[ATF Ruling 96-2]

      18 U.S.C. section 923(a): ENGAGING IN THE BUSINESS OF DEALING
IN FIREARMS (Auctioneers)

      Auctioneers who regularly conduct consignment-type auctions of
firearms, for example, held every 1-2 months, on behalf of firearms
owners where the auctioneer takes possession of the firearms
pursuant to a consignment contract with the owner of the firearms
giving the auctioneer authority to sell the firearms and providing
for a commission to be paid by the owner upon sale of the firearms
are required to obtain a license as a dealer in firearms.

      ATF Rul. 96-2

      An association of auctioneers has asked the Bureau of Alcohol,
Tobacco and Firearms (ATF) for a ruling concerning the auctions
conducted by their members and whether the sale of firearms at such
auctions requires a Federal firearms license as a dealer in
firearms.

      The auctioneers' association stated that their members
generally conduct two types of auctions: estate-type auctions and
consignment auctions. In estate-type auctions, articles to be
auctioned, including firearms, are sold by the executor of the
estate of an individual. In these cases the firearms belong to and
are possessed by the executor. The auctioneer acts as an agent of
the executor and assists the executor in finding buyers for the
firearms. The firearms are possessed by the estate and their sale
to third parties is controlled by the estate. The auctioneer is
paid a commission on the sale of each firearm by the estate at the
conclusion of the auction.

      The association states that, in consignment-type auctions, an
auctioneer may take possession of firearms in advance of the
auction. The firearms are inventoried, evaluated, and tagged for
identification. The firearms belong to individuals or businesses
who have entered into a consignment agreement with the auctioneer
giving the auctioneer authority to sell the firearms. The agreement
states that the auctioneer has the exclusive right to sell the
items listed on the contract at a location, time, and date to be
selected by the auctioneer. The agreement also provides for the
payment of a commission by the owner to the auctioneer. The
consignment-type auctions generally involve accepting firearms for
auction from more than one owner. Also, these auctions are held on
a regular basis, for example, every 1-2 months.

      Section 923(a), Title 18, U.S.C., provides that no person
shall engage in the business of dealing in firearms until he has
filed an application and received a license to do so. Section
922(a)(1), Title 18, U.S.C,, provides that it is unlawful for any
person, other than a licensee, to engage in the business of dealing
in firearms. Licensees generally may not conduct business away from
their licensed premises.
       The term "dealer" is defined at 18 U.S.C. section
921(a)(11)(A) to include any person engaged in the business of
selling firearms at wholesale or retail. The term "engaged in the
business" as applied to a dealer in firearms means a person who
devotes time, attention, and labor to dealing in firearms as a
regular course of trade or business with the principal objective of
livelihood and profit through the repetitive purchase and resale of
firearms. A dealer can be "engaged in the business" without taking
title to the firearms that are sold. However, the term does 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 personal collection
of firearms. 18 U.S.C. section 921(a)(21)(C).

      In the case of estate-type auctions, the auctioneer acts as an
agent of the executor and assists the executor in finding buyers
for the estate's firearms. The firearms are possessed by the
estate, and the sales of firearms are made by the estate. In these
cases, the auctioneer does not meet the definition of "engaging in
the business" as a dealer in firearms and would not require a
license. An auctioneer engaged in estate-type auctions, whether
licensed or not, may perform this function, including delivery of
the firearms, away from the business premises.

      In the case of consignment-type auctions held on a regular
basis, for example, every 1-2 months, where persons consign their
firearms to the auctioneer for sale pursuant to an agreement as
described above, the auctioneer would be "engaging in the business"
and would require a license. The auctioneer would be disposing of
firearms as a regular course of trade or business within the
definition of a "dealer" under section 921(a)(11)(A) and must
comply with the licensing requirements of the law.

      As previously stated, licensed auctioneers generally must
engage in the business from their licensed premises. However, an
auctioneer may conduct an auction at a location other than his
licensed premises by displaying the firearms at the auction site,
agreeing to the terms of sale of the firearms, then returning the
firearms to the licensed premises for delivery to the purchaser.

      Held: Persons who conduct estate-type auctions at which the
auctioneer assists the estate in selling the estate's firearms, and
the firearms are possessed and transferred by the estate, do not
require a Federal firearms license.

      Held further: Persons who regularly conduct consignment-type
auctions, for example, held every 1-2 months, where the auctioneer
takes possession of the firearms pursuant to a consignment contract
giving the auctioneer the exclusive right and authority to sell the
firearms at a location, time and date to be selected by the
auctioneer and providing for a commission to be paid upon sale are
required to obtain a license as a dealer in firearms pursuant to 18
U.S.C. section 923(a).