Part 3: ATF Rulings You MUST Know!

We made it! The final chapter in this three-part extensive review of 6 key ATF rulings you must be familiar with to operate your FFL in a compliant manner.  Before we jump into the final two ATF Rulings, here are the links to the previous four.

• ATF Ruling 2001-5 – Knowing and Identifying Your Customer.
• ATF Ruling 2010-1 – Temporary Assignment of a Firearm by an FFL to an Unlicensed Person.

Click HERE to review the blog that covers these two ATF Rulings.

• ATF Ruling 2016-1 – Requirements to Keep Firearms Records Electronically.
• ATF Ruling 2016-2 – Electronic ATF Form 4473.

Click HERE to review the blog that covers these two ATF Rulings.

Next, we will close this miniseries of compliance fun with two final rulings that are less than a year old as of this writing.  We are going to continue to focus on your records, record retention, and how the final two ATF Rulings directly impact these practices.  ATF will tell you that maintaining meticulous records is your most important function as an FFL when it comes to:

• Tracing firearms, and;
• Ensuring you are the first line of defense in stopping straw purchases.

These final two rulings are kind of the Ying and the Yang of record keeping. The first, ATF Ruling 2021R-05f places additional record retention requirements on your business while ATF Ruling 2022-1 allows you to use technology to make your life easier. 

ATF RULING 2021R-05f:

The bulk of this ruling has absolutely nothing to do with record keeping.  In fact, that is why many FFLs I speak with don’t even know the new requirement is part of the ruling.  Which is scary when you consider that not following it will almost certainly lead to a revocation of your FFL.

Tucked in the back of the obnoxiously long ATF Ruling is this little nugget of very important information:

Record Retention

FFLs must retain their Firearms Transaction Records, Forms 4473, and acquisition and disposition records until they discontinue their business or licensed activity. The rule also allows for paper records older than 20 years to be stored at a separate warehouse or electronically in accordance with a forthcoming ATF Ruling. The separate warehouse is considered part of the licensed premises and subject to inspection.

Did you see that very important statement at the end of the first sentence?  “Until they discontinue their business or licensed activity” – that means the previous timeframes for keeping your records no longer apply.  What used to be 20 years for bound books and transferred 4473s, and 5 years for NICS Denials and Void No Sale 4473s in which NICS was contacted is now FOREVER. 

Not only that, but ATF also opined in writing that this forever requirement applies to every 4473 that has been started.  Let me repeat that. Every 4473 that you start in your store, whether on paper with a pen or electronically, as soon as it is started, you have to keep it and keep it for the life of your FFL.

Here is what ATF FIPB (Firearms Industry Programs Branch) told 4473 Cloud in writing when we inquired about this shortly after this ruling was released:

The final rule 2021R-05F amends 27 CFR 478.129 as follows:

“…provided that Forms 4473 with respect to which a sale, delivery, or transfer did not take place shall be separately retained in alphabetical (by name of transferee) or chronological (by date of transferee’s certification) order.”

“It no longer matters whether NICS is contacted or not regarding retention; if they start a 4473, it must be retained.” 

If you would like, click here to review the PowerPoint ATF released last summer to review the ruling in its entirety.

Therefore, as of August 17^th, 2022, any 4473 in your possession, even those that were at the time older than 20 years—the longest you ever had to keep a document under the “old” regulations—have to be maintained by the FFL for the life of the FFL’s business.  That back room you are keeping your printed or handwritten 4473s in just got significantly smaller. 

First, they rolled out this ruling making you keep everything forever and then they gave the industry a break.  ATF Ruling 2022-1 was officially released by ATF on August 17^th, 2022 as well. And like ATF Rulings 2016-1 and 2016-2 before it, it allows FFLs to now store 4473s digitally without the need for an approved variance.

Remember the statement, “prior to 2008, FFLs needed an ATF Approved Variance to use an electronic Bound Book”?  The same logic applies here. Prior to August 2022, you needed an ATF Approved Variance to stop printing 4473s and to store them digitally. Now you don’t need ATF’s permission, you just must be 100% sure the software you use to store 4473s digitally meets the requirements in the ruling itself.

***WARNING: keeping a PDF copy of a 4473 stored on your desktop, or on your computer does NOT meet any of the requirements of this ATF Ruling!

ATF RULING 2022-1:

As with all these rulings, you should take the time to review in detail and educate yourself on what is required of you and your FFL.  Taking a fellow FFL’s word for what is or isn’t compliant is not an advisable way to ensure you are compliant. That statement about saving PDFs above – that isn’t made up. We have heard this from more than one 4473 Cloud customer and, quite frankly, that is a little scary. 

Do your own diligence and only rely on your own knowledge. When it comes to ATF, the only alternative is to hire a professional ATF compliance expert to assist you.

Here is what your digital 4473 storage software must do:

1. Licensees must provide written notification to their local ATF Industry Operations Area Office 60 days prior to implementing an electronic Form 4473 retention system.

2. Transactions must first be completed using an electronic Form 4473 in accordance with ATF Ruling 2016-2 (or subsequent ruling), and all forms must be retained in an electronic format.

3. The Form 4473 must be saved in an unalterable format. The original electronic Form 4473 must be retained and may not be deleted, amended, replaced, or otherwise altered. Consistent with the Notices, Instructions, and Definitions on the Form 4473, if errors are found on a Form 4473, corrections may be made to a copy (electronic or paper) of the original Form 4473, and the corrected copy should be electronically attached to the original electronic form and retained as part of the FFLs permanent records.

4. All supplemental ATF forms or documents from a transaction (multiple sale forms or documentation showing the exception to the nonimmigrant alien prohibition) must be electronically attached at the end of Form 4473 as required by 27 CFR 478.124(c)(3)(iii) and 478.126a.

5. ATF must be provided uninterrupted access to the database in which the electronic Forms 4473 are stored to facilitate a compliance inspection, complete a trace request or conduct a criminal investigation of a person other than the licensee per 18 U.S.C. 923(g)(1)(B). ATF access to the Forms 4473 must be in a “read-only” capacity.

6. ATF must be provided access to the database in which the electronic Forms 4473 are stored with a minimum of one electronic access point or computer terminal for every 500 Forms 4473 executed over the previous 12-month period. An FFL who offers computer terminal access is not required to provide more than five terminals regardless of the number of Forms 4473 executed during the 12-month period.

7. The retention system must allow the Form 4473 to be printed, and the FFL must print any Form 4473 upon request from ATF.

8. The retention system must retain the Form 4473 in alphabetical, chronological, or numerical order. The retention system must allow for searches or queries to be made by transferee/buyer name, transfer date, transaction number (if any), firearm type, model, manufacturer/importer, caliber, size, or gauge, and serial number.

9. The retention system must backup the Form 4473 upon the completion of a transaction or when a transaction is stopped, and the Form 4473 must be retained in the system.

10. The retention system must allow access to the Form 4473 and the acquisition and disposition (A&D) record simultaneously (i.e., the ability to toggle back and forth).

11. The retention system must have the ability to flag or set aside Forms 4473 in order to save for further review during inspections.

12. The retention system must allow or provide sorting of Forms 4473 during ATF compliance inspections.

13. Whenever a transaction is stopped, put into a pending status, or completed, the Form 4473 must immediately be downloaded and saved to a computer hard drive, server, Universal Serial Bus (USB) Flash Drive, or other similar electronic storage device located at the licensed premises. If the licensee utilizes a contract host facility such as a remote server or cloud storage provider, all Forms 4473 must also be electronically saved to an onsite electronic storage device that is updated on the day of any change to, or addition of, database record(s) to protect the data from accidental deletion or system failure. In all cases, electronically retained Forms 4473 must be downloaded in a format that is unencrypted with the required information readily apparent and retained on a device that is located at the licensed premises in accordance with 27 CFR 478.121(a) for the length of time prescribed by 27 CFR 478.129.

14. ATF recognizes there may be circumstances where a licensee’s electronic system may fail, be unavailable, or otherwise not utilized, and paper Forms 4473 may be completed. Licensees must retain any original paper Forms 4473, unless digitally scanned per the conditions of this ruling, for the period specified in 27 CFR 478.129(b). Upon absolute discontinuance of business, all retained paper forms must be delivered to ATF pursuant to 27 CFR 478.127. When a licensed business is discontinued and succeeded by a new licensee, all retained paper forms shall be delivered to the successor, or to ATF pursuant to 27 CFR 478.127. 15. Upon absolute discontinuance of business or when a licensed business is discontinued and succeeded by a new licensee, any Forms 4473 retained in electronic format in accordance with this ruling must be delivered in electronic format to the NTC’s Out of Business Records Center in a format suitable for imaging such as a TIFF, JPEG, or PDF. If the forms will be submitted in a PDF or TIFF format, the licensee must ensure that Optical Character Recognition and Intelligent Character Recognition are turned off/disabled, and images are flattened and not electronically searchable. The forms, retained alphabetically by name of the purchaser, chronologically by disposition date, or numerically by transaction number, must be delivered on a media device such as a USB drive, CD, DVD, etc.

Held further, pursuant to 27 CFR 478.22, 478.121, 478.124, and 27 CFR 479.26, ATF authorizes an alternate method or procedure for the retention of Forms 4473 (5300.9). Specifically, ATF authorizes FFLs to digitally scan paper Forms 4473 and retain it in an electronic format provided all the following requirements are met:

16. FFLs who have paper Forms 4473 completed prior to, or after this ruling, may elect to digitally scan Forms 4473 older than 3 years from the date the firearm transfer occurred, the date the transaction was denied or canceled, or the last date of entry where no sale or delivery of the firearm occurs, including supplemental ATF forms or documents from a transaction (multiple sale forms or documentation showing the exception to the nonimmigrant alien prohibition). The Forms 4473 must be scanned in an expeditious manner, and retained in the same manner as required in conditions 3-5, 7-8, 13, and 15 set forth for FFLs retaining electronically completed Forms 4473 in an electronic format.

17. An FFL electing to digitally scan and electronically retain paper Forms 4473 older than three years from the date the firearm transfer occurred, the date the transaction was denied or canceled, or the last date of entry where no sale or delivery of the firearm occurs, must ensure all electronic documents are an exact image of the paper form, include all pages of the paper Form 4473 and any supplemental ATF forms or documents from a transaction (multiple sale forms or documentation showing the exception to the nonimmigrant alien prohibition); is incapable of being altered without tracking of the alterations; and is saved to an onsite electronic storage device. Only after a paper Form 4473 is converted, saved in an electronic format in accordance with the requirements of this ruling, and verified to be complete and correct, may the paper Form 4473 be destroyed.

18. When submitting files to the Out of Business Records Center, the file names for digitally scanned and electronically retained paper Forms 4473 must not contain personally identifiable information (e.g. name, address, date of birth, social security number, etc.).

That’s another one with a LOT of information. There are a few key things you should take from all of this. While they are all important and your software has to meet everyone, some you need to be most familiar with are:

• Unalterable does not mean a simple PDF. PDF files are about 1 step higher on a security scale than a Word document. You must ensure your storage solution not only encrypts your files but also stores them in a tamper-evident file format. 
  • Why Tamper evident – simply put, it is the most secure.  Period. Full stop.
  • If the solutions you have seen don’t offer this, it should raise a concern.
• Your solution needs an ATF-specific audit function.
  • Questions to ask?
    • Is it locked down to my store hours?Is there a way for me to see if ATF is accessing the 4473s off-site?
    • What can ATF see when viewing my 4473s?
• Must be able to make edits or error corrections within the software.
  • Does the solution require these corrections to be made on a copy of the original?How does it save the edited copy?Is there a clear delineation between the original and the correction?
  • Are corrections made with guardrails so my team does not make clerical mistakes?

Two last questions to ask: is the software you are reviewing certified compliant, and does it provide legal protection for its users?  If not, ask why not. The reality is, anyone selling or providing compliance-related software should stand behind their software 100%. No questions asked. If they don’t provide you with rock solid piece of mind, why should you put your trust in them?

4473 Cloud not only meets but exceeds the requirements specified above by ATF.  In fact, we spent two years working with ATF FIPB prior to releasing our software to ensure we meet ATF’s expectations.  Not only is our software attorney-backed compliant, but it will also work with any e4473 software provider that is ATF Ruling 2016-2 compliant. No other software for digital storage of 4473s can make this claim. 

You have to keep more documents than ever before, and there is no better solution to help you do so than 4473 Cloud.  Start saving money from the very first 4473 you load into 4473 Cloud.  No messy IT implementations, no long-term contracts, create an account in 5 mins and start storing your 4473s digitally today. 

No More Paper, No More Boxes, No More Dust. 

Stop letting ATF live rent-free in your store.  Start electronically storing your 4473s now!

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