The Bureau of Alcohol, Tobacco, Firearms and Explosivesí National Firearms
Registration and Transfer Record

Evaluation and Inspections Report I-2007-006
June 2007
Office of the Inspector General


Executive Digest

INTRODUCTION

On June 26, 1934, Congress passed the National Firearms Act (NFA) to limit the availability of machine guns, short-barreled shotguns, short-barreled rifles, sound suppressors (silencers), and other similar weapons that were often used by criminals during the Prohibition Era.1 The NFA imposed a tax on the manufacture, import, and distribution of NFA weapons and required a registry of “all NFA firearms in the United States that were not under the control of the United States [government].”2 The Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) collects the taxes and maintains NFA weapon possession records in a central registry – an electronic database called the National Firearms Registration and Transfer Record (NFRTR), which contains records on almost 2 million weapons.3 ATF’s NFA Branch (under the Firearms and Explosives Services Division, Office of Enforcement Programs and Services) maintains the NFRTR and processes all applications to make, manufacture, import, register, and transfer NFA weapons.

Congress expanded the scope of the NFA through the Gun Control Act (GCA) of 1968 to include destructive devices (bombs, incendiary devices such as flash bang grenades, and weapons with a bore of greater than one-half inch), frames and receivers that can convert a semi-automatic weapon into an automatic weapon firing multiple shots with one function of the trigger, and other concealable weapons.4 The GCA restricts registrations of NFA weapons to only makers, manufacturers, and importers.5 Private citizens or individuals who meet eligibility under the NFA are allowed to purchase, sell, possess, and transfer only previously registered NFA weapons. Further, the GCA called for a 30-day amnesty period ending December 1, 1968, where anyone possessing an NFA weapon could register the weapon without consequence. However, any NFA weapon not registered during the amnesty is considered contraband, cannot be registered, and must be forfeited or voluntarily surrendered to ATF.

On May 19, 1986, Congress passed the Firearms Owners’ Protection Act to prohibit possession of machine guns that were not legally possessed prior to its enactment. Thus, the Firearms Owners’ Protection Act allowed newly manufactured machine guns to be available only to the U.S. government (such as the U.S. military) and law enforcement entities after May 19, 1986.

NFA weapons and their owners must be registered with the NFRTR, and whenever possession is transferred (through sale, rental, gift, or bequest) the registration must be updated. An owner is required to retain the approved NFA weapons application form as proof of a weapon’s registration and make it available to ATF upon request.6 Manufacturers, importers, and makers of NFA weapons also are required to register each newly made, manufactured, or imported weapon. Law enforcement agencies are allowed to register weapons that have been seized or voluntarily surrendered to the U.S. government.

The Office of the Inspector General (OIG) examined ATF’s effectiveness in maintaining the records of registrations and transfers of NFA weapons in the NFRTR. The OIG conducted the review in response to requests from members of Congress who had received letters from citizens expressing concern about the accuracy and completeness of the NFRTR. These citizens asserted that errors in the NFRTR and errors in decisions by NFA Branch employees left NFA weapons owners vulnerable to unjust convictions for violating the NFA.

RESULTS IN BRIEF

We found that since 2004, the NFA Branch has improved significantly the timeliness of both processing NFA weapons applications and responding to customer inquiries. However, continuing management and technical deficiencies contribute to inaccuracies in the NFRTR database. For example, NFA Branch staff do not process applications or enter data into the NFRTR in a consistent manner, which leads to errors in records and inconsistent decisions on NFA weapons applications. In addition, the NFA Branch has a backlog of record discrepancies between the NFRTR and inventories of federal firearms licensees that were identified during ATF compliance inspections. Further, the NFRTR’s software programming is flawed and causes technical problems for those working in the database. The lack of consistency in procedures and the backlog in reconciling discrepancies, combined with the technical issues, result in errors in the records, reports, and queries produced from the NFRTR. These errors affect the NFRTR’s reliability as a regulatory tool when it is used during compliance inspections of federal firearms licensees. However, we did not find evidence that individual weapons owners or federal firearms licensees had been sanctioned or criminally prosecuted because of errors in the database, as asserted in the citizens’ letters.

The NFA Branch Chief has recently initiated several actions to reduce errors in the NFRTR, such as hiring additional staff, training staff, improving communication with staff, and revising a procedures manual. The NFA Branch Chief and the Assistant Director of the Office of Enforcement Programs and Services both stated that lack of funding precluded other significant actions such as correcting and upgrading the programming for the NFRTR and implementing online submission of applications.

Our main findings are summarized below.

The NFA Branch has improved the timeliness of processing NFA applications and responding to customer inquiries.

The NFA Branch has decreased the amount of time it takes to process NFA weapons applications and improved responsiveness to customer inquiries. Between 2004 and 2006, the average processing time for all eight types of NFA weapons applications decreased collectively from 30 days to 8 days.7 In the same time period, the average processing time for the four types of applications used by individual weapons owners (Forms 1 and 4) and NFA weapons dealers (Forms 3 and 5) for registering and transferring NFA weapons decreased collectively from 39 days to 10 days. Specifically, processing time for Form 1 decreased from 99 days to 28 days; for Form 4, from 81 days to 9 days; for Form 3, from 30 days to 4 days; and for Form 5, 30 days to 9 days. The NFA Branch Chief attributed the improved processing times to the hiring of more contractor Data Entry Clerks, who enter data from the paper forms into the NFRTR, thereby freeing other staff to focus on reviewing the content of the applications. The NFA Branch has improved its process for responding to customer inquiries by hiring contractor Customer Service Representatives to staff the telephones and answer questions, usually within 24 hours, from the public and ATF personnel.

To further improve customer service, the NFA Branch established a working relationship with the National Firearms Act Trade and Collectors Association (NFATCA), which represents NFA weapons dealers, manufacturers, importers, and owners. To build that relationship, the NFA Branch hosted a meeting with members of the NFATCA executive board in 2006 to demonstrate Branch operations and discuss NFA and NFRTR issues. The NFA Branch and the NFATCA also collaborated to write a handbook on the NFA and the weapons registration process, which ATF plans to make available on its website. However, we found that the ATF website’s generally poor structure makes it difficult to navigate or locate relevant information and is a potential barrier to the electronic handbook’s use.

In interviews, NFATCA representatives told us that the process for registering and transferring NFA weapons had “vastly improved” and that members of the NFA weapons industry spoke highly of NFA Branch staff, praising the staff’s progress in minimizing the time to process and approve an application.

ATF Industry Operations Investigators (IOI) and ATF Special Agents we surveyed and interviewed were satisfied with the timeliness of the NFA Branch’s response to their requests for inventory reports and records checks from the NFRTR. IOIs use inventory reports during inspections of federal firearms licensees and Special Agents use results from records checks during criminal investigations. The NFA Branch usually completed inventory reports 2 to 4 days after the Investigators’ requests and records checks 2 to 3 days after the Special Agents’ requests, with urgent checks completed within 1 day.

NFA Branch staff do not process NFA weapons applications or enter data into the NFRTR in a consistent manner.

We found that because of inadequate standard operating procedures, training, and communication, NFA Branch staff members do not process applications or enter data uniformly into the NFRTR. The staff’s variations in completing these tasks result in errors in NFRTR records, reports, and queries as well as inconsistent decisions on NFA weapons registration and transfer applications.

The NFA Branch does not provide staff with a comprehensive standard operating procedures manual. The NFA Branch Chief inherited an undated manual of standard operating procedures when he assumed his position in 2005. The manual was under revision at the time of our review, but the NFA Branch Chief told us that he has not had enough staff to complete the revision.

None of the staff members we interviewed had ever received a copy of this manual as a resource to help them perform their duties. Instead, the procedural memorandums and directives provided to NFA Branch staff as guidance were usually specific to one issue and did not cover the basic information needed to process applications and enter data into the NFRTR. For example, NFA Branch staff stated that they did not have adequate written direction on how to enter data such as abbreviations in the NFRTR, how to maintain application files, how often to contact applicants with pending applications, the proper method for fixing or working around NFRTR technical flaws, and who has responsibility for correcting errors in NFRTR records. Therefore, staff members relied on each other or on managers to verbally explain what they believed were the procedures for processing applications and navigating the NFRTR database.

Additionally, training for new NFA Branch staff members is ad hoc and not uniform. Staff members told us that because of the inadequate training it was difficult to become familiar with the NFRTR and navigate easily through the database, a vital skill needed to process applications and conduct records checks. Staff also believed that inadequate training hampered their ability to learn about the NFA and the process for registering and transferring NFA weapons. Incomplete and inaccurate training could lead to errors in the NFRTR and in decisions based on the NFRTR. For example, supervisors’ inadequate training led to variations in their direction and inconsistent decisions about approving or disapproving NFA weapons registration and transfer applications. Since taking over in 2005, the NFA Branch Chief has provided some training opportunities to staff, including sessions on NFA weapons and NFA-related legal issues, as well as access to NFA weapons industry conferences. However, staff stated that training must be more comprehensive and frequent.

Further, the NFA Branch does not have systematic methods for managers to communicate with staff to keep them informed of NFA and NFRTR issues. Most staff members told us they were comfortable asking questions of Section Chiefs and the NFA Branch Chief but needed more structured and regular forms of communication to stay current on changes in NFA weapons regulations. Staff members said that they sporadically received e-mails and memorandums from managers on administrative, procedural, or NFA issues. However, there were no regular staff meetings or established communication methods, even though staff told us that they would welcome such regular interaction. Without coordinated and regular communication, Branch managers could not update the staff on the complex regulations and issues surrounding NFA weapons or ensure that direction was given in a standard manner. In March 2007, after the fieldwork for our review had concluded, the NFA Branch Section Chiefs began conducting monthly staff meetings to improve the flow of information within the Branch.

The NFA Branch is not promptly correcting a backlog of NFRTR errors identified during inspections of federal firearms licensees.

The NFA Branch is not promptly correcting discrepancies between the NFRTR records and licensee inventories. The NFA Branch is responsible for addressing the errors and discrepancies, identified by IOIs during compliance inspections of federal firearms licensees.8 However, there are no established guidelines for the Branch on reconciling the errors within a certain amount of time, and as of March 2007 the Branch had a backlog of 61 discrepancy reports to reconcile. This means that some corrections to records do not get made before a licensee receives their next inspection, which could be 3 years later. At the time of our review, the NFA Branch Chief had assigned one staff member to work part-time on the backlog.

We found that discrepancies between the NFRTR and inventories of federal firearms licensees were frustrating and time consuming for IOIs as well as disconcerting for licensees. While most discrepancies could be resolved quickly during inspections if the licensees could produce the transfer and registration paperwork, about one of four discrepancies could not be resolved without research by NFA Branch staff. According to the NFA Branch Chief, the discrepancies made the NFA Branch look incompetent and could be disruptive to licensees’ operations because of the time licensees must devote to resolving discrepancies between their inventories and the NFRTR.

In our survey of IOIs, 46.5 percent (139 of 299) reported that they found a discrepancy between the NFRTR inventory report and a licensee’s inventory “always” or “most of the time.” Further, 44.4 percent of respondents (133 of 299) said that the discrepancy was due to an error in the NFRTR “always” or “most of the time.” In comparison, no respondents reported that the error was “always” on the part of the licensee, and only 2 percent (6 of 299) reported that the error was on the part of the licensee “most of the time.”

IOIs stated that many licensees were worried about any identified discrepancy because ATF could refer licensees to ATF Special Agents for violations of the NFA and GCA discovered during compliance inspections. However, we found that errors in the NFRTR have not resulted in inappropriate administrative or criminal sanctions against individual weapons owners or licensees. IOIs told us they only refer cases involving discrepancies to ATF Special Agents for investigation when the discrepancy cannot be resolved or when the IOI suspects there is a deliberate violation of the NFA. We found that IOIs referred cases infrequently to Special Agents and between 2000 and 2006 only 15 federal firearms licensees were charged criminally for violating only the NFA. While IOIs can note NFA violations in the report of the compliance inspection, they cannot issue administrative sanctions for NFA violations alone. In 2006, ATF conducted 7,292 compliance inspections and issued 12,176 violations. Of that total number, less than 1 percent (53) was for NFA violations.9 From our interviews, data analyses, and survey, we identified no instances in which an NFRTR error resulted in inappropriate seizure of an NFA weapon or in inappropriate criminal consequences to an individual weapons owner or federal firearms licensee. We asked the NFATCA for examples of its members’ weapons being inappropriately seized because of inaccuracies in the NFRTR, and we received none in response.

The NFRTR database has technical problems, and the NFA Branch considers the programming to be flawed.

The NFRTR’s programming has not been modified since 1997 when ATF converted the original 1983 electronic database to an Oracle platform. Several NFA Branch personnel described the NFRTR programming as obsolete, or becoming obsolete, and identified flaws that make it difficult to work with the database and to ensure that decisions based on NFRTR reports and queries are correct. The flaws include: (1) older NFRTR records with empty data fields can improperly exclude the records from search results, (2) the NFRTR can erroneously generate two separate records for one weapon, (3) the system lacks controls to prevent inconsistent data entry, (4) the system lists incorrect owners of NFA weapons on queries and reports, and (5) when multiple weapons are registered on a single form, a change entered in the NFRTR for one weapon incorrectly applies the change to all the weapons listed on that form.

For the last 5 years, ATF would not make system enhancements to the NFRTR because ATF planned to integrate many of the databases of its National Tracing Center, Firearms and Explosives Imports Branch, and NFA Branch. The goal of the Firearms Integrated Technology (FIT) project was to allow access to information in the various databases through a single entry point. Content of the individual databases would not be affected. ATF received budget allocations in fiscal year (FY) 2001 and FY 2002 for FIT; however, ATF reallocated the funding to another priority mission, which exhausted the funding by 2004. Any continued work on FIT was dependent on congressionally earmarked funds (which were exhausted during 2005) and the acquisition of specific funds to perform specific tasks. ATF’s subsequent funding requests for FIT have not been successful. ATF requested additional funds for NFRTR improvements for FY 2008, but funding was not included in the President’s budget. To address some technical issues, in 2006 the NFA Branch Chief created a permanent Information Technology Specialist position to determine the full capability of the NFRTR database, develop additional queries and reports, and determine the best approach to correcting errors in NFRTR records.

ATF has not completed two vital projects to improve the NFRTR, which limits the NFA Branch’s ability to correct or prevent discrepancies.

ATF has initiated, but has not completed due to budget constraints, two projects that would improve the accuracy of the NFRTR and increase the efficiency of the NFA Branch. The first project involves scanning (or imaging) all NFA weapons transfer and registration applications since 1934 into digital files in a database and establishing an indexing system to search this new database. The second project, titled e-Forms, is creating an electronic filing system for individual weapons owners and federal firearms licensees to submit NFA weapons applications online.

We found that ATF has 1-year’s backlog worth of NFA weapons applications to image and index. In 2005, the NFA Branch had four contractors working on imaging and indexing, and the backlog was only 6 months. In June 2006, budget cuts forced ATF to reduce the number of contractors to two, which has increased the backlog significantly. Reduction of this backlog is important because NFA Branch staff use the imaging database to quickly and easily locate specific forms, perform a complete search of a weapon’s ownership history, and verify registration of NFA weapons.

ATF also has not completed the e-Forms project it initiated in 2004. The capability for individual weapons owners and federal firearms licensees to submit applications online would reduce data entry errors by NFA Branch personnel, detect errors on applicant’s registration and transfer forms before entry into the NFRTR, and allow importers and manufacturers to check the status of forms they submitted electronically for processing. ATF expects the e-Forms system to free up limited staff resources in the NFA Branch by reducing the number of paper forms that must be keyed into the NFRTR.

In FY 2002, ATF received funding for the e-Forms project and developed the requirements document for an electronic filing system and a prototype of the system. In February 2006, the ATF demonstrated the prototype at a firearms industry trade show and received enthusiastic responses from industry members. However, because of budget constraints, ATF suspended the project before the system was finalized and implemented. ATF estimated that it needed $13,964,870 to complete the e‑Forms system and to operate it for the first 2 years and that $200,000 would be needed to operate it each year thereafter.

CONCLUSIONS AND RECOMMENDATIONS

We concluded that the NFA Branch has made significant improvements to its processing of NFA weapons applications and its responsiveness to inquiries from the public and ATF personnel. However, management infrastructure and information technology issues persist that contribute to errors in the NFRTR and affect its reliability as a regulatory tool. NFA Branch staff do not process applications or enter data into the NFRTR in a consistent manner, leading to errors in records and inconsistent decisions on NFA weapons applications. The NFA Branch also has a backlog of discrepancies in its records that it is not able to resolve in a timely manner due to a shortage in staff resources. Further, the NFRTR database has software programming flaws that cause errors in records and reports.

Despite the concerns of both the citizens who wrote the letters to Congress that prompted our review and federal firearms dealers that errors in the NFRTR leave them vulnerable to unwarranted sanctions and criminal charges, we concluded, based on ATF documents and interviews with ATF personnel and NFA weapons industry representatives, that errors in NFRTR records have not resulted in inappropriate criminal charges against individuals or licensees. ATF does not have the authority to issue sanctions to federal firearms licensees for violations of only the NFA found during inspections.

To help improve the processing of NFA applications and reduce errors in the NFRTR, we recommend that ATF:

  1. Improve the ATF website by making it easier to find NFA information, such as frequently asked questions, application forms and instructions, NFA Branch contact information, and the NFA handbook.

  2. Develop and disseminate to all NFA Branch staff a comprehensive standard operating procedures manual that includes all NFA weapons application processes, NFRTR processes, and data entry codes and abbreviations.

  3. Develop uniform and structured training for staff members that includes standard operating procedures and hands-on experience with the NFRTR. Ensure that all NFA Branch staff members attend the training and that the staff trainers are themselves properly trained. Provide training for the Section Chiefs on supervisory techniques.

  4. Establish regular and recurring methods of communication to NFA Branch staff.

  5. Resolve discrepancies between the NFRTR and inventories of federal firearms licensees in a timely manner.

  6. Develop and implement an action plan to fix technical programming flaws and errors in the NFRTR.

  7. Develop and implement an action plan for eliminating the backlog of imaging and indexing forms for the imaging database.

  8. Develop and implement an action plan for completing the e-Forms project.



Footnotes
  1. 26 U.S.C. § 5845 (1986).

  2. 26 U.S.C. § 5845. NFA applicants must pay a $200 tax each time they make or transfer an NFA weapon. Further, manufacturers, importers, and dealers must pay a Special Occupational Tax (SOT) to do business in NFA weapons and are licensed as Special Occupational Taxpayers. Manufacturers and importers are taxed $1,000 each year and dealers are taxed $500.

  3. The NFRTR was automated in 1983.

  4. The GCA also defined the term “firearm” to exclude antique firearms or any devices (excluding machine guns and destructive devices) that could be classified as collectors’ items. 26 U.S.C. § 5845. Flash bang grenades are non-lethal, pyrotechnic distraction devices used by law enforcement agencies, the military, and movie and television productions.

  5. NFA weapons makers are unlicensed individuals who usually make one weapon at a time for individual use. NFA weapons manufacturers are licensed to manufacture weapons for sale and pay an annual Special Occupational Tax.

  6. 26 U.S.C. § 5841(e).

  7. The eight types of NFA weapons applications are Form 5320.20, Application to Transport Interstate or to Temporarily Export Certain NFA Firearms; Form 1, Application to Make and Register a Firearm; Form 2, Notice of Firearms Manufactured or Imported; Form 3, Application for Tax-Exempt Transfer of Firearm and Registration to Special Occupational Taxpayer; Form 4, Application for Tax-Paid Transfer and Registration of a Firearm; Form 5, Application for Tax-Exempt Transfer and Registration of a Firearm; Form 9, Application and Permit for Permanent Exportation of a Firearm; and Form 10, Application for Registration of Firearms Acquired by Certain Government Entities.

  8. Compliance inspections examine whether a federal firearms licensee is complying with federal firearms laws. During inspections, licensees must account for all weapons that they have bought or sold, and verify they have reported multiple sales and firearms thefts to ATF.

  9. Violations of the GCA and the Firearms Owner’s Protection Act are those most frequently cited during compliance inspections of federal firearms licensees. These violations could include not reporting multiple sales to one individual, selling a firearm to a minor, or not properly filling out an ATF Form 4473 (a firearms transaction record).



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