Can church form an NFA trust for any members to use?

[bloodcoveredsin]

Can church form an NFA trust for any members to use?

Also would this subject us to violation of the 4th amendment?

 

[Sam1911]

Interestingly, we discussed this very question last year: http://www.thehighroad.org/showthread.php?t=734225

Lots of issues abound.

1) The trust owning lots of nifty stuff that any of the members could then lose, break, sell, etc. and thus harm the group.

As Frank said:

Any time one combines valuable property with any multiparty form of ownership, like a trust, a partnership or a corporation, there is the potential for significant legal and tax complications and various disputes among the parties regarding use and control. These can be very complex from both a legal and social perspective.

2) Issues of possession. There's ownership and there's possession and they are not necessarily synonyms.
Again, Frank:

A "transfer" includes a change in possession, not necessarily just ownership. The federal law relating to interstate transfers of firearms apply to changes in possession even in the absence of a change in ownership.

Read through the rest of the thread to get a more complete picture.

 

[Sam1911]

I'd also say that it seems like it would be seriously muddling the church's ministry by diluting the church's focus (teaching, counseling, charity, etc.) in with complex and weighty legal affairs of whatever portion of the congregation might be interested in partaking of a gun trust so they can have cooler toys. It would be like a church having a lottery or car rental pool or a pharmacy for members.

Unless your ministry is in arming your congregants and teaching them to shoot -- HA HA! LOL! -- you probably don't want to introduce a huge sidetrack like a gun trust into a religious organization.

 

[Frank Ettin]

...Also would this subject us to violation of the 4th amendment?

Where do you see Fourth Amendment issues?

 

[bloodcoveredsin]

Thank you Sam1911 for the input. I am interested in hearing any accounts of it's done legally in the past from others. Our church is small enough the socio/psychological issues would be kept to a minimum and dealt with. Already we prepare with arms every two months, mentally and spiritually to resist the beast system.

Certain niceties like suppressors/SBRs cannot be legally without it would be nice if a instead each member deals with legalities on his own as a group the trust that would keep items in the church independent of individual circumstances.

Where do you see Fourth Amendment issues?

I am confused maybe, whether FFL or also NFA item holders are subject to random inspection

 

[Frank Ettin]

Where do you see Fourth Amendment issues?

I am confused maybe, whether FFL or also NFA item holders are subject to random inspection

I don't know about "random" inspections. Certainly FFL can be required to submit to audit and also permit inspection of records. And persons holding NFA items may be required to permit inspection of the tax stamps and NFA paperwork to show that the items are lawfully in their possession.

These would not necessarily be Fourth Amendment violations. A court would usually sustain such inspections under the Fourth Amendment.

Remember that the Fourth Amendment only prohibits unreasonable searches and seizures. There is a considerable body of decisional law discussing when a search indeed satisfied the Fourth Amendment.

 

[Sam1911]

Certain niceties like suppressors/SBRs cannot be legally without it would be nice if a instead each member deals with legalities on his own as a group the trust that would keep items in the church independent of individual circumstances.

I'm sorry, your text isn't quite clear there. Do you mean to say you would keep your weapons IN the church? Like a collective arsenal?

 

[Anmut]

A better question: How do I join your church?

 

[Aaron Baker]

Whether having NFA firearms subjects you to warrantless searches has been covered endlessly. It doesn't.

Obviously a person can create a trust to own NFA firearms and share possession among trustees. If a person wanted to do that and list all his fellow church members as trustees, there's nothing to stop him.

Your real question is whether an organization can be a grantor of a trust. I don't know the answer to that, frankly.

However, I would suggest that you consult a gun trust lawyer in your state to find the answer. But my gut reaction is this: if your church isn't a separate legal entity (not incorporated in any way), then it isn't a legal entity that can do anything. And if your church is incorporated, then why create a separate trust? Corporations can own firearms.

But, again, this is a question for a lawyer in your home state.

Aaron

 

[AlexanderA]

Sounds like an obvious sham to me. You can only stretch the rules so far.

The parallel is with the Branch Davidians in Waco. Seems like you're just asking for a massive ATF raid.

Churches are not gun clubs. If you want a gun club, just form a gun club.

 

[bloodcoveredsin]

Aaron Baker, thank you for the well thought out post. It sounds like one leader should form the trust, then add other members, instead of the organization itself

Sounds like an obvious sham to me. You can only stretch the rules so far.

The parallel is with the Branch Davidians in Waco. Seems like you're just asking for a massive ATF raid.

Churches are not gun clubs. If you want a gun club, just form a gun club.

Can you cite the "rule" in us code or explain why forming an NFA trust has anything in common with a group owning unregistered machine guns, or cite an instance where a NFA trust has triggered a "massive raid" for "stretching rules"? No?

 

[Arizona_Mike]

The question is complicated because a trust is a person under the NFA and not the GCA. The past practice of reading the GCA provisions that apply to NFA weapons "in harmony" with the NFA recently changed with a recent determination letter. The argument in this determination taken to its logical conclusion would reopen the machine gun registry for trusts (since it is part of the GCA and possession by a trust would no longer be prohibited).

The main impact of this would be ambiguity at best over interstate transfer of physical possession between trustees.

However, thing would be legally much simpler for a corporation and a lot of churches are already corporations.

Mike

PS. There are no 4th amendment implications to owning NFA weapons. That needs to be a sticky!

 

[Frank Ettin]

...a trust is a person under the NFA...

That is not accurate.

1. A trust is not a legal entity.
   
   
2. However, under the Internal Revenue Code (Title 26 of the United States Code), the word "person" is defined to include, among other things, a trust, a partnership, an association and an estate (26 USC 7701(a)(1)).
   
   
3. However, the definitions set out in 26 USC 7701(a)(1) are prefaced by the caveat:

   ...where not otherwise distinctly expressed or manifestly incompatible with the intent thereof—

   
   
4. So Congress apparently decided that there might be times when, for the purposes of the effective administration of the tax laws, it might be convenient to lump various non-entities under the term "person", that does not necessarily change the fundamental legal reality that a trust, partnership, association, or estate is not a legal entity.
   
   
5. Oh, and by-the-way, the NFA is a tax law and therefor included in the Internal Revenue Code.

 

[Arizona_Mike]

Frank, how is what I said inaccurate? I did not use the term "entity" in my reply.

26 U.S. Code § 7701 - Definitions

(a) When used in this title, where not otherwise distinctly expressed or manifestly incompatible with the intent thereof—
(1) Person
The term “person” shall be construed to mean and include an individual, a trust, estate, partnership, association, company or corporation.

Nowhere did I argue that this definition applies outside of the revenue code (which includes the NFA). In fact the whole current discussion about the machine gun registry is based on it not applying to the GCA (which is not a part of the revenue code)?

Mike

 

[Frank Ettin]

Frank, how is what I said inaccurate? I did not use the term "entity" in my reply....

I explained exactly how.

 

[Arizona_Mike]

I explained exactly how.

By refuting an opinion I do not hold and did not state?

Mike

 

[Aaron Baker]

Yeah, I'm a little confused, Frank. Mike said that a trust is a person under the NFA definitions.

You then said that his statement wasn't accurate, but provided the definition of person in the tax code that said a trust is person, and then pointed out that the NFA is part of the tax code.

I understand that you're taking the position that a trust isn't a "legal entity," but it does seem to be a "person" for NFA purposes.

Are Mike and I confused somehow?

Aaron

 

[Aaron Baker]

Having read the website of the "church" in question, I want to post once more to reiterate that the original poster should consult an attorney in his home state before taking any actions.

It would not be very High Road of me or on-topic to comment on my opinions of the craziness expressed in the linked website, but I don't want to be seen as giving legal advice to someone that I believe might be paranoid enough that the government might be inclined to give them special attention.

I apologize if I come across as offensive. I'm happy to speculate on the general question, but don't want to find myself associated with the specific situation.

Aaron

 

[Superpsy]

^smart guy.

 

[Arizona_Mike]

I never even looked at the web page until you pointed it out.

As a Catholic I deny neither the resurrection of the spirit or the body (the soul being the union of the two), and while I will likely not need Claratin in the afterlife, I'm certainly not giving it up in this one.

 

[AlexanderA]

Having read the website of the "church" in question

I just looked at the web site too. All I can say is -- Yikes! It was a big mistake for them to call attention to themselves. If they weren't on the radar of law enforcement before, they certainly are now!

I was right in drawing the parallel to the Branch Davidians.

 

[Frank Ettin]

...You then said that his statement wasn't accurate, but provided the definition of person in the tax code that said a trust is person, and then pointed out that the NFA is part of the tax code.

I understand that you're taking the position that a trust isn't a "legal entity," but it does seem to be a "person" for NFA purposes.

Are Mike and I confused somehow?

I'm sorry, but you are confused, and I guess that it's a product of a sort of "code" sometimes used in complex statutory schemes. And the statement:

...a trust is a person under the NFA...

is inaccurate because it is meaningless. It does not address the legal significance or consequences.

So let me go through this again.

1. Under the Internal Revenue Code (Title 26 of the United States Code), the word "person" is defined to include, among other things, a trust, a partnership, an association, a company and an estate (26 USC 7701(a)(1)).
   
   
2. However, a trust, a partnership, an association, an estate, and a company are not legally a "person."
   
   
3. Furthermore, the preface to the IRC definitions says:

   ...where not otherwise distinctly expressed or manifestly incompatible with the intent thereof—

   
   
4. So even in the IRC when the word "person" is used it doesn't necessarily include a trust, a partnership, an association, an estate, or a company. It all depends on the intent and context.
   
   
5. Thus I made the statement:

   So Congress apparently decided that there might be times when, for the purposes of the effective administration of the tax laws, it might be convenient to lump various non-entities under the term "person", that does not necessarily change the fundamental legal reality that a trust, partnership, association, or estate is not a legal entity.

   
   
6. In other words, defining "person" to include a trust, a partnership, an association, a company and an estate is merely for the purposes of stylistic convenience. There may be times when, and situations in which, for the purposes of tax law the word "person" may be read to include a trust, a partnership, an association, a company or an estate. For example, certain rules relating to the deductibility of some business expenses, or the accounting for some business income, might apply whether the business is conducted by a natural person (i. e., a sole proprietorship), an artificial person (i. e., a corporation), a partnership, a trustee managing business property held by him pursuant to a trust, etc.
   
   
7. But lumping a trust, a partnership, an association, a company and an estate under the heading "person" doesn't change the legal nature or character of a trust, a partnership, an association, a company and an estate.

 

[Aaron Baker]

I think you're arguing semantics.

As I understand it, for the purposes of the NFA, the term person has been defined. That definition includes trusts. If all we're discussing is the NFA, then it isn't relevant that a trust isn't a "person" in other contexts. I'm not discussing whether a trust can use a tanning bed or drink a slurpee. We're discussing trusts owning NFA firearms.

Also, I'm not sure what you mean by:

fundamental legal reality

What is that? Legal realities, in my humble opinion, are whatever the relevant statutes say they are. I suppose it could be argued that, in the United States, the most common set of legal standards are what is referred to as the "common law." However, nearly every field has been preempted by state or federal statutes. And to the extent that a relevant statute defines a term, that's the definition that applies.

But if your point is that under the common law, a trust isn't a person, I can't help but concede that. But that begs the question: what does that prove?

And you also keep saying that a trust isn't a

legal entity

.

Why? What do you mean by legal entity? What distinction are you actually trying to make by saying that?

Because at least as far as Black's Law Dictionary 2nd Edition is concerned, legal entity is defined as:

A lawful or legally standing association, corporation, partnership, proprietorship, trust, or individual. Has legal capacity to (1) enter into agreements or contracts, (2) assume obligations, (3) incur and pay debts, (4) sue and be sued in its own right, and (5) to be accountable for illegal activities.

I guess where I'm lost is: what point are you actually trying to make?

Aaron

 

[Arizona_Mike]

I'm very confused as Frank and I seem to be in "violent agreement".

The point I was trying to make is that where you see "person" in the NFA, you are supposed to substitute the definition of person from the internal revenue code.

I was not claiming this has any effect of any other statute where the definition of person is different (or absent) and I was not claiming it had any political or philosophical implications of "personhood" either. It is a "legal fiction" (or shortcut) and I was using it in that context of a shortcut (and only as it applies to the NFA).

For example, when people talk about corporate personhood with respect to first amendment rights it is a shorthand for the concept that natural people have first Amendment rights and they don't loose those rights when they simultaneously exercise freedom of association and voluntarily choose to speak as a group.

In fact, my original point was that it does not apply to the GCA.

Mike

 

[Frank Ettin]

Because at least as far as Black's Law Dictionary 2nd Edition is concerned, legal entity is defined as:

A lawful or legally standing association, corporation, partnership, proprietorship, trust, or individual. Has legal capacity to (1) enter into agreements or contracts, (2) assume obligations, (3) incur and pay debts, (4) sue and be sued in its own right, and (5) to be accountable for illegal activities.

Interesting definition from Black's because all through law school, the Bar exam and 30+ years of practice, trusts and partnerships do not assume obligations, enter into contracts, or sue or be sued as entities.

In a partnership, for example, the partners (or general partners) are personally liable for the debts of the business. A partnership might do business under a properly filed fictitious name giving the appearance of being a single entity, but the property, liabilities and debts trace back personally to the individual general partners.

Let's consider the nature of a trust:

• A trust is a special structure for holding title to property.
  
  
• In a trust, there is one of more trustees who hold title to certain property. Trustees can be natural persons or artificial persons (corporations). But the property is owned by the trustee(s). If the trustee is a natural person, he personally owns the property which is held in trust.
  
  
• But in a trust, while the property is owned by the trustee he is not free to do with it as he wishes. He is not free to use it for his own purposes. He owns the property as a fiduciary to use for the benefit of one or more third parties called the beneficiaries.
  
  
• The rights and obligations of the trustee with regard to the property he owns in trust (sometimes called the "trust res") are set out in writing in a document called a trust, or trust document, or trust indenture. That document describes what the trustee must do, may do and may not do with the property he owns in trust. That document also sets out the rights and obligations of the beneficiary.
  
  
• The trust is started, assuming a trustee agrees to act, by a person, called the trustor or settlor, transferring property to the trustee. The trustee accepts the property subject to the trust document and agrees to be bound by the trust document.
  
  
• So there is no entity called a trust. Business related to the property held in trust is conducted by the trustee as trustee, as a person (natural or artificial, as the case may be).
  
  
• The foregoing is the basic structure of any trust arrangement. Trusts are used in many contexts for many purposes and to hold title to all kinds of property. Trusts are not unique to the NFA world, and an NFA trust is still a trust and operates essentially as described above.

I'm very confused as Frank and I seem to be in "violent agreement". The point I was trying to make is that where you see "person" in the NFA, you are supposed to substitute the definition of person from the internal revenue code....

Okay, Mike. I'm sorry for the confusion. But just a couple of things:

• As noted from the prefatory language to 26 USC 7701, the substitution doesn't always apply.
  
  
• The fact that sometimes the word "person" includes a trust doesn't make a trust legally just like a person. And as you note, "person" doesn't include a trust under GCA68.