RELEASE: CAP Outlines New Executive Action to Close Loophole for Private Gun Sales

Washington, D.C. — In an issue brief published today, the Center for American Progress calls for new executive action to strengthen background checks by ensuring that high-volume gun sellers are required to become licensed gun dealers. Under current federal law, only licensed dealers are required to perform background checks for all gun sales, and only individuals deemed to be “engaged in the business” of dealing in guns are required to obtain a license from the Bureau of Alcohol, Tobacco, Firearms and Explosives, or ATF. But the current regulatory definition of what exactly it means to be “engaged in the business” is vague and ambiguous and has created the opportunity for individuals to sell guns at a high volume without becoming licensed and without conducting background checks.

In order to address this weakness in the current regulation, CAP proposes that the administration look to state sales tax laws as a useful analogy. Nearly every state imposes a sales tax on goods sold, and in many states, sellers are exempt from the sales tax collection requirement if they engage only in low-volume or infrequent sales. In determining what type of sale is exempt from taxation, many states have adopted a nuanced approach that considers not only the number of products sold, but also other factors that assess the overall nature of the business.

While Congress must act to fully close the loophole in the federal law that allows unlicensed individuals to sell guns without a background checks and with no questions asked—a proposal that continues to have the support of nearly 90 percent of Americans—President Barack Obama has the executive authority to take a meaningful step toward closing that gap via regulation.

“Congress may still have the same debates and recycle the same tired talking points trying to justify their continued inaction to address gun violence in this country, but President Obama has indicated that he is not willing to wait,” said Chelsea Parsons, Vice President of Guns and Crime Policy at CAP. “Updating this regulation via executive action to ensure that all high-volume gun sellers become licensed and conduct background checks would be a significant step in the right direction.”

CAP recommends considering not only the number of guns sold but a number of other factors that help assess the full character of the business, including the amount of money involved in transactions, frequency of sales activity, accepting credit card payments and formal record keeping, paying employees, and selling new and unopened guns or multiple guns of the same make and model. A revised regulation should also make it clear that dealers who lose their licenses should not be permitted to sell off their inventory as unlicensed sellers without conducting background checks, but rather should be required to dispose of these firearms by selling them to other licensed dealers.

“State sales tax laws provide an instructive blueprint for how the regulation defining what it means to be engaged in the business of dealing in guns could be improved to provide additional guidance to individual gun sellers and law enforcement,” said Arkadi Gerney, Senior Vice President at CAP. “These laws have adopted a nuanced approach that considers multiple aspects of individuals’ retail activity to determine whether they are just selling casually for a hobby or as an established, profit-seeking business.”

Read the full issue brief, “Executive Action to Strengthen Background Checks by Addressing High-Volume Gun Sellers,” online here.

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For more information on this topic or to speak with an expert, contact Liz Bartolomeo at lbartolomeo@americanprogress.org or 202.481.8151.

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