applying the presumptions. In addition, the rule also proposes to retain the definition of “predominantly earn a profit” with some revisions, to change the definition of “personal collection” to apply only to licensee personal collections and remove the definition of “former licensee inventory.” These provisions were included in the EIB rule to aid persons in understanding and applying the statutory change from BSCA. In addition, the EIB rule did not result in the anticipated increase in the number of licensees. As a result, removing or revising these additional provisions does not generate a cost to the public.

The Office of Management and Budget (“OMB”) has determined that, although this rule would not be economically significant under section (3)(f)(1) of Executive Order 12866, it would be a “significant regulatory action” under the Order. OMB has therefore reviewed this rule

the number of licensees. As a result, removing or revising these additional provisions does not generate a cost to the public.

The Office of Management and Budget (“OMB”) has determined that, although this rule would not be economically significant under section (3)(f)(1) of Executive Order 12866, it would be a “significant regulatory action” under the Order. OMB has therefore reviewed this rule. ATF provides the following analysis to comply with Executive Orders 12866 and 13563. This proposed rule would revert the definition of “engaged in the business” to the one outlined specifically by statute, without the additional provisions added by the previous rule. As a result, this proposed rule would provide qualitative benefits to the public in the form of reduced confusion and reduced concerns about perceived risk of over-enforcement, as well as qualitative costs in the form of potential increase in persons who should be licensed remaining unlicensed. This rule would not create quantifiable costs or burdens for the public.

1. Need Statement

The EIB rule included provisions in addition to the statutory definitional change from BSCA, and those provisions did not result in the projected increase in licensees. As illustrated in Table 2, the number of all FFL applications has been decreasing since 2021. Between the time the NPRM for the EIB rule was published in 2023 and was later finalized in 2024, the number of applications for all FFLs decreased overall.

Table 2—Number of FFL Applications by Year Year FFL applications 2020 12,537 2021 13,879 2022 10,811 2023 9,237 2024 8,679 2025 8,648 The intended clarifying provisions instead created confusion and raised concerns by commenters on the rule that the provisions could be misapplied and misunderstood in ways that would constitute violations of law. As a result, ATF has determined that these provisions should be removed or revised and that the definition of engaged in the business as a dealer should be primarily limited to the statutory definition

d for in the EIB rule. As a result, this proposed rule would not have any quantifiable monetary cost savings.

3. Disbenefits

Potential qualitative disbenefits ( i.e., adverse impacts) to this proposed rule may include a de minimis increase in risk to public safety. In the EIB rule, ATF described conditions in which an individual might be considered “engaged in the business” of selling firearms. Some individuals who might have been active firearms sellers prior to the EIB rule might have refrained from selling firearms after the EIB rule out of concern that their conduct rose to the level of being “engaged in the business” because it would subject them to the GCA's requirements ( e.g., record-keeping, conducting background checks, inspections). If parts of the regulations implemented by the EIB rule are rescinded, these persons might resume selling firearms actively without becoming licensed, just as they had prior to publication of the EIB rule. This could mean that any risks regarding unlicensed sellers that Congress perceived when initially enacting the GCA would not be addressed through regulations clarifying the GCA's requirements.

4. Regulatory Alternatives

Alternative 1. Maintaining the Status Quo (the No-Action Alternative)

During the previous Administration, ATF published the EIB rule, in which ATF included the statutorily revised definition of engaged in the business as a dealer and additional regulatory provisions to further define and clarify the term and how persons could determine its application. Upon further consideration, ATF has determined that the ensuing confusion from these additional provisions may impose additional risks on members of the public, who might interpret the rule as prohibiting them from purchasing firearms for self-defense or protection and might make them feel chilled in purchasing and reselling personal firearms occasionally without predominant intent to profit, as intended by Congress

and concerns about perceived over-enforcement, specifically entailing qualitative benefits to current and future firearm owners. Although it is possible that removing the proposed provisions would result in some risk to public safety from persons who would no longer feel constrained in dealing in firearms without a license, such a risk is qualitative and speculative, imposing no quantifiable costs. Therefore, as discussed above, this rule would not impose any additional quantifiable monetized costs, and total costs would be less than zero. ATF therefore expects this rule, if finalized as proposed, to qualify as an Executive Order 14192 deregulatory action (defined by OMB Memorandum M-25-20 as a final action that imposes total costs less than zero).

C. Executive Order 14294

Executive Order 14294 (Fighting Overcriminalization in Federal Regulations) requires agencies promulgating regulations with criminal regulatory offenses potentially subject to criminal enforcement to explicitly describe the conduct subject to criminal enforcement, the authorizing statutes, and the mens rea standard applicable to each element of those offenses. This proposed rule would not create a criminal regulatory offense and is thus exempt from Executive Order 14294 requirements.

D. Executive Order 13132

This proposed rule would not have substantial direct effects on the states, the relationship between the federal Government and the states, or the distribution of power and responsibilities among the various levels of government. Therefore, in accordance with section 6 of Executive Order 13132 (Federalism), the Director has determined that this proposed rule would not impose substantial direct compliance costs on state and local governments, preempt state law, or meaningfully implicate federalism. It thus does not warrant preparing a federalism summary impact statement.

E

ain a license in order to sell personal firearms from their personal collections, for example. Although the EIB rule anticipated that the rule would cause some persons operating unlicensed small businesses to become licensed as dealers of firearms, ATF—as explained above in section II.A of this preamble—has not observed an actual increase in the rate of licensure since the issuance of the EIB rule. In light of the EIB rule's apparent lack of effect on the operation of small businesses, ATF does not believe that repealing certain provisions of EIB rule as proposed in this rule would affect such businesses. Therefore, ATF does not believe that this proposed rule, if finalized, would have a significant economic impact on a substantial number of small entities. ATF nonetheless welcomes comments on any potential effects of this proposed rule on small entities.

G. Unfunded Mandates Reform Act of 1995

This proposed rule does not include a federal mandate that might result in the expenditure by state, local, and tribal governments, in the aggregate, or by the private sector, of $100 million or more in any one year, and it would not significantly or uniquely affect small governments. Therefore, ATF has determined that no actions are necessary under the provisions of the Unfunded Mandates Reform Act of 1995.

H. Paperwork Reduction Act of 1995

Under the Paperwork Reduction Act of 1995 (“PRA”), 44 U.S.C. 3501-3521, agencies are required to submit to OMB, for review and approval, any information collection requirements a rule creates or any impacts it has on existing information collections. An information collection includes any reporting, recordkeeping, monitoring, posting, labeling, or other similar actions an agency requires of the public. See 5 CFR 1320.3(c). This proposed rule would impact four existing information collections covered under the PRA

determine whether a person may lawfully receive a firearm. Form 4473 enables FFLs to determine if they may lawfully sell or deliver a firearm to the prospective transferee, and to alert the buyer or other transferee of certain restrictions on receiving and possessing firearms. The licensee must determine the transaction's lawfulness and maintain proper records of the transaction. The GCA, 18 U.S.C. 923, also requires that licensees must keep records of each firearm they acquire and dispose of, and ATF implementing regulations in 27 CFR 478.23(c)(1) and (2) set forth the details required for those records, which are in addition to the Form 4473, the purpose of which is primarily for a licensee to determine whether the requested sale is lawful.

Purpose: The Form 4473 information collection aids licensees in obtaining the necessary information from which to make that determination and to use when submitting a required NICS background check, and also serves as a record of the transaction, all of which are necessary for the licensee to comply with the statutory requirements. The acquisition and disposition record-keeping requirements ICR permits ATF to examine records during inspections to ensure that licensees are complying with statutory and regulatory requirements, and also serve as records licensees may search in response to a crime-gun trace request from law enforcement agencies conduction investigations into crimes in which a firearm was used.

IV. Public Participation

A. Comments Sought

ATF requests comments on the proposed rule from all interested persons. ATF specifically requests comments on the clarity of this proposed rule and how it may be made easier to understand. In addition, ATF requests comments on the costs or benefits of the proposed rule and on the

All comments must reference this document's RIN 1140-AB01 and, if handwritten, must be legible. If submitting by mail, you must also include your complete first and last name and contact information

through the federal e-rulemaking portal, at https://www.regulations.gov (search for RIN 1140-AB01).

Severability

Consistent with the Administrative Procedure Act, the issues raised in this proposed rule may be finalized, or not, independently of each other, after consideration of comments received. ATF has determined that this proposed rule implements and is fully consistent with governing law. However, in the event this proposed rule is finalized, if any provision of that final rule, an amendment or revision made by that rule, or the application of such provision or amendment or revision to any person or circumstance, is held to be invalid or unenforceable by its terms, the remainder of that final rule, the amendments or revisions made by that rule, and application of the provisions of the rule to any person or circumstance shall not be affected and shall be construed so as to give them the maximum effect permitted by law.

List of Subjects in 27 CFR Part 478

Administrative practice and procedure, Arms and munitions, Exports, Freight, Imports, Intergovernmental relations, Law enforcement officers, Military personnel, Penalties, Reporting and recordkeeping requirements, Research, Seizures and forfeitures, Transportation.

For the reasons discussed in the preamble, ATF proposes to amend 27 CFR part 478 as follows:

PART 478—COMMERCE IN FIREARMS AND AMMUNITION

1. The authority citation for 27 CFR part 478 continues to read as follows:

Authority:

5 U.S.C. 552(a); 18 U.S.C. 847, 921-931; 44 U.S.C. 3504(h).

2. Amend § 478.11 by:

a. Revising paragraph (3) of the definition of “engaged in the business” (“dealer in firearms other than a gunsmith or a pawnbroker”); the definition of “personal collection (or personal collection of firearms, or personal firearms collection)”, including its title; and the definition of “predominantly earn a profit”; and

b. Removing the definition of “former licensee inventory”

not required in cases in which the person engaged in the regular and repetitive purchase and disposition of firearms for criminal purposes or terrorism.

§ 478.13 [Removed and Reserved]

3. Remove and reserve § 478.13.

§ 478.57 [Amend]

4. Amend § 478.57 by removing from paragraphs (b)(2) and (c) the second sentence.

The revisions read as follows:

§ 478.57 Discontinuance of business.

(b) * * * * *

(2) Transfer the former licensee inventory to a responsible person of the former licensee to whom the receipt, possession, sale, or other disposition is not prohibited by law.

(c) Transfers of former licensee inventory to a licensee or responsible person in accordance with paragraph (b)(1) or (2) of this section shall be appropriately recorded as dispositions, in accordance with §§ 478.122(b), 478.123(b), or 478.125(e), prior to delivering the records after discontinuing business consistent with § 478.127.

§ 478.78 [Amend]

5. Amend § 478.78 by removing from paragraphs (b)(2) and (c) the second sentence.

The revisions read as follows:

§ 478.78 Operations by licensee after notice.

(b) * * * * *

(2) Transfer the former licensee inventory to a responsible person of the former licensee to whom the receipt, possession, sale, or other disposition is not prohibited by law.

(c) Transfers of former licensee inventory to a licensee or responsible person in accordance with paragraph (b)(1) or (2) of this section shall be appropriately recorded as dispositions, in accordance with §§ 478.122(b), 478.123(b), or 478.125(e), prior to delivering the records after discontinuing business consistent with § 478.127.

Robert Cekada, Director.

[FR Doc. 2026-08919 Filed 5-5-26; 8:45 am] BILLING CODE 4410-FY-P