Auctioneers encounter all types of licensing requirements almost no matter where they live in the United States.
- the sale of real property
- the sale of titled vehicles
- the sale of firearms
Our question today is, “How does this type of auctioneer-FFL licensing work?” For that matter, how does any licensing work? First of all, much licensing requires attaining a certain age, an application, schooling and/or specific training, testing, apprenticeships and recurring fees.
The criteria governments used to determine if a license is needed is typically worded something like “if you do this, this or this …” you need a license except for “if you do that, that or that …” you don’t need a license.
For example, in South Carolina, one must be licensed as an auctioneer if one “Sells or offers to sell goods or real property at auction in this state …” But … no license is required for “Selling your own property not acquired for resale, auctions under court order, certain charity auctions,” etc.
Probably the most debated of the items in our list above concerns firearms. The criteria the Federal Government (ATF) uses to determine if an auctioneer needs an FFL is “Engaging in the business.” ATF Rul. 96-2 attempted to clarify this standard, by analyzing two types of auctions — “Estate-type” and “Consignment.”
And important for this discussion, the association asking the question prefaced such with a statement that “Their members generally conduct two types of auctions,” suggesting these were not the only two types of auctions their members conducted — and their members indeed conduct other types of auctions.
Here is the material text from ATF Rul. 96-2:
In the case of estate-type auctions, the auctioneer acts as an agent of the executor and assists the executor in finding buyers for the estate’s firearms. The firearms are possessed by the estate, and the sales of firearms are made by the estate. In these cases, the auctioneer does not meet the definition of “engaging in the business” as a dealer in firearms and would not require a license. An auctioneer engaged in estate-type auctions, whether licensed or not, may perform this function, including delivery of the firearms, away from the business premises.
In the case of consignment-type auctions held on a regular basis, for example, every 1-2 months, where persons consign their firearms to the auctioneer for sale pursuant to an agreement as described above, the auctioneer would be “engaging in the business” and would require a license. The auctioneer would be disposing of firearms as a regular course of trade or business within the definition of a “dealer” under §_921(a)(11)(A) and must comply with the licensing requirements of the law.
So the question appears to be, “If an auctioneer does a single-seller onsite auction where the seller maintains possession and control of the firearms” (which would necessarily include the “Estate-type” exemption) is the auctioneer required to be an FFL? In other words, is the auctioneer “Engaging in the business?” If we were to assume (incorrectly) that all auctions are Estate-type or Consignment, this onsite auction would have to be one or the other, wouldn’t it?
One could argue that since it’s not a “Consignment” auction that no FFL is needed, or one could argue that since it doesn’t involve an estate or executor, an FFL would be required. I would argue this auction is neither of the two types of auctions analyzed by the ATF (but certainly more like [or actually] an Estate-type than a Consignment auction,) and therefore the only standard left to use would be: Is the auctioneer engaging in the business?
Certainly, to gauge the level of “engaging in the business,” we could easily substitute seller for estate/executor and have essentially the same type of auction:
In the case of estate-type auctions, the auctioneer acts as an agent of the executor [seller] and assists the executor [seller] in finding buyers for the estate’s [seller’s] firearms. The firearms are possessed by the estate [seller,] and the sales of firearms are made by the estate [seller.] In these cases, the auctioneer does not meet the definition of “engaging in the business” as a dealer in firearms and would not require a license
On the contrary, the “Consingment” type auction doesn’t resemble at all this “single-seller onsite auction where the seller maintains possession and control of the firearms” auction. In fact, if the seller maintains possession and control, doesn’t the 2nd Amendment to the Constitution essentially guarantee that right to sell, outside of any background check and other reasonable burdens?
The mechanics of the “Estate-type” license exception emphasizes “estate” and “executor” citing that the “single-seller onsite auction where the seller maintains possession and control of the firearms” test fails. However, the “Consignment” auction license requirement emphasizes “consignment,” “regular basis” and “persons (plural)” and this is where the “single-seller onsite auction where the seller maintains possession and control of the firearms” test fails.
Finally, licensing requirements in the United States are structured such that only if you do this, this, and this … you need a license. If the Consignment auction is where a license is needed, the “single-seller onsite auction where the seller maintains possession and control of the firearms” doesn’t trigger the licensing requirement.
What does trigger an auctioneer needing an FFL? That answer is what has always triggered it … Engaging in the business.
Mike Brandly, Auctioneer, CAI, AARE has been an auctioneer and certified appraiser for over 30 years. His company’s auctions are located at: Mike Brandly, Auctioneer, RES Auction Services and Goodwill Columbus Car Auction. He serves as Distinguished Faculty at Hondros College of Business, Executive Director of The Ohio Auction School and Faculty at the Certified Auctioneers Institute held at Indiana University.