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Congressional Research Sei
Informing the legislitive debate sinee 1914
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Updated February 9, 2024
Firearms Dealers Engaged in the Business
On June 25, 2022, President Joe Biden signed into law the
Bipartisan Safer Communities Act (BSCA; P.L. 117-159).
Section 12002 of P.L. 117-159 amends definitions related
to firearms dealer licensure in the Gun Control Act of 1968
(GCA, 18 U.S.C. §§921 et seq.). Under the GCA, the
definition of engaged in the business undergirds provisions
that require persons buying and selling firearms at the
wholesale or retail level to be federally licensed as firearms
dealers. Section 12002 of P.L. 117-159 amends a
subparagraph of the GCA definition of engaged in the
business as it pertains to federally licensed firearms dealers
by striking the language with the principal objective of
livelihood and profit, and replacing it with to
predominantly earn a profit. As amended, the definition at
18 U.S.C. §921(a)(21)(C) reads as follows:
[Engaged in the business,] as applied to a dealer in
firearms, as defined in section 921(a)(11)(A),
[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, but such term shall not include a person
who makes occasional sales, exchanges, or
purchases of firearms for the enhancement of a
personal collection or for a hobby, or who sells all
or part of his collection of firearms.
As discussed below, Section 12002 also amends the GCA
to define the clause to predominantly earn a profit as
specifically excepting firearms transfers made to improve
or liquidate a personal firearms collection. Notably, Section
12002 does not amend the parallel GCA subparagraphs
defining engaged in the business for firearms and
ammunition manufacturers, gunsmiths, and importers at 18
U.S.C. §921(a)(21)(A), (B), (D), (E), and (F).
Engaged in the Business and Licensure
The GCA requires all persons engaged in the business of
importing, manufacturing, and dealing firearms to be
licensed as federal firearms licensees (FFLs) (18 U.S.C.
§923). Any person who imports or manufactures
ammunition must also be licensed, but a federal dealer's
license is not required to deal in ammunition. Under Section
922(a)(1)(A) of Title 18 of the U.S. Code, it is unlawful to
engage in the business of importing, manufacturing, or
dealing in firearms without a federal license. Offenses are
punishable by up to five years' imprisonment. The Bureau
of Alcohol, Tobacco, Firearms and Explosives (ATF) is the
federal agency that administers and enforces the GCA and
licenses FFLs. Section 921(a)(11) of the GCA defines the
term dealer to mean:
(A) any person engaged in the business of selling
firearms at wholesale or retail [i.e., firearms
dealers],
(B) any person engaged in the business of repairing
firearms or of making or fitting special barrels,
stocks, trigger mechanism to firearms [i.e.,
gunsmiths], or
(C) any person who is a pawnbroker.
The term licensed dealer means any dealer who is
licensed under the provision of this chapter.
It is notable that the subparagraph (18 U.S.C.
§921(a)(21)(C)) that defines engaged in the business for
federally licensed firearms dealers only refers to
subparagraph (11)(A) of the GCA definition of dealer. The
subparagraph does not refer to subparagraphs (11)(B) and
(11)(C) of the definition of dealer. Hence, gunsmiths and
pawnbrokers must be federally licensed as gun dealers,
even if they do not meet the conditions set out in the
definition of engaged in the business for federally licensed
firearms dealers at 18 U.S.C. §921(a)(21)(C).
Defining To Predominantly Earn a Profit
The amendment to P.L. 117-159 further emphasizes a profit
motive as a factual circumstance requiring federal licensure
as a gun dealer by defining to predominantly earn a profit
to mean
that 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.
Again, this definition reiterates a personal firearms
collection exception included in the definition of engaged in
the business. On the other hand, in regard to firearms
transfers related to terrorism and other criminal conduct,
this definition includes the following proviso:
That proof of 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. For purposes of this
paragraph, the term 'terrorism' means activity,
directed against United States persons, which-
(A) is committed by an individual who is not a
national or permanent resident alien of the United
States;
(B) involves violent acts or acts dangerous to
human life which would be a criminal violation if
committed within the jurisdiction of the United
States; and](ViewImageLocal?handle=hein.crs/goveohs0001&div=1&collection=&method=preview&ext=.png&size=3)
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