UPDATE: The final rule has been released
Since the comment period for 41p ended on December 9th, 2013, we have been waiting to see how the ATF would respond to the record breaking number of comments they received, which pointed out numerous legal flaws in their proposed regulation.
They have responded by continually kicking the can down the road in six month increments while seemingly taking no action. Back in June of this year, I reported that the ATF had once again moved back the proposed final action date on 41p. In keeping with the trend, they moved it forward six months to December 2015.
Now, as we close in on December, they have moved the date once again … but this time, it was only by one month. The proposed final action date is now set for January of 2016 and the industry is abuzz with discussion over what this means.
“Did they simply move it to 2016 as a procedural matter?”
“Does the fact that they only moved it one month mean that they are almost ready to finalize the regulation?”
“Have they addressed the massive number of substantive comments they received?”
“If implemented, will the final version of the regulations have any changes which will correct the legal flaws we identified in the original?”
The answer to all of these questions is “We simply do not know.”
What we do know is this:
- The ATF has publicly stated that, if implemented, the proposed regulation would not be retroactice and that transactions already pending or approved will not be affected.
- There are valid legal grounds to challenge the regulation should it be promulgated and a number of law firms are planning for this very eventuality.
So where does this leave us?
First, if you have been waiting to buy an NFA item, now would be a great time to get your NFA trust established and your application pending!
Second, even if 41p were to be promulgated as-written, trusts would continue to be the preferred vehicle for NFA ownership simply due to the usage and estate planning benefits.
Having said that, I personally do not believe that 41p can be promulgated in its current form and survive the inevitable legal challenges.
In summary … do not let fear of 41p stop you from using an NFA trust, with all its benefits, to build your NFA collection.