Gunsmithing SOT 07 ITAR and Excise Question

[GasLight]

Hello,

I am just starting to do some research on things, and I think I have it down, but it is fairly confusing. I just wanted to double check what I think I know, and perhaps get a correction where applicable.

To start manufacture of firearms, and/or ammunition, you need a type 07 FFL.
If you would like to add Title 2/NFA items to the manufacture or dealer side of the business, you need to add an SOT tax.
With an SOT, you will need to register with the State Department and pay a fee to be in ITAR compliance.
As a class 07/SOT, if you manufacture more than 50 items (per firearm, how is this calculated with ammunition?) you need to pay an Excise tax to the Tax and Trade Bureau.

Type 07 - $150 per 5 years
SOT - if less than $500,000 in business per year - $500 per year.
ITAR Registration - $2250 per year
Excise Tax - 10% of pistols selling price, 11% of other firearms and ammunition selling price.

Is the above correct? Am I missing anything?

Thanks!

Dave

 

[TheJ]

I don't know all of your answers, but:

Type 07 FFL is manufacturer of firearms excluding destructive devices
Type 06 FFL is for manufacturer of ammunition.

Two different FFLs.

ITAR is required for manufacturer whether they make title 2 weapons or not. If you want to operate an 07 FFL, you have to do ITAR. Well, unless all of your manufacture is for experimentation, R&D, etc. But if you plan to sell, you must do the ITAR.

I don't know about the excise tax, sorry.

 

[jasonk]

07 covers ammo too, so you don't need the 06 mentioned above. An 06 or 07 FFL is a manufacturer and either/both need to pay the ITAR fees, they have nothing to do with being an SOT. Correct on the excise tax, 1-49 you pay no taxes....but make 50 and you pay excise on all 50 of them. Everything else in your assumptions appear correct based on my info.

 

[GasLight]

Do you know how excise is calculated on ammunition?

 

[biffj]

Ammunition excise tax is 11% on the selling price just like for firearms. I don't know if the 50 gun exemption covers ammo at all or not....I don't think so. You really need to talk with the ATF TTB (tax and trade bureau) for factual information on the excise taxes. Its complex and tricky and while internet advice is all well and good you need info from the source on this.

The FFL 07 is $150 for 3 years not 5.

Frank

 

[jasonk]

Ammunition excise tax is 11% on the selling price just like for firearms. I don't know if the 50 gun exemption covers ammo at all or not....I don't think so. You really need to talk with the ATF TTB (tax and trade bureau) for factual information on the excise taxes. Its complex and tricky and while internet advice is all well and good you need info from the source on this.

The FFL 07 is $150 for 3 years not 5.

Frank

There's no exemption on ammo from my understanding, but I'm not the ATF. The 07 cost is not even a factor sadly, it's the annual ITAR that kills you.

 

[JimT]

I can confirm. 07=ITAR. If you aren't willing to register and pay the tax, you will be told to turn in your FFL and books.

 

[desertfox01]

but does the 06 need to get the ITAR? just curious, I am going to get a FFL again, very least a 01, maybe add the NFA to it. I do not know if I want to do the 07 again....The 06 interests me, but the dam insurance!!! hell, would be worth it just to manufacturer 22LR

 

[jasonk]

but does the 06 need to get the ITAR? just curious, I am going to get a FFL again, very least a 01, maybe add the NFA to it. I do not know if I want to do the 07 again....The 06 interests me, but the dam insurance!!! hell, would be worth it just to manufacturer 22LR

From what I read, yes, 06 and 07 need ITAR. Ugh....

 

[rjacobs]

The 06 interests me, but the dam insurance!!! hell, would be worth it just to manufacturer 22LR

Ive contemplated getting an 06. The insurance seems to be about 2500 per year per million dollars and it was suggested to me to have a million per caliber minimum. I was looking at 6 calibers so I was looking at 15000 a year just in insurance. I dont know what a lot of these guys are doing as far as insurance, but 15k a year seemed kinda ridiculous. Although in the grand scheme of trying to load 6 calibers(I was looking at ~$1 million a year in components running the schedule and quantities I was going to aim for) 15k isnt much. 6 machines will run you between 4k(for a decked out 1050 with bullet feeder and auto drive) to 40k-60k for Camdex's(which is really the way to go at least for your pistol calibers). It seemed to me with being an ammo manufacturer it was go big or go home due to the basic costs involved(~5000 per year for the license, ITAR and 1 million of insurance) if you were only doing 1 caliber it was pretty hard to break even on your 5k plus your potentially 5-10k(or 30-40k for camdex) equipment cost. If all you wanted to load was 1 load of 9mm(say 115g) it would take close to 800k rounds just to pay your license/insurance/itar, Camdex, and your components and packaging. Thats 3300 rounds a day(counting a 5 day work week) which on a Camdex is nothing, it can crank that in 1 hour.

If you are actually selling as an 07 I would think you would want to carry a pretty hefty insurance policy as well.

 

[Beef_Supreme]

Really, as explained to me, anything shooting or even considered Defense. I know ITT Night Vision was fined a tremendous amount for not paying ITAR. ATF though- will often times NOT tell you about the ITAR thing, and then you find out later on and realize you are paying out more than you are making when addiing up Insurance, license fees, etc. Ammo is not remotely profitable for the small manufacturer. I did some work several years ago analyzing it all and it would require making 5 grand profit to pay to make the ammo before pocketing a dime or recovering any equipment investment and ITAR is yearly.