Ammunition Excise Taxes/FFL 06

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perdurabo93

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I'd like to bring up a hypothetical situation, just for the sake of experimentation. Using the analogy of the 80% receiver not being a firearm subject to ATF regulations or excise taxes, I'd like to speculate on an analogous situation with ammunition. At what point does an assembled set of centerfire cartridge components constitute a cartridge that:

1) Requires an 06 FFL in order to manufacture and sell
2) Requires an 11% excise tax to be paid on the sale thereof
3) Would be prudent for the seller/manufacturer to carry liability insurance in order to sell

Does a cartridge have to be 100% loaded in order to require these things for public sale? If somone came up with a method to create an *mostly* loaded cartridge (pre-sized, pre-primed, powder measured, an inexpensive and reusable method for the end user to quickly, consistently and easily assemble and seat the bullet accurately) would marketing that set of pre-measured components require an 06 FFL? Would the sale of these components together, but unassembled require an 11% excise tax to be paid on their sale by the seller? Would it be prudent for the seller to carry liability insurance despite the fact that the end-user is technically responsible for all the components ultimate assembly? Do reloading component manufacturers generally carry liability insurance despite the fact that its almost never the manufacturers fault, legally speaking, when a reloading accident occurs?

If you could come up with a way to sell unloaded ammunition components to people in such a way that the vast majority of the work is taken out of the loading process, but you are still selling unloaded ammunition components, would you not be able to avoid ATF licensure or paying excise taxes, and therefore be able to undercut the price of already loaded ammo? I understand there are HAZMAT issues with shipping primed-but-unloaded ammo and loose powder, but on the surface this seems like a potential way, if a technology or system can be devised, of reducing the cost of ammo by skirting taxes and placing the liability on the user, but without requiring them to invest in a lot of expensive and sometimes frustrating reloading equipment.

The black powder world has already come up with pre-measured pyrodex pellets that you just drop down the barrel of your .50cal muzzleloader that dont require a measure. What about pre-measured loads of smokeless powder compressed/infused somehow into a primed case but without a seated bullet for very common loads like .223/62gr, .308/147gr, 9mm/115gr, and 45acp/230gr. You could then sell a cheap manual hand loading device that is pre-calibrated for seating the bullets that comes with the pre-charged cases so that all the end user has to do to is drop in both components and then whack it with a hammer or on a hard surface, or some other very simple process.

Since the loading is done by the end user using the tool, is all the liability for ammunition failure mishaps theirs? Do reloading component companies ever get sued successfully for component "defects" despite the fact that the final assembly is totally the purview of the end user?
 
Frankly, I wouldn't trust the opinion of anyone answering your question, unless they can link to something authoritative on the matter. The ATF does not find circumventing revenue laws to be very amusing, and you will not enjoy their visit...

That said, the best way to get an answer is describe in detail what you want to do and submit a letter to the ATF Technical Branch. They get to interpret the laws to a degree and the answer will function as a "stay out of jail card".
 
Another problem that comes to mind is that you might have described enough of your idea here that you might not be able to patent it anymore.

On the up side, nobody else can patent it now either.

When you figure out your end-user reloading device/method, keep it under your hat until you know it's either a pipe dream or a marketable product.

-J.
 
Honestly, the only patentable items in this idea are how to make the pre-measured/pre-loaded primed brass and how the pre-calibrated bullet seating device would work. I don't think you can patent a sales strategy.
 
You can patent almost ANYTHING. There are plenty of business models/sales strategies out there that are actually pretty useful for the companies that hold them.

I think that the sales strategy is the most valuable aspect of this rather dubious idea. You can design a different device to get to the same end, but hey, if some other guy holds a defensible patent on the basic concept, he has a monopoly for 20 years no matter what device you invent afterwards.

That's not to say I'd bet the farm on the original poster's idea. I just think that if you have a novel business idea you should probably not tell the world about it before you are sure you don't want it.

As soon as you make it public, the cat is out of the bag.

Nevermind that the big problem is that even if the ATF says that this is kosher, and the tax man says it's not taxable, you'd be kind of hosed if they just changed the tax rules to define your new gadget as "ammunition" a month after you go to market.

Oh, and you'd never get away from liability insurance. Period. Unless you don't like owning your house, your car, your retirement, your kid's college fund, etc. etc.

-J.
 
Requires an 11% excise tax
Why are you trying to circumvent the excise tax in the first place?

It is one of the few taxes we pay that actually goes to a very good cause.

The Pittman-Robertson act, which the excise tax is based on, supports more wildlife habitat, public hunting land, sport fishery's, State F&G departments, etc.

That is all a good thing for the shooting sports in my book!

rcmodel
 
You can not circumvent the intent of the law.....you have no way to do it. You idea would be offer components...you need the license etc, the liability insurance, and you will need to rethink....Freakshow10mm just went in and out of the bullet casting biz and ammo biz.....he posted that he liability insurance was not all that bad like 175? a month.....

How else could even get decent prices on components? Graf's and BHSS offer FFL 06 pricing so that you the ammo mfgr tacks on the excise tax......
 
Reloading components are not excise taxed, only fully loaded ammo.

The intent of the law is to tax loaded ammunition. Nobody at all, from manufacturer to retailer pays an 11% excise tax on reloading components and people who reload do not pay the tax either. Obviously one of the reasons reloaded ammo is cheaper than commercial factory or commercial reloaded ammo is that the manufacturers of loaded ammo have to increase priced at least 11% above cost to cover this tax.

The reasons most often given for not reloading is that its too much time and hassle and the up front costs are too high. If you could eliminate most of the "hassle" and sell reloading components just like Midway or Grafs but in such a way that only a small amount of labor was required to "complete" the ammo, then you would be offering the customer ammo that was far cheaper than commercially loaded factory ammo because, at the very least, you didn't have to mark it up 11% to cover the tax.

If you can determine with certainty at what point a set of reloading components becomes "loaded ammunition" such that the excise tax applies, then you could offer a specific set of components that already had all of the work done JUST up until that point, and no more..leaving relatively little reloading work to the end user. If the feds wanted to tax this sort of arrangement, they would have to tax ALL components, and no one would stand for that.
 
The bullet itself, if made and sold for commercial purposes, requires an FFL/06, according to BATFE, at least that's what I have read.

People casting their own do not require that.
Once you start doing it for profit you're a FFL/06 and need appropriate licensing, permits, insurance, etc.

I thought about selling brass with predispensed powder with a bullet partially started in the case, set to the OAL you want, and presto, it's not finished ammo- however, you can't get around the 06 FFL for the bullet itself.
Any dodge that on the surface is an obvious attempt to circumvent taxation will be descended upon with the full force of the law, regardless of if it is or is not a grey area. Uncle Sugar likes his tax dollars.
 
No my friend you pay the excise tax on all the stuff...unless you are a 06/07 FFL! It is built into the price....like primers, powder, and brass! The tax is paid........when you buy from.....places.....like Grafs, Midway, etc. You dont pay the excise tax if you are a 06/07 cause then you pay the taxes on mfg'd ammo! Just look at pricing for 06/07 differences from places like BHSS or Grafs......
 
Your intent is try and circumvent the law and shipping rules under CFR49....and you will not do that legally!
You are would be shipping ....... stuff that is not covered under ORM-D ie small arms ammo or just shipping primed cases..... You would not be shipping powder in orginal approved shipping containers....and you would not be shipping loaded ammo either....simply put the idea is fruitless! You are selling components.....with no way to to control anything! Not that you could control end use!
 
OEM prices 06/07 FFL for primers ie.....Fed 150 $98.99
Regular prices for dealers.....Fed 150 $113.99
Game set match! And, the same thing can be seen in BHSS catalog with prices on bulk Hornady bullets for the 06/07 FFL......the tax is paid....just like the tax is paid on guns....like LE pricing on Glocks vs regular whsle.......
 
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