WHAT IS THE FIRESALE LOOPHOLE? Even after ATF revokes a gun dealer's license for chronic non-compliance with federal law, it has allowed dealers to sell their remaining guns without recordkeeping or background checks - by transferring hundreds guns from their "business inventory" into their "personal collections."
PREVENTING GUN DEALERS WHOSE LICENSES HAVE BEEN REVOKED FROM CONTINUING TO SELL THEIR INVENTORY
- Current law requires dealers who sell from their
business inventory to run background checks under the Brady Law and to keep
records of sales so the gun can be traced.
- These requirements also apply to some sales from dealers' personal collections:
- If a licensed dealer transfers a gun from his
business inventory to his personal collection and then sells it within a
- If a licensee sells a gun out of his personal
collection "for the purpose of willfully evading the restrictions placed
- In these cases, "such firearm shall be deemed part of such licensee's business inventory" under 18 U.S.C. § 923(c).
- These requirements no longer apply, however, once ATF has revoked someone's license, because they are no longer a licensed dealer.
EXAMPLES OF THE FIRE SALE LOOPHOLE:
Solution: Pass legislation to close the fire sale loophole.
- Example 1: Valley Gun Shop - In 2005 federal officials revoked the license of Valley Gun Shop in Parkville, MD. Reports indicate the dealer was permitted to sell his inventory as a "private" seller.
- Valley Gun had 483 suspicious crime gun traces
between 1996 and 2000, tying it for 37th among the 120 worst dealers in the
- In the process of revoking Valley Gun's license, ATF documented serious violations:
- ATF identified 900 violations of federal law by
- One ATF inspection showed that Valley Guns could not account for a quarter of its inventory, which made all those guns untraceable by law enforcement.
- Despite this long and well-established record of violating federal law, DOJ and ATF allowed the owner to sell off the store's remaining inventory - over 700 guns - without doing background checks, even after its license had been revoked.
- Example 2: Jim's Guns and Whatever - ATF allowed this store in Dayton, OH to sell guns, even after it had revoked the owner's license and without background checks.
- ATF found the owner violating numerous federal laws, including:
- Deliberately falsifying his federally required
- Failing to send in reports of multiple handgun sales, a key sign of trafficking
- ATF let the owner keep selling guns through at least April 2007, even though they had informed him of his license revocation in January.
- ATF specifically told the owner, however, that his entire inventory, around 700 to 800 guns, became part of a "personal collection" which he could sell.
- He sold them from what had been his store, under his old business name, just as he had done when he held a license, but without background checks.
- H.R. 6664, which was introduced by Rep. Mark Kirk in the 110th Congress, stops gun dealers who lose their licenses from selling their remaining inventory without conducting background checks.
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