ATF Revocations – 5 Deadly “Sins”

The Top 5 Reasons FFLs Are Being Revoked

FFLs are facing a regulatory environment unlike any in recent memory. Having been in the firearm industry since 1994, I can confidently say the action being taken against FFLs by the ATF is unprecedented. Since I first wrote about this issue in 2022, the momentum of ATF revocations has not subsided in the least.

According to ATF, in 2021, ATF revoked five licenses with only one FFL surviving a revocation hearing stemming from the below criteria.^[1] In 2022, ATF revoked 88 licenses with 83 FFLs managing to escape revocation and in 2023 there were 250 licenses revoked with 249 prevailing at revocation hearings.^[2]

Why such an increase? You can look directly to the current Administration’s commitment to target “Rogue” FFL Dealers who “intentionally” violate the law. The problem is these revocations aren’t targeting ONLY rogue dealers that intentionally and willfully violate the federal regulations. Many of these revocations have even been initiated for simple clerical errors on 4473s and many are from previously closed inspections.

[1] https://www.atf.gov/rules-and-regulations/enhanced-regulatory-enforcement-policy

[2] Id.

Concerns over these revocations did reach ranking members of Congress’ radar. In June of 2022, 25 Members of Congress sent a letter to ATF, demanding an explanation for the skyrocketing revocation proceedings based on “minor infractions” alleged in previously closed inspections. The letter noted that the businesses had fully resolved the issues at or before the time of the prior inspection and had no new infractions cited between the inspection and the notice of revocation. Congress has raised their eyebrows at the direction of these inspections and so should you. The underlying message of this letter is clear: the compliance health of your FFL has never been more important, nor has it ever been more in question. The thought process that “my last ATF inspection wasn’t bad, so we are ok” can no longer be in your vocabulary.

While it is true ATF has always moved to revoke licenses from licensees who have willfully violated the Gun Control Act, depending on the egregious nature of the violations, opportunities to come back into compliance and alter policy and procedures to ensure compliance were allowed. These opportunities now are the exception and no longer the rule. ATF’s “zero tolerance” policy has led to an increase in revocations since 2021 and you must be more prepared today than you ever have for your next ATF inspection.

ATF has, over the past few years, taken time to speak at industry events to discuss what they consider to be the 5 key violations that will cause you to have your license revoked. Remember, this is from ATF, not industry and as you can see from the above, these “5 Deadly Sins” as they have become known, may not be the only thing that causes your FFL issues. Just know, that these 5 absolutely WILL cause you issues.

According to ATF executive leadership who spoke at Orchid Advisors FIC (in Atlanta in April of 2023) and at NSSF Retail and Range EXPO (in New Orleans in July of 2022) these are the 5 things that will cause a revocation letter to be sent to your FFL:

Transferring a firearm to a prohibited person.
Failing to conduct a required background check.
Falsifying records, such as a Firearm Transaction Form (the ATF F 4473)
Failing to respond to a trace request.
Refusing to permit ATF to conduct an inspection.

Transferring Firearms to Prohibited Persons

It is unlawful to transfer a firearm to an individual prohibited by 18 U.S.C. § 922(g) and various state law provisions. While seemingly straight forward, particularly when the majority of the transfers that occur are done by contacting NICS or the appointed state agency in a point of contact state, FFLs have been revoked for violations that were the result of transferring a firearm to a prohibited person.

A Florida licensee had their FFL revoked for transferring a firearm after contacting the Florida Department of Law Enforcement (FDLE). The FDLE notified the licensee that the individual was prohibited and provided a unique identification number indicating the transfer was denied, yet the licensee still transferred the firearm. Despite the individual returning the firearm to the store, and this being the only violation, the FFL was revoked.

Background Checks

The failure to conduct a required background check sounds rather simple on its face. As licensees know, when an individual attempts to purchase or have a firearm transferred to them, the licensee is required to conduct a background check (absent several limited exceptions).

A review of a small sample of ATF’s Final Revocation Notices reveal that licensees were issued a Notice of Violations (and subsequent revocation) for:

Failing to contact NICS and wait the prescribed three business days[1] before transferring the firearms with no response from NICS. In this instance, the 4473 indicated NICS was contacted on May 14, 2020 and the A&D Book showed a transfer date of May 14, 2020, but the licensee did not receive a “Proceed” from NICS.
Failure to record the NICS Transaction Number on the 4473 or in the correct location on the 4473.
Failure to perform a NICS check on a law enforcement officer prior to transferring a firearm.[2]
Failure to conduct a NICS check on individuals purchasing firearms. The individuals presented out of state carry permits which the licensee accepted in lieu of a NICS check.[3]

Falsification of Records

The GCA and its supporting regulations require records to be accurate.

Notice of Revocation was issued after a Licensee in NY initiated a background check on March 21, 2021, received a delayed response from NICS with an authorized transfer date March 25, 2021 and subsequently transferred the firearm. NY law requires a proceed response from NICS or wait 30 days from the date the NICS check was initiated. The licensee then requested the individual return to the premises, along with another person they believed could obtain the firearm, allegedly directed them to complete a 4473 to that effect, and then recorded the transfer in their A&D Book.[4]
1. The Licensee and ATF entered into a settlement agreement where the basis for revocation was only as to the transfer of the firearm in violation of the state law timeline.

Failure to Respond to Trace Requests

27 C.F.R. 478.25(a) requires Licensees to respond to requests from the National Tracing Center no more than 24 hours after receipt of a request.

Notice of revocation cited failure to comply with the regulation as a basis for revocation and willful violation of the GCA.
Notice of revocation issued for repeated failures to comply with the regulation.

Refusing to Permit ATF Compliance Inspection

Federal law permits the Attorney General (through ATF) to conduct a general compliance inspection of licensees without a warrant no more than once every twelve months. Licensees have had licenses revoked for failing to allow these compliance inspections to occur.

A licensee had a compliance inspection scheduled for June 25, 2021. At their request, it was moved to July 9. 2021 and then again to August 10, 2021. On August 3, 2021 the licensee again requested the inspection be moved but did not provide a date for which they would be available. ATF attempted to contact the licensee by phone on August 17 and September 8, 2021 unsuccessfully. ATF then stopped by the premises during business hours to conduct an unannounced inspection but was unable to gain entry and left a card instructing the licensee to call ATF by October 13, 2021, to schedule the inspection. On November 24, 2021 ATF sent a certified letter to the licensee to contact ATF by December 8, 2021 to schedule an inspection or the license would be revoked. On November 27, 2021 USPS attempted to deliver the certified letter and was unable to, leaving instructions that it could be picked up at the post office. On December 27. 2021 the letter was returned to ATF as unclaimed. A license revocation followed.

Notice there is no terminology such as intentional or purposeful, etc. “Willful” does not mean “intentional” and FFLs should be aware of the distinction between the two. In this environment, paper 4473s present the highest level of risk for error. There are numerous e4473 and eBound Book software providers, such as FastBound, Orchid eBound, EZ Arms Keeper, Rapid POS, and others in the industry that significantly reduce the likelihood of 3 Zero-Tolerance violations.

If you are using paper, and are now considering a move to digital or an electronic 4473 and Bound Book but don’t know where to start? We have some good news for you. We did the initial leg work for you in a previous blog post. Simply click here to review.

Technology can help your business with completing these traces faster than ever. Digital storage of 4473s is the next step in fully digitizing your FFL’s operations. In August 2022, ATF issued Ruling 2022-1 that removed the requirement for an approved variance to store your 4473s digitally. All that paper taking up room in your facility could be gone sooner than you think! 4473 Cloud works with ALL e4473 software available in the marketplace today and we are integrated with the industry’s leading solution providers to offer the most seamless solution for your business. You can be using 4473 Cloud today.

The moral of the story is, to get your business into the 21^st century, let technology help your company’s compliance, mitigate your risk and allow you, as an owner or Responsible Person of your FFL, to sleep better knowing you have significant safeguards against these 5 violations with a click of a button. Do your research and ensure the software you are using meets the ATF’s minimum requirements and get started today. Don’t let an honest mistake or an oversight by one of your employees cost your business its FFL.

Utilizing tools like 4473 Cloud can help to protect your business against these common pitfalls. By upgrading your FFL to use electronic bound book and 4473 solutions, you can more easily ensure accurate completion of these forms to avoid incorrect or “falsified” forms. And using 4473 Cloud makes ATF trace requests and inspections a breeze. With 4473 Cloud, you can complete a trace request nearly instantly, from anywhere with an internet connection. Also, with 4473 Cloud’s encrypted security and limited access features, ATF can only see what they need to see. This creates a quick, accurate, and easy inspection when the IOIs come to your shop. Click here to get started today!

[1] See 27 C.F.R. 478.102(a) (describing how to calculate three business days).

[2] https://www.atf.gov/firearms/qa/may-licensee-sell-firearms-law-enforcement-agencies-and-individual-officers

[3] See 27 C.F.R. 478.102(d)(1)(ii).

[4] The Licensee and ATF entered into a settlement agreement where the basis for revocation was only as to the transfer of the firearm in violation of the state law timeline.