Depending on the type of Federal Firearms License (FFL), different business activities with firearms can be conducted.
For example, one type of FFL will allow you to be a firearms dealer and/or gunsmith (Type 01 FFL) whereas a different type is required if you’d like to also manufacture firearms (Type 07 FFL).
There are 9 different types of FFL Licenses and, contrary to popular belief, you may not need an FFL. However, if you do want to get an FFL, you really need to make sure that you’re getting the right license type. Also, there’s something called an SOT, commonly called a “class 3 license” that exists in conjunction with an FFL, but it is not a type of FFL (or even a “license”).
In this article, we’ll explore:
- What is an FFL?
- Who needs an FFL?
- What are the Different Types of FFL Licenses?
- FFL License Cost
- What is an SOT (Class 3 License)?
- FFL License Type Details
What is an FFL?
An FFL is a Federal Firearms License which allows the holder (a person or company) to lawfully engage in various business activities with firearms and ammunition.
The Federal Firearms License system was created by the Gun Control Act of 1968 (GCA) and is regulated by the Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF).
The term “FFL” can be used to refer to both the license and the license holder – this can be confusing if you aren’t paying attention to context. For example, it is sometimes said “I got my FFL” and also, “he is an FFL.” In this article, we will sometimes refer to the thing as an “FFL License” even though the term is a bit redundant. 😉
Who needs an FFL?
You need an FFL if you intend to be engaged in the business of buying, selling, making, or importing firearms.
The “engaged in the business” part is very important.
You do not need an FFL to buy or sell personal guns. Nor do yo need an FFL to make your own firearms.
However, once you buy a firearm or make a firearm with the intent to sell it, you need to have an FFL. If you’re interested in getting an FFL, even an FFL from your home (most FFL’s are home-based), then you should check out my article on how to get an FFL.
What are the Different Types of FFL Licenses?
There are 9 different types of FFL Licenses – we cover each FFL type in detail below.
|FFL Type||FFL License Purpose|
|Type 1 FFL||Firearm Dealer and/or Gunsmith|
|Type 2 FFL||Firearm Dealer and/or Pawnbroker|
|Type 3 FFL||Curio and Relic Firearm Collector|
|Type 6 FFL||Manufacturer of Ammunition|
|Type 7 FFL||Manufacturer of Firearms|
|Type 8 FFL||Importer of Firearms|
|Type 9 FFL||Firearm Dealer (including Destructive Devices)|
|Type 10 FFL||Manufacturer of Firearms (including Destructive Devices)|
|Type 11 FFL||Importer of Firearms (including Destructive Devices)|
As you can see from the table of FFL License Types above, you can either be a firearms dealer (sell firearms), a firearms or ammunition manufacturer (make firearms and ammunition for sale), a firearms importer (bring foreign guns into the country), or you can be a collector.
It’s easiest to explain each type of FFL by grouping them into categories:
- Dealer FFLs (Type 1, Type 2, or Type 9 FFLs) generally allow the licensee to engage in the business of selling firearms. As an FFL Dealer, you can also be a gunsmith. If you’re interested in pawning firearms, you’ll need a Type 02 FFL and if you’d like to deal with Destructive Devices (DD), you’ll need a Type 09 FFL .
- Manufacturer FFLs (Type 6, Type 7, or Type 10 FFLs) allow the licensee to manufacturer firearms or ammunition as a business. Under federal law, you can make your own firearms and ammunition. However, if you make them with the intent to sell them, then you’ll need the appropriate license. If you’d like to only make ammunition, a Type 06 FFL is for you. However, if you’d like to make firearms, and also possibly ammunition, then you’ll need a type 07 FFL. And just like with the Dealer category above, if you want to make Destructive Devices (DD), you’ll need a specific FFL, in this case a Type 10 FFL. As a note, if you have a firearm manufacturer FFL (Type 07 or Type 10), you can also be a dealer.
- Importer FFLs (Type 08 or Type 11 FFLs) allows the licensee to import firearms from another country.
- A Collector FFL (type 03 FFL) allows the licensee ONLY to collect Curio and Relic (C&R) firearms. This does not allow any “business” activity with firearms (making, selling, or importing) and is only for people that like collecting C&R firearms for themselves and want the firearms shipped straight to them. C&R firearms are those at least 50 years old or that appear on a list from the ATF.
Even if you’re not interested in getting your own FFL, knowing about the different types of Federal Firearm Licenses is still important because you should know who you’re dealing with. For example, if you are shipping a firearm to someone who is claiming to be an FFL but they only hold a Type 6 FFL (ammunition manufacturer) then you MUST use another FFL that can deal with firearms for a transfer.
We’ll cover more about each FFL type in detail below.
FFL License Cost
Each FFL License has a different cost for the first three years and FFL renewals depending on which FFL Type you get.
The most common type of FFL, the Type 01 dealer/gunsmith FFL costs $200 for the first three years and $90 for each renewal period thereafter.
The second most common type of FFL, the Type 07 firearm manufacturer FFL, costs $150 for the first three years and also $150 for each three year renewal.
As you can see, although the Type 7 Manufacturer FFL is cheaper for the first three years, the Type 01 dealer FFL is much cheaper for renewals.
Here’s a breakdown of the cost of each FFL Type for the initial application and first 3 years and also the renewal cost for each subsequent 3 year period:
|FFL Type||First 3 Year Cost||Renewal Cost|
|Type 1 FFL||$200||$90|
|Type 2 FFL||$200||$90|
|Type 3 FFL||$30||$30|
|Type 6 FFL||$30||$30|
|Type 7 FFL||$150||$150|
|Type 8 FFL||$150||$150|
|Type 9 FFL||$3000||$3000|
|Type 10 FFL||$3000||$3000|
|Type 11 FFL||$3000||$3000|
If you’d like to learn more about these costs, please see my article on FFL License Cost.
What is an SOT (Class 3 License)?
First off, an SOT is a status as a taxpayer so it’s not really a “license.”
SOT stands for Special Occupational Taxpayer. To become an SOT, you must first be an FFL and then pay an annual federal tax. SOTs are divided into three classes (discussed below).
By registering as an SOT and paying the once a year tax, you can work with NFA firearms without having to pay a tax for every single NFA firearm you make or sell.
NFA firearms, so called because they are covered under the National Firearms Act) are a special class of firearms that are highly regulated under federal law.
- silencers/suppressors (yes, they’re legally “firearms”),
- short barreled rifles (rifles with a barrel less than 16″ or an overall length less than 26″),
- short barreled shotguns (shotguns with a barrenness than 18″ or an overall length less than 26″),
- destructive devices (grenades and bombs), and
- “any other weapons (AOWs)” (pen guns, handguns with a vertical fore grip, etc.)
The making or transfer of NFA firearms requires a $200 federal tax upon manufacturer and for each and every transfer for all but AOWs… they cost only $5.
However, as an FFL that is also an SOT, the once yearly tax is all that is needed and the per item tax isn’t paid. This not only saves money when dealing multiple items, it is required for manufacturers.
Depending on the type of activity you’d like to conduct and which type of FFL License you have, you need to be one of the three classes of SOT:
- Class 1 SOT: For importing NFA firearms
- Class 2 SOT: For manufacturing NFA firearms
- Class 3 SOT: For dealing/selling NFA firearms
Note, an FFL who sells NFA firearms is sometimes called a “Class 3 Dealer” or that they sell “Class 3 firearms.” Neither is technically correct – they are a dealer FFL who is a Class 3 SOT selling NFA firearms. The NFA firearms aren’t “class 3” because they were made by a Class 2 SOT or imported by a Class 1 SOT.
Here’s a table with the type of FFL matched up with the Class of SOT and the cost to be an SOT whether you make over or under $500k annually. Note, the cost only increases over $500k for certain FFL types:
|FFL Type||SOT Class||Under $500k Cost||Over $500k Cost|
|Type 1 FFL||3||$500||$500|
|Type 2 FFL||3||$500||$500|
|Type 3 FFL||n/a||n/a||n/a|
|Type 6 FFL||n/a||n/a||n/a|
|Type 7 FFL||2||$500||$1,000|
|Type 8 FFL||1||$500||$1,000|
|Type 9 FFL||3||$500||$1,000|
|Type 10 FFL||2||$500||$1,000|
|Type 11 FFL||1||$500||$1,000|
FFL License Type Details
Type 01 FFL
The Type 01 FFL License type for dealers and/or gunsmiths is, by far, the most popular type of FFL in the country. Your local gunshot, and even most home-based FFLs (yes, you can have an FFL from your home) are Type 01 FFLs.
With this FFL License type, you can buy and sell guns for a business purpose. If you’d like help getting this FFL, check out RocketFFL
Type 02 FFL
Type 02 FFLs aren’t very common – they are effectively a Type 01 FFL but they allow you to conduct pawnbroker activities. The difference to the ATF is that some firearms in your inventory won’t be the business’s property and pawned firearms have a higher likelihood of being crime guns.
Type 03 FFL
Type 03 FFLs are for collectors of Curio and Relics ONLY. You can not engage in any business activity related to firearms with this FFL. If you’d like to collect antique guns and avoid having to go down to your local gun shop for transfers, then this collector’s FFL might be for you.
Type 06 FFL
The Type 06 FFL is for manufacturing ammunition ONLY. You can not use this FFL to buy and sell firearms nor make guns. Remember, it is perfectly legal under federal law to make your own ammunition. However, once you start to make ammunition with the intent to sell it, you need with this FFL or a Type 07 FFL.
Type 07 FFL
The Type 07 manufacturer FFL is the second most common FFL type in the country. This FFL allows you to manufacture firearms for sale (it also allows you to manufacture ammunition, too). If you are getting this FFL and plan to make firearms (even simply assembling AR style rifles), then you need to be prepared to have the firearms marked in accordance with ATF rules and regs. If you need help, check out Rocket FFL’s ATF compliance program.
Type 08 FFL
If you’re going to import standard firearms, then the Type 08 FFL is for you. Just like with the Type 07 FFL, you need to be prepared to mark them properly.
Type 09 FFL
If, in addition to buying and selling normal firearms, you’d also like to buy and sell Destructive Devices, you’ll need to be a Class 3 SOT and have this FFL.
Type 10 FFL
If you’d like to manufacture firearms AND/OR Destructive Devices, then you’ll need to be a Class 2 SOT and have this FFL License type.
Type 11 FFL
If you’d like to import firearms AND/OR Destructive Devices, then you’ll need to be a Class 1 SOT and have this type of FFL License.
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