Proposed Trust changes update?

[Nation On Fire]

What's the latest with this? I know it's been bumped ahead a few times but haven't heard anything lately.

 

[Kevin_NH]

That's because there has been nothing new reported regarding 41p lately. Zero updates, officially or otherwise, and I wouldn't expect any news until at least after the election.

 

[massBRS]

I'm curious to know at what point will changes effect NFA submissions. My paper form was submitted in september, and I called to get an idea on my wait and was told April. Hopefully 41P won't effect me?

 

[Kevin_NH]

I've been following the other forums, the Prince Law blog, etc. No consensus, no hints from BATFE.

Everybody's best guess is that once your paperwork is accepted (aka "Pending"), you should have nothing to fear from 41P. But the change is unprecedented; BATFE can pretty much do whatever they want, could just kick back every trust and corporation stamp application that isn't yet "Approved".

 

[soam]

Last I heard it was going to take them well into 2015 sorting through all the comments they received during the open comment period. Apparently they got quite a few.

 

[browncoat]

I don't see how they can do away with the trusts while still allowing corporations to hold Title II arms. Of course, I'm sure that they will eventually find a way to give corporations what they want while taking away stuff from the little guys, because that's what they do.

 

[massBRS]

I don't see how they can do away with the trusts while still allowing corporations to hold Title II arms. Of course, I'm sure that they will eventually find a way to give corporations what they want while taking away stuff from the little guys, because that's what they do.

You could be a little guy with a closely held non profit corporation - only $15 in annual filing fees. All I need is someone interested in being a test case for me and it would be a fun experiment to try out (I just passed the Mass State Bar) - best validation of formation? "5. for promoting temperance or morality in the Commonwealth" - haha!
http://www.sec.state.ma.us/cor/corpweb/cornp/npinf.htm

 

[browncoat]

You could be a little guy with a closely held non profit corporation - only $15 in annual filing fees. All I need is someone interested in being a test case for me and it would be a fun experiment to try out (I just passed the Mass State Bar) - best validation of formation? "5. for promoting temperance or morality in the Commonwealth" - haha!
http://www.sec.state.ma.us/cor/corpweb/cornp/npinf.htm

This is why I'm wondering how the ATF can really close the "loophole", because corporation filing fees aren't that high. What the ATF wants to ban is exactly individuals using trusts to make it "easier" to jump through hoops, if individuals start using corporations instead I get the feeling they will want to limit things further. At some point, I wonder how all of this hoopla can be justified as being reasonable and where the compelling state interest is in the regulation. Heck, we have had a judge wonder as much with regards to silencers.

 

[massBRS]

This is why I'm wondering how the ATF can really close the "loophole", because corporation filing fees aren't that high. What the ATF wants to ban is exactly individuals using trusts to make it "easier" to jump through hoops, if individuals start using corporations instead I get the feeling they will want to limit things further. At some point, I wonder how all of this hoopla can be justified as being reasonable and where the compelling state interest is in the regulation. Heck, we have had a judge wonder as much with regards to silencers.

Fees are $500 annually for regular corporations (and LLCs) - the trick is what public interest you're serving to file as non profit - that's why I joke about temperance/morality. The whole "an armed society is a polite society" validated by the state is what you'd be hoping for in filing as non profit. The other is a three party board (president, secretary, treasurer) where as with a trust you only need one trustee, which is why they work so well in our usage.

 

[browncoat]

Fees are $500 annually for regular corporations (and LLCs) - the trick is what public interest you're serving to file as non profit - that's why I joke about temperance/morality. The whole "an armed society is a polite society" validated by the state is what you'd be hoping for in filing as non profit. The other is a three party board (president, secretary, treasurer) where as with a trust you only need one trustee, which is why they work so well in our usage.

Couldn't you create your corporation in a different state with lower filing fees?

 

[massBRS]

Couldn't you create your corporation in a different state with lower filing fees?

Good thinking! You may still need a agent for service of process, or at the very least a mailing address there. Cheapest I can find according to this site is Kentucky which is $40 for LLC, however reputable this site is:
http://www.incorporatefast.com/filingfee.asp

 

[Kevin_NH]

41P change will impact Corporations, LLCs, and Trusts equally.

Last I heard it was going to take them well into 2015 sorting through all the comments they received during the open comment period. Apparently they got quite a few.

Might be quicker if they continue to "streamline" the review process.

I don't see how they can do away with the trusts while still allowing corporations to hold Title II arms. Of course, I'm sure that they will eventually find a way to give corporations what they want while taking away stuff from the little guys, because that's what they do.

BATFE is NOT "doing away with trusts". The change does nothing to prevent trusts from being the owner of record of Title II (NFA) arms. All the proposed rule change does it make it a much bigger hassle for grantors, trustees, and beneficiaries under the new "responsible person" rules (see below or the original text).

This is why I'm wondering how the ATF can really close the "loophole", because corporation filing fees aren't that high. What the ATF wants to ban is exactly individuals using trusts to make it "easier" to jump through hoops, if individuals start using corporations instead I get the feeling they will want to limit things further. At some point, I wonder how all of this hoopla can be justified as being reasonable and where the compelling state interest is in the regulation. Heck, we have had a judge wonder as much with regards to silencers.

There is nothing in 41p that is specific to trusts, or that will prohibit trust transfers. The same proposed new restrictions for trusts will also apply to all other transfers to non-natural persons, including corporations.

The Department of Justice proposes amending Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF) regulations that concern the making or transferring of a firearm under the National Firearms Act (NFA). The proposed changes include: Defining the term “responsible person,” as used in reference to a trust, partnership, association, company, or corporation; requiring “responsible persons” of such legal entities to submit,inter alia,photographs and fingerprints, as well as a law enforcement certificate, when the legal entity files an application to make an NFA firearm or is listed as the transferee on an application to transfer an NFA firearm; modifying the information required in a law enforcement certificate, so that the certificate no longer requires a statement from the certifying official that he or she has no information indicating that the maker or transferee of the NFA firearm will use the firearm for other than lawful purposes; and adding a new section to ATF's regulations to address the possession and transfer of firearms registered to a decedent. The new section would clarify that the executor, administrator, personal representative, or other person authorized under state law to dispose of property in an estate may possess a firearm registered to a decedent during the term of probate without such possession being treated as a “transfer” under the NFA. It also would specify that the transfer of the firearm to any beneficiary of the estate may be made on a tax-exempt basis.
. . .
In addition, the applicant must be identified on the form by name and address and, if other than a natural person (e.g., a corporation or trust), by the name and address of the principal officer or authorized representative of the entity...
. . .
A. Amendment of § 479.11

The Department proposes amending § 479.11 to add a definition for the term “responsible person.” The term would include specific definitions in the case of a trust, partnership, association, company (including a Limited Liability Company (LLC)), or corporation. Depending on the context, the term includes any individual, including any grantor, trustee, beneficiary, partner, member, officer, director, board member, owner, shareholder, or manager, who possesses, directly or indirectly, the power or authority under any trust instrument, contract, agreement, article, certificate, bylaw, or instrument, or under state law, to receive, possess, ship, transport, deliver, transfer, or otherwise dispose of a firearm for, or on behalf of, the entity.

To ensure that responsible persons, as so defined, are subject to penalties under 26 U.S.C. 5871 for committing prohibited acts under the NFA (as defined in 26 U.S.C. 5861) to the same extent as are the legal entities with which they are associated, the Department also proposes amending the definition of “person” in 27 CFR 479.11 to clarify that a “person” is a partnership, company, association, trust, or corporation, including each responsible person associated with such an entity; an estate; or an individual.

So the situation Post-41P for corporations will suck just as badly, if not more so, than the situation for ownership under a Trust, and even with 41P, a trust will be a better entity for holding Title II firearms than a Corporation in nearly all circumstances. Technically, this could have a huge impact on corporations which just happen to own a few Title II firearms, as the change could require BATFE paperwork before the corporation could appoint any new partner, member, officer, director, board member, shareholder, or manager who could be construed, directly or indirectly, as having access to Title II assets.

 

[RockMaple]

Here's the latest info on 41P (spoiler: it's been pushed back until May 2015 at the earliest):

http://americansuppressorassociation.com/atf-update-41p-nfa-backlog-and-the-e-forms-system/

 

[Nation On Fire]

Good

 

[warwickben]

You could be a little guy with a closely held non profit corporation - only $15 in annual filing fees. All I need is someone interested in being a test case for me and it would be a fun experiment to try out (I just passed the Mass State Bar) - best validation of formation? "5. for promoting temperance or morality in the Commonwealth" - haha!
http://www.sec.state.ma.us/cor/corpweb/cornp/npinf.htm

Interested but confused .
I want a trust for sbr etc .

 

[massBRS]

Interested but confused .
I want a trust for sbr etc .

In all honesty, if the corporation route made sense, more people would be doing it. The thing about corporations and LLCs is they are legal entities designed to grow business profits while limiting liability of owners. As such, you can't sue owners personally for damages, barring a few exceptions. In order to have this legal shield from liability, you need to pay the state of MA $500 annually - biggest hang-up for most people. The exception to this charge is non-profit corporations with fees of only $15 annually. Much easier to swallow. However, only certain purposes meet the qualifications of "non-profit" that I linked. My joke was that a hypothetical non profit corporation could be validated as promoting morality, but you'd have to get the Secretary of the Commonwealth of Massachusetts to sign off on the adage that, "An armed society is a polite society." Unless you can come up with a better validation for a non profit existing to possess NFA items. I'm all ears if so, and more than happy to help anyone in MA reasonably interested through the process.

 

[warwickben]

Recoil therapy ?

 

[Kevin_NH]

Interested but confused. I want a trust for sbr etc .

TL;DR version of what I posted above -- if you want a trust, get a trust. Don't be deterred by the "Proposed trust changes", because all 41P changes also apply to Corporations, LLCs, and all other such entities.

In all honesty, if the corporation route made sense, more people would be doing it. The thing about corporations and LLCs is they are legal entities designed to grow business profits while limiting liability of owners. As such, you can't sue owners personally for damages, barring a few exceptions. In order to have this legal shield from liability, you need to pay the state of MA $500 annually - biggest hang-up for most people. The exception to this charge is non-profit corporations with fees of only $15 annually. Much easier to swallow. However, only certain purposes meet the qualifications of "non-profit" that I linked. My joke was that a hypothetical non profit corporation could be validated as promoting morality, but you'd have to get the Secretary of the Commonwealth of Massachusetts to sign off on the adage that, "An armed society is a polite society." Unless you can come up with a better validation for a non profit existing to possess NFA items. I'm all ears if so, and more than happy to help anyone in MA reasonably interested through the process.

Would any of the legal shield issues apply to an entity which exists solely to own Title II (NFA) firearms? Wouldn't you be more at risk, as the Commonwealth of Massachusetts could decide to dissolve your corporation at any time, making you an instant felon?

 

[massBRS]

Would any of the legal shield issues apply to an entity which exists solely to own Title II (NFA) firearms? Wouldn't you be more at risk, as the Commonwealth of Massachusetts could decide to dissolve your corporation at any time, making you an instant felon?

Good questions regarding the protective benefits of a corporation - I honestly don't know. I can say the risk of dissolution would certainly be interesting because the Attorney General must be made a party to the action and disperse of all corporate assets to a "like" charity. If two people set up such "non profits" and one of the parties screws it up, all the assets of corp #1 would be gifted by Martha to corp #2, presuming she'd follow the letter of the law. Such a funny thing to imagine. I suppose I need 2 volunteers to set up non-profits for just such a contingency.

 

[RockMaple]

more[/U] at risk, as the Commonwealth of Massachusetts could decide to dissolve your corporation at any time, making you an instant felon?

I can't think of an instance when a state has revoked a corporate charter for "bad acts" (in this case holding title to inherently evil firearms). During Eliot Spitzer's stint as NY AG, he got a lot of attention for suggesting that he might consider revoking charters for serial bad actors like tobacco companies. Of course he was bluffing: any state that did this would see a mass exodus of corporations fleeing to safe states like DE and NV. Invariably, boards of directors of MA incorporated corporations would ask: "If they're revoking the charters of corporations holding title to firearms, are we next?"

But that's more of an academic point. Practically speaking, using a business entity to hold title to NFA firearms just doesn't make much sense for most people. It's too expensive, burdensome, and provides less privacy than a trust. For instance, to form an LLC in MA you've got formation costs of $500 (payable to the commonwealth), which doesn't include legal fees (I charge $650 for LLC formation, and that's a really good price), then you've got annual public filing obligations and an ongoing annual fee of $500. The costs are lower in states like ME or NH, but it's still not cheap, and then as massBRS mentioned, you'd need to pay to have someone serve as resident agent (unless you've got a buddy that will serve in that capacity).

 

[jho]

https://www.youtube.com/watch?v=cMvk9j7617E&list=UUJimfyIOFM3Yaot_V8bFLPQ

good video about NFAFA. 41p is mentioned in this.