Very confusedOriginally Posted by Mule
The transfer tax isn't called an SOT. SOT stands for Special Occupational Taxpayer. This is a FFL who has paid Uncle Sam extra money in order to deal, manufacture or import Title 2/NFA weapons such as machine guns, silencers, short rifles, short shotguns, certain gadget guns called AOWs and sometimes even destructive devices like rocket launchers and grenades. Title 1 guns are the ordinary long guns and handguns you can buy at a gun shop. Most C&R guns are Title 1 firearms. The BATFE doesn't tax transfers of Title 1 firearms.
The savings I alluded to were due to the fact that the Title 2 C&R gun (in my case a Reising Model 50 machine gun) went from Individual A in State X to C&R licensee B in State Y on a single $200 transfer. If individual B were not a FFL, the gun would have to first transfer from Individual A in State X to a FFL+SOT in State Y on a $200 Form 4. It would then transfer on another $200 Form 4 from FFL+SOT in State Y to individual B in State Y. Total transfer taxes: $400 and the amount of time for the BATFE to process two transfers is longer. The FFL+SOT will want a fee to do the transfer too. Typically, thats around $100 so you're now up to shelling out $500 whereas having a C&R FFL would have saved you $300 and some time.
By the way, a regular FFL who doesn't have a SOT can do the same thing for any NFA weapons that are permitted by his FFL. Not having the SOT means he still has to pay the transfer tax, do the FP cards, photos and CLEO certification, but the gun can come directly across state lines to him.
As a rule, the $200 federal transfer tax ($5 for AOWs) is payable on all permanent transfers where either or both parties are individuals or businesses that do not have a FFL+SOT. There are some narrow exceptions to this rule for inheritance and for cases when a state or federal agency is involved as a party to the transfer.
A S.O.T. tax certificate can only be obtained by a commercial FFL other than a Type 06 ammunition manufacturer. It cannot be obtained by the non-commercial Type 03 C&R FFL! The SOT allows the commercial FFL to extend their business to include Title 2 (i.e. NFA) firearms of a type compatible with the type of FFL they have. For instance, an ordinary Type 01 FFL dealer can get a SOT which will allow him to also deal in NFA firearms except for Destructive Devices. He would need a Type 09 FFL and a Class 3 SOT instead to deal in DDs.
The type of SOT a FFL gets depends on their FFL type. Type 01, Type 02 and Type 09 FFL dealers would get a Class 3 SOT at $500/year. A type 07 or Type 10 manufacturer FFL would get a Class 2 SOT at $1000/year (reduced by $500 if his gross annual sales are less than $500,000/yr). A Type 08 or Type 11 importer FFL would get a Class 1 SOT (also at $1000/yr reduced by $500 for gross annual sales less than $500,000/yr).
Transfers of NFA weapons between SOTs are tax free and are done on a BATFE Form 3. There are no fingerprint cards, photos or CLEO signoffs required when the transferee is a SOT. But the SOT itself is not free as you can see.
http://www.atf.gov/firearms/nlc/ffl/ffl_types.htm
http://www.atf.gov/pub/nfab/index.htm
http://www.atf.gov/firearms/faq/faq2.htm#m
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