Tax Exemptions
Law enforcement, states, and local governments are totally exempt from the making and transfer
(either to or from) taxes, but must comply with the registration requirements. While the NFA only
specifically provides that there is no transfer tax due when the U.S. government is the transferee, (26 U.S.C. sec. 5852(a)), or a state governmental entity (26 U.S.C. sec. 5853(a)), ATF has made up an exemption from the transfer tax where any U.S. or state governmental entity is the transferor,
see ATF Chief Counsel Opinion numbers 20023 and 20400. Opinion 20023 is on my web page -
ATF refuses to release number 20400, claiming it is privileged attorney-client work product.
Abuses of this tax exemption, as in transferring guns through governmental entities so as to avoid transfer taxes, have been successfully prosecuted. See U.S. v. Fleming, 19 F.3d 1325 (CA10 1994).
Federal government agencies, the military, and National Guard are exempt from the registration or tax
requirements, and generally speaking NFA Branch removes weapons from transferrable status in the Registry once they are transferred to the federal government.
