June 5, 2018

ATF Inspection Perfection

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By Wally Nelson, NSSF Compliance Consultant Team Member

To be truly ready for an eventual ATF inspection, FFL owners and managers must be assured that the business is in compliance with Gun Control Act (GCA) regulations, that they possess a thorough knowledge and understanding of record keeping, form preparation and other GCA requirements, and with that knowledge have properly trained their employees.

I recommend that FFLs have standard operating procedures (SOPs) in place that document the practices the store uses for its day-to-day operations. These SOPs can also be used for employee training and internal management reviews. While not an absolute requirement, having SOPs available in writing and ensuring their steps are being followed will go a long way toward preparing an FFL for a successful inspection. These three steps will also help:

Three Actions That Help Reduce ATF Inspection Violations

1. Bound Book Errors: ATF regulation 27 CFR 478.125 (e) requires dealers maintain accurate and timely firearms acquisition and disposition record entries. The second most common problem cited by ATF IOIs in 2016 was failure to maintain timely entries in the Acquisition and Disposition (A&D) record (the bound book). This means that a dealer is either failing to enter in a timely manner (or failing to enter at all) firearms received into the bound book or, more commonly, failing to record disposition information in a timely manner. Recommended practices to minimize and detect bound book errors:
   1. Specific personnel, to include a primary and a backup, should be assigned to log firearms into and out of the A&D record. FFLs that have firearms receipts and records maintained “by committee” are more likely to have record and inventory issues on inspections. FFLs need to make sure that information on all firearms received — new, used, consigned and repairs — get to the designated recordkeeper promptly.
   2. Create standard procedures for the central collection of firearms dispositions (Forms 4473, shipments to other FFLs, repair returns and consignment returns) for the recordkeeper, to ensure all dispositions are logged out.
   3. Take inventory. Essential to A&D book accuracy, and therefore zero ATF violation citations is the taking of a 100-percent serial number-based firearms inventory as often as possible. Many retailers take them quarterly. Some with barcode-scanning technology are able to take them weekly. ATF regards unreported missing firearms from inventory as a particularly serious violation and a public safety problem. Dealers who take regular inventories have no or very few missing firearms, especially during ATF inspections.
   4. FFLs with computer-based records must have employees who know how to print out an on-hand report and the required A&D record. ATF will ask for these records. FFLs that cannot produce them must get assistance from their software provider.
2. Forms 4473 Errors: The most commonly cited ATF violations relate to the failure to properly complete ATF Form 4473, which is required by ATF regulation 27 CFR 478.124. Recommended practices for the accurate completion of Form 4473:
   1. Have the customer carefully review Section A, before signing, to catch errors and omissions.
   2. Have the salesperson do the same before the customer leaves the store.
   3. If possible, and before the customer leaves the store, have a coworker or manager review the Form 4473. A second set of eyes should also review Sections B, C and D for completeness and accuracy.
   4. Recording the NICS information at the time the call is made must be done as a matter of course. FFLs using NICS e-Check should print out the short receipt and file it with the Form 4473 as proof of the check.
   5. When an initial NICS response is “delayed,” FFLs should always record the provided Missing Disposition Information (MDI) date and make sure all employees understand that the firearm cannot be transferred prior to that date unless NICS provides a “proceed” response prior to that date.
   6. Make sure “zero” is entered in block 29 on Forms 4473 where NICS is contacted but no firearm is transferred. Many FFLs miss this.
   7. Make sure “denied” Forms 4473 are signed by the person who completed Section B.
   8. The person posting the disposition in the A&D record should also review the Forms 4473 before filing. Instructions on how to correct errors and omissions after the firearm has been transferred are on the Form 4473 and should be followed.
   9. Use the NSSF ATF Form 4473 Overlay Guide. It is a review template that indicates what items need to be completed and what the correct responses should be. This template is available free to NSSF members through the Member Portal — just add the template to your shopping cart and check out. The proper and consistent use of this overlay guide should prevent or eliminate most Form 4473 completion errors.
   10. Electronically generated Forms 4473 are now commonplace. Here are some compliance tips for FFLs that use them.
       1. Ink corrections of errors and omissions detected after the form has been printed can be made on the form.
       2. Print out and file forms where the NICS initial response was “delayed” and a transfer never occurred.
       3. Make sure “zero” is entered in block 29 where NICS is contacted and no firearm is transferred. Some electronic programs default this field to “one.”
3. Failure to File Multiple Handgun (and Rifle) Reports: ATF regards this as a serious violation. These violations often are cited at larger stores with numerous staff, especially those who do not recognize a customer another associate served earlier in the week. As with other common violations, this can be overcome by standard procedures. It can be as simple as asking a customer when they last purchased a handgun or maintaining a handgun log that is checked on each sale back five business days, or as sophisticated as a computer-based customer sales history check. Some computerized firearms records programs have the ability to alert the FFL when a report is required, and some even print out the ATF form. No matter how it is done, dealers need to have consistent procedures in place to identify multiple handgun (and rifle, where required) purchases that need to be reported.

What Else Can I Do to be ATF Inspection-Ready?

In addition to the services the NSSF Compliance Consulting Team provides on an individual basis, NSSF and ATF offer various group training opportunities throughout the year. A prime example of this is SHOT Show University, which offers a full day of courses dedicated to compliance. SHOT Show University takes place the day before the annual SHOT Show kicks off and provides the opportunity to not only learn from, but to interact with, the experts on compliance topics. ATF also offers regional ATF compliance seminars throughout the year, which NSSF staff and consultants attend, support and speak at. These events offer an opportunity for retailers and their staff to attend training without traveling far or being away from the store for too long.

Over these past nine years, NSSF has made available new compliance programs to its firearms retail members to assist them in minimizing commonly cited violations and to continue to pass their ATF inspections without difficulty. I have found it particularly satisfying to get feedback from FFLs with whom I have consulted and hear that they did in fact “pass with flying colors” after my consultation.

NSSF stands ready to assist any of its member dealers in their efforts to get into and stay in compliance with ATF regulations. The NSSF Retail Services staff and the team of Compliance Consultants are here to help you, and our onsite consultations are available to all our Retail Members. Our Premium Retail Members enjoy a number of additional benefits, including access to a legal defense fund to protect their business against administrative actions proposed by ATF, and they may also contact their personal compliance consultant with questions as they occur throughout the year, without additional charge. This link provides more information about the retailer membership that’s right for your business.

NSSF also maintains a Retail Member hotline, which allows FFLs to call or email in their compliance questions. Responses will be handled by NSSF staff or by an NSSF Compliance Consultant. For more information on any of NSSF’s retailer memberships and programs, contact John McNamara, Senior Director, Retail Services, at jmcnamara@nssf.org.

You may also be interested in: NSSF FFL Compliance Consultants Identify Top Issues, Make Recommendations

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Tags: A&D book ATF ATF Citation ATF inspection ATF Violation BP Item Compliance Featured FFL Form 4473 IOI regulation retailers store management Top Stories

Categories: BP Item, Featured, Retailers, Top Stories

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