The firearms industry is subject to stringent regulatory oversight, especially since the Biden administration adopted a "zero tolerance" policy toward firearms dealers who intentionally violate gun laws. Introduced in June 2021, this policy aims to revoke the Federal Firearms Licenses (FFLs) of dealers found engaging in illegal activities. However, its ramifications extend beyond targeting rogue dealers; it also impacts the operations of all FFL holders, regardless of their compliance history. The increased scrutiny has led to a surge in revocation notices, with specific violations, known as the “Deadly Sins,” carrying severe penalties, including the potential loss of one’s license. This blog delves into these critical violations and other offenses that can lead to license revocation, ensuring that FFL holders are well-informed of the risks.

The Context: Zero Tolerance Policy

The Biden administration's "zero tolerance" policy has significantly heightened the focus on firearms compliance. The Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF) has increased both the frequency and thoroughness of its inspections, reducing the interval between inspections from the traditional 3-5 years to much shorter periods. Alongside this, there has been stricter enforcement of penalties, with even minor infractions potentially leading to severe consequences, such as fines, criminal prosecution, or license revocation.

Between July 2021 and December 2023, 672 revocation notices were issued to FFLs, with 250 resulting in successful revocations. Additionally, 173 FFLs voluntarily surrendered their licenses after receiving a revocation notice, highlighting the aggressive nature of this enforcement policy. At the core of these revocations are specific violations of the Gun Control Act (GCA) that the ATF has identified as particularly egregious—the “Deadly Sins.”

The 5 Deadly Sins

The ATF has outlined five critical violations, referred to as the “Deadly Sins,” each of which can result in immediate action to revoke an FFL. These violations are:

1. Refusing to Allow ATF to Conduct a Lawful Inspection:

   • FFLs must permit ATF inspections as part of their licensing requirements. Refusal to comply with an inspection request is considered a willful violation, leading to serious consequences.

2. Transferring a Firearm to a Prohibited Person:

   • This violation occurs when firearms are sold or otherwise transferred to individuals legally barred from owning them. Specific scenarios include:

     • Transferring a firearm after receiving a “Denied” response on a National Instant Criminal Background Check System (NICS) check.

     • Transferring firearms to individuals who identify as prohibited persons in their answers to the disqualifier questions on ATF Form 4473.

     • Failing to verify the residency or exception status for non-U.S. citizens or non-immigrant aliens.

     • Illegally transferring firearms to underage purchasers or out-of-state residents.

     • Failing to recognize and prevent straw purchases.

3. Failing to Conduct a Required Background Check:

   • This violation involves not completing or improperly completing ATF Form 4473, failing to perform mandatory background checks, or misusing exemptions, such as:

     • Using expired concealed carry permits for NICS exemption.

     • Transferring firearms following a delayed NICS response without a proceed message.

4. Falsifying Records:

   • Creating or submitting false documentation related to firearm sales or inventory, such as:

     • Recording false information on ATF Form 4473.

     • Altering or destroying firearm records.

     • Failing to accurately record firearm transactions in the Acquisition and Disposition (A&D) records.

5. Failing to Respond to a Trace Request:

   • FFLs are required to respond to ATF trace requests within 24 hours. Non-compliance with this requirement is a serious offense, with no exceptions allowed.

Other Revocable Infractions

Beyond the “Deadly Sins,” there are additional violations that, while potentially less severe in isolation, can also lead to the revocation of an FFL if they are repeated or aggravated by other offenses. These include:

6. Failure to Account for Firearms:

   • Failing to record the disposition of a firearm on a Form 4473 or in the A&D records can result in a revocation notice, particularly if the firearm is missing during an ATF inspection or trace request.

7. Failure to Verify and Document Buyer Eligibility:

   • Accepting expired identification documents or failing to verify the buyer’s identity and residency can trigger enforcement actions. This includes incomplete or missing information in Box 26.a and 26.b of ATF Form 4473.

8. Failure to Maintain Records for Firearm Tracing:

   • Accurate and timely recording of firearm transactions in the A&D records is critical. Failing to comply with this requirement, particularly in the context of firearm tracing, can lead to serious penalties.

9. Failure to Report Multiple Sales of Handguns/Rifles:

   • FFLs are required to submit reports of multiple firearm sales to the ATF and local law enforcement by the end of the business day. Non-compliance with this requirement is viewed as a significant violation.

10. Prior ATF Administrative Action:

    • FFLs that have been subject to prior administrative actions, such as citations or warning conferences, are under heightened scrutiny. Repeat violations following such actions are treated as willful and can lead to immediate revocation.

Conclusion: The Importance of Compliance

The firearms industry operates within a complex and highly regulated environment, where even minor lapses in compliance can have severe consequences. The “Deadly Sins” and other revocable offenses outlined by the ATF serve as a critical reminder for FFL holders of the importance of strict adherence to all legal and regulatory requirements. As the data from 2021 to 2023 demonstrates, the consequences of non-compliance are increasingly severe, with the ATF’s “zero tolerance” policy leading to a significant rise in license revocations.

For FFL holders, the best defense against these risks is a proactive approach to compliance—ensuring that all transactions are conducted lawfully, all records are meticulously maintained, and all ATF requests are promptly addressed. By doing so, FFLs can avoid the pitfalls of the “Deadly Sins” and maintain their licenses in good standing, thereby continuing their operations within the bounds of the law.