If you are in the business of buying and selling guns with the purpose of making a profit, you are required to be licensed by the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), according to the federal Gun Control Act (GCA). The ATF helps facilitate a number of actions, such as keeping firearms out of the hands of prohibited individuals (e.g., felons, those who were involuntarily institutionalized, and unlawful immigrants) by running background checks on potential buyers, keeping records of transactions to trace guns involved in criminal activity, and ensuring sellers provide safe and secure gun storage and safety features.
Not only is a license required to conduct business at brick-and-mortar store or a temporary location like a gun event or show, but it is also required for online sales as well. Additionally, if you consistently hold gun auctions that are first cosigned to you for sale, and you have every intention to make a profit from those sales, you need a license.
On the other hand, if you only sell firearms from your personal collection occasionally, you do not need a license. However, private and unlicensed sellers may need a licensed dealer to help facilitate the sale.
The federal courts will consider the following factors to determine if a person engaged in buying/selling firearms for business purposes:
- If you repeatedly purchase and sell firearms
- If your intention is to make a profit
- If you represent yourself as a dealer
- Other circumstances related to selling firearms
If you deal firearms without a license, you could face federal criminal charges. A conviction can result in a maximum federal prison sentence of five years and a fine of up to $250,000.