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Author Topic: Excutive order virtually shuts down small gunsmith operations  (Read 7948 times)

RMc

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Re: Excutive order virtually shuts down small gunsmith operations
« Reply #25 on: August 01, 2016, 12:45:18 am »
This is all much ado about nothing and effects almost no one. 

George, can you expound on this?
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    RevDisk

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    Re: Excutive order virtually shuts down small gunsmith operations
    « Reply #26 on: August 03, 2016, 02:03:15 pm »
    Disclaimer: I am not a lawyer. If I was a lawyer, I would not be your lawyer. Consult a export control and compliance lawyer before providing defense articles or services. This is meant to give basic guidance to provide general awareness, and is not situational applicable. My background is that I did export control work for one of the largest defense contractors in the US and wish I drank enough to forget that sub-career. Though having Antonov on speed dial was cool.



    Arms Export Control Act of 1976 governs all defense articles and services. It has ALWAYS applied to gun manufacturers, gunsmiths, gun trainers, etc. Most just didn't know or didn't comply with the law as it was written. Calling it an Obama thing is misleading and inaccurate. Blame Gerald Ford. ITAR and ATF regs are wholely independent and have nothing to do with each other. They're separate, totally. Some things the ATF cares about, DDTC doesn't. Some things DDTC cares about, ATF doesn't. For example, if you modified a tail pipe to only fit military HMMWVs, you would need to register as a defense article manufacturer but wouldn't need a single license from the ATF.

    The $2250 fee is the DDTC registration fee. You'd have to look up their current fee schedule, but it's probably accurate.

    In short, it's been this way since 1976. Just most folks didn't know about it. More than a few gun trainers probably violated the hell out of US federal law by giving 'advanced' training to foreign persons (ie not US citizen, green card holder, etc) without an export license. Showing a person basic safety operations doesn't require a license. Providing tactical training does. I swear I should write a small book and sell it on Amazon.

    What doesn't apply:

    Painting doesn't apply. A lot of accessories don't apply. Simple repairs don't apply, mostly. Direct replacements don't apply (ie swapping barrels, triggers or stocks). Even swapping receivers may not apply. Basic assembly doesn't apply. Think assembling an AR15 from parts kits. Most AK builds would require an DDTC registration. Cleaning products generally don't apply. Cleaning weapons doesn't apply, generally.

    What does apply:

    Manufacturing any firearm parts. Materially improving weapons. Doing any significant (non-cosmetic) cuts by any means. Making ammo. Making changes to the weapon where you are increasing ammo capability, changing caliber, etc.

    In short, 'light gunsmithing' doesn't apply. Significant gunsmithing does. If you're not cutting metal essentially or making new stuff, you're generally good to go. Only tricky thing is mods that increase ammo capacity or change caliber. IMHO, swapping AR15 uppers doesn't count. It's a one to one replacement, even if it's a different caliber. But modifying a barrel to take a different caliber would.


    Is home gunsmithing or reloading ITAR?  Generally No. Generally to be "Yes" and you don't already have an FFL, you're probably violating other federal laws already. Generally you have to be selling/providing/transferring stuff to the public. I'm not sure if you made YouTube videos on operator level gun fu 'advanced training', that it may be considered an ITAR issue. There's no hard line between First Amendment and providing ITAR technical information. Generally open source stuff is not considered ITAR tech data.

    Essentially, ITAR strictly has to do with manufacturing defense articles and providing defense services. Private non-commercial stuff is virtually never applicable. Unless you're bringing it in or out of the country, giving it to foreign persons, doing activities with prohibited or proscribed persons even if they are a US person, etc. You can get into hot water even if you're not charging a dime. If you decided to provide gun training to a neighbor, that you didn't know was a foreign national, you could get into trouble even if you didn't charge a dime. ITAR handles essentially 'transfers', not the direct actions of end consumers.


    So, yes it sucks to pay a $2250 ish fee every year. But it's nothing new. I can explain why folks care now rather than previously, but it's still just implementing a crappy 40 year old law that's been biting aerospace the entire time.
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    tokugawa

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    Re: Excutive order virtually shuts down small gunsmith operations
    « Reply #27 on: August 05, 2016, 09:51:58 am »
    "So, yes it sucks to pay a $2250 ish fee every year. But it's nothing new. I can explain why folks care now rather than previously, but it's still just implementing a crappy 40 year old law that's been biting aerospace the entire time."

     $2250 is a drop in the ocean for an aerospace firm. Whether the law is crap or not is outside my knowledge- But I would lay a pretty good bet when this law was implemented it was never intended to be used against a domestic gunsmith. This is a classic example of a law being stretched as far as possible to encumber someone.

     $2250 -yeah, it's a hit, but it does not sound like a huge deal, right?   Well, in order to come up with a  $2250 fee,  which comes right off the top, and has no productive value at all, save for keeping one out of jail, a business is going to have to do at least $22,500 in business, assuming they have a 10% margin, which these days is pretty damned hard to do. So I don't know what a gunsmith makes, maybe a good one with good discipline can do $10,000 a month gross. Maybe. So now, he is going to have to work nine weeks just to pay the fee. And of course, it has an opportunity cost like every other expenditure. That new lathe, or a shop helper just got a lot less likely.  There are an awful lot of small businesses that are just sort of hanging on, very carefully managing costs to survive.  I suspect the Mom and Pop nature of most gunsmith shops fall into this category of small artisans.  So do they put the mortgage on a CC this month, or pay the fee? Or maybe shut the doors and sell the tools and collect welfare?
     

    RevDisk

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    Re: Excutive order virtually shuts down small gunsmith operations
    « Reply #28 on: August 05, 2016, 01:44:08 pm »
    "So, yes it sucks to pay a $2250 ish fee every year. But it's nothing new. I can explain why folks care now rather than previously, but it's still just implementing a crappy 40 year old law that's been biting aerospace the entire time."

     $2250 is a drop in the ocean for an aerospace firm. Whether the law is crap or not is outside my knowledge- But I would lay a pretty good bet when this law was implemented it was never intended to be used against a domestic gunsmith. This is a classic example of a law being stretched as far as possible to encumber someone.

     $2250 -yeah, it's a hit, but it does not sound like a huge deal, right?   Well, in order to come up with a  $2250 fee,  which comes right off the top, and has no productive value at all, save for keeping one out of jail, a business is going to have to do at least $22,500 in business, assuming they have a 10% margin, which these days is pretty damned hard to do. So I don't know what a gunsmith makes, maybe a good one with good discipline can do $10,000 a month gross. Maybe. So now, he is going to have to work nine weeks just to pay the fee. And of course, it has an opportunity cost like every other expenditure. That new lathe, or a shop helper just got a lot less likely.  There are an awful lot of small businesses that are just sort of hanging on, very carefully managing costs to survive.  I suspect the Mom and Pop nature of most gunsmith shops fall into this category of small artisans.  So do they put the mortgage on a CC this month, or pay the fee? Or maybe shut the doors and sell the tools and collect welfare?
     

    The only plus side is you could deduct the fee as a business expense. Yeah, another side gig was preparing tax returns for folks as an after school job.

    I agree that it should be on a scale, and there should be a trivial fee (or free) for any business making under $100k per year. I'd recommend that a number of folks like the NRA, NSSF, etc talk to DDTC about that being an option. Though no one cared when every other small biz got hit with the ever increasing registration fee. George is correct. It sucks that essentially garage gunsmiths are getting hit with a $2k fee, but most gunsmiths already have a host of other fees they have to pay. Starting with an FFL and SOT. Plus Firearms and Ammunition Excise Tax (FAET), plus state/local laws. It adds up.

    Essentially this is just another strike against folks trying to run a gun business off their kitchen table. I suspect DDTC has been edging up the fee for that very reason. DDTC doesn't want the headache of dealing with angry ornery folks playing ITAR manufacturer out of the kitchen or garage that aren't remotely familiar with export compliance. Which, by and large, they are not. Tell me this, how many of you guys showed proof of being a US person before attending anything more advanced than an NRA basic class? Or proof of being a US person for any serious gunsmithing? If not, the instructor or gunsmith indeed has no clue how export control works. Regardless of the registration fee.

    Not saying I agree with or endorse DDTC's fee schedule. Just saying how it actually is, rather than what it should be or we wish it to be.
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    JesseL

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    Re: Excutive order virtually shuts down small gunsmith operations
    « Reply #29 on: August 05, 2016, 02:04:22 pm »
    An 07 FFL only costs $150 for 3 years. Less than an 01. A SOT is $500 per year for business selling under a half million per year (and most places don't need a SOT). Manufacturers producing under 50 guns per year are exempt from the excise tax. For me, state and local sales tax licenses were a one time cost, under $50.

    It's kinda hard to blame anyone who NEVER DOES ANY IMPORTING OR EXPORTING to be a little clueless about export control laws. It's like expecting an accountants office to worry about their EPA compliance.

    The law works that way, but it shouldn't.

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    ksuguy

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    Re: Excutive order virtually shuts down small gunsmith operations
    « Reply #30 on: August 05, 2016, 02:25:08 pm »
    What's the point in even having export controls if we have senior members of the government selling guns to drug lords, numerous other weapons and vehicles to terrorist organizations and other oppressive dictatorships, and advanced ballistic missile technology to the Chinese?

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    RevDisk

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    Re: Excutive order virtually shuts down small gunsmith operations
    « Reply #31 on: August 05, 2016, 04:59:42 pm »
    An 07 FFL only costs $150 for 3 years. Less than an 01. A SOT is $500 per year for business selling under a half million per year (and most places don't need a SOT). Manufacturers producing under 50 guns per year are exempt from the excise tax. For me, state and local sales tax licenses were a one time cost, under $50.

    It's kinda hard to blame anyone who NEVER DOES ANY IMPORTING OR EXPORTING to be a little clueless about export control laws. It's like expecting an accountants office to worry about their EPA compliance.

    The law works that way, but it shouldn't.

    I try to explain that think of export control as quantum physics. It does make sense, but in a sanity bending way. Or rather, WHEN it starts making sense, you're already having conversations with Cthulu about interior decorating.

    Imports and exports don't just happen at geophysical national borders. According to export control, there's a number of ways of importing and exporting. Foreign embassies, certain shipping zones (not a thing here, is elsewhere) or giving to a foreign person are also exports. Selling an EOTech or NVGs to a foreign national can be an illegal export.

    https://tnvc.com/faq/
    https://www.atncorp.com/exportinformation

    So, yes, I am willing to bet a large number of gun dealers have illegally exported stuff. Said gun dealers would probably say "I NEVER EXPORTED ANYTHING IN MY LIFE!" Ask them if they requested proof being a US person before they sold EOTechs or thermal hunting scopes to customers. And they'd likely look at you like you grew extra eyes and homicidal personalities.


    (Also side note, frequently buildings, including accountant offices, do need EPA stuff. We keep records of how long we run our generators because it's a couple hundred Kw. Also refrigerants for large HVAC stuff. There's other examples.)
    To know the darkness is to love the light,
    to welcome dawn and fear the coming night.
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    RetroGrouch

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    Re: Excutive order virtually shuts down small gunsmith operations
    « Reply #32 on: August 06, 2016, 03:15:17 am »
    This is the same insanity that says if you sell a product totally created in-state, sold in-state, that is impacting  interstate sales, and therefore the Feds have authority to regulate what you do, based on the Interstate Commerce Clause, which was intended to prevent states from interfering with the free flow of trade across state lines.
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    RevDisk

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    Re: Excutive order virtually shuts down small gunsmith operations
    « Reply #33 on: August 08, 2016, 08:24:50 am »
    This is the same insanity that says if you sell a product totally created in-state, sold in-state, that is impacting  interstate sales, and therefore the Feds have authority to regulate what you do, based on the Interstate Commerce Clause, which was intended to prevent states from interfering with the free flow of trade across state lines.

    Eh, except it's legal. Without the magically expanding Interstate Commerce clause or general welfare clause. Per the Constitution. Notice I'm not saying smart or well implemented. The feds have essentially near absolute control of the borders of the US and what comes in/out. It's not an unreasonable interpretation that giving technology to a foreign person is an export. The Constitution gives that power to Congress, Congress implemented it in the Arms Export Control Act of 1976, the courts have mostly correctly given it the ok.

    Not to say portions of the AECA were always upheld. Crypto was ruled, correctly, to be a First Amendment thing and Congress passed the appropriate legislation to mostly de-control it.


    Mind you, just so folks don't shoot the messenger: Just because something is legal and Constitutional doesn't mean it's a good idea. Controlling weapons and technology transfers to foreign countries and persons is a legitimate function of government. China is actively trying to acquire US technology, before them the Soviets were doing so.

    It could be significantly better implemented. But I have indeed assisted in enough investigations to know that some equivalent of ITAR is necessary. It wasn't that long ago that I helped a gun store deal with an ITAR issue that turned out to be Russians ordering EOTechs and shipping them to a freight forwarder. Folks have bought thermal and night vision scopes from retail gun stores that ended up in very bad locations. It's not a theoretical exercise.

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    RetroGrouch

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    Re: Excutive order virtually shuts down small gunsmith operations
    « Reply #34 on: August 08, 2016, 04:17:48 pm »
    I'm sorry, but threading barrels, stoning triggers, making grips that fit normal humans is NOT "exporting technology", unless you live in the late 1800s.  Of the modern guns (post WWII) I own, all but the ARs were made overseas, including threaded barrels, aftermarket grips, better sights, etc., which tells me that tech exists overseas already.  The riflescope on my AR is a Nikon, which last time I looked, is a foreign company.  Almost all of the ammo I own was imported into this country.  The powder for my reloads is imported.  Hell, the components for some of our highest tech is made overseas!


    Really, what does this ITAR fee really do?  As an American citizen, I can buy almost any tech I want.  And I can sell it (unknowingly) to a foreign national or agent, without being able to trace it to an end user.
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    tokugawa

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    Re: Excutive order virtually shuts down small gunsmith operations
    « Reply #35 on: August 25, 2016, 12:26:21 pm »
    Quote from: RetroGrouch link=topic=23700.msg396578#msg396578 date=1470687468
    Really, what does this ITAR fee really do?
    [/quote

     The most important function is to keep the Clinton's competition to a minimum.  If just anyone could  sell US defense secrets to foreign powers, the price would drop like a rock.

     

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    Kaso

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    Re: Excutive order virtually shuts down small gunsmith operations
    « Reply #37 on: October 09, 2016, 05:35:42 pm »
    update:
    http://blog.defenderoutdoors.com/congress-introduces-bill-to-protect-gunsmiths/
    When linking to a strange site, it is customary to provide a quote or brief overview of the article. :coffee

    RevDisk

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    Re: Excutive order virtually shuts down small gunsmith operations
    « Reply #38 on: October 11, 2016, 02:43:22 pm »
    update:
    http://blog.defenderoutdoors.com/congress-introduces-bill-to-protect-gunsmiths/

    It's a bit weird. It moves all firearm hardware over from State to Commerce. Which is a very weird way of going about this. All actual firearm sales for foreign countries going through Commerce? It also does not talk about defense services. So even if it passes, don't expect all firearm defense services to magically become Commerce controlled. If it passed, I still do not know if that would mean firearm manufacturers would have to license with State Department or not. The proposed bill doesn't say.

    Even if it ends up being Commerce controlled, expect gun trainers to get smacked at some point. Because I've met only a handful that inquire about citizenship, let alone demand proof of citizenship before providing defense services. Yes, Commerce is a hundred times as efficient and lax as State but "less stringent control" does not mean uncontrolled.

    If it passes, I expect some more or less common sense compromise to be issued by DDTC and Commerce. Which they could mostly do today with current regulation. But not the "no screening for foreign nationals" de facto standard that currently exists in practice.
    To know the darkness is to love the light,
    to welcome dawn and fear the coming night.
    - Book of Counted Sorrows

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