Class 3 License & How to Become a Dealer

How to Get a Class 3 License

Ok, first off, there’s really no such thing as a “Class 3 License.”

Instead, someone who has a Federal Firearms License, must become a Special Occupational Taxpayer (SOT) in order to deal, manufacture, or import a certain category of firearms called NFA Firearms/Title II firearms. This special category of firearms includes Silencers (suppressors), Short Barreled Rifles (SBRs), Short Barreled Shotguns (SBS), Full-Auto Machine Guns, and “Any Other Weapons” (AOWs).

What is an SOT?

An SOT is a taxpayer (entity) with an FFL that has registered with the federal government and paid an annual tax. The status as an SOT applies to the entity (business). This means that a business can get more than one FFL and it can rely on its status as the same SOT.

The SOT tax must be paid every year by July 1st, and the cost of the FFL and SOT registration varies per FFL Type and, in some cases, by annual sales. Unfortunately, if you decide to become an SOT on June 1st, you’ll either need to pay again for the next year on July 1st, or you’ll need to wait until July 1st to start the next SOT tax year.

SOT Classes

Depending on the activity the FFL wants to engage in with NFA Firearms, they must become one of 3 classes of SOT and have a certain type of FFL.

This is why your local gun shop which sells NFA firearms is sometimes called a “Class 3 Dealer.” They don’t have a “Class 3 license,” but rather are likely a Type 1 FFL who has become a Class 3 SOT.

There’s really no such thing as a “Class 3” firearm either.

Yes, an FFL must be a Class 3 dealer (is a Class 3 SOT) in order to sell NFA firearms. However, the NFA firearms themselves aren’t “Class 3.” As you can see in the above chart, every NFA Firearm was either imported by a Class 1 Importer (is a Class 1 SOT) or it was made by a Class 2 Manufacturer (is a Class 2 SOT). Therefore, the same NFA firearm likely passes through different Classes of SOTs.

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The ultimate guide to getting your Federal Firearms License

How to Become a Class 3 Dealer

This is what most people are wondering about when they ask, “How do I become a Class 3 License?”

The first step is to become a Federal Firearm Licensee. In another article, we’ve broken down how to get your FFL in 4 easy steps, and we offer classes which help you get your FFL.

After you have your FFL, you’re ready to register as an SOT and pay the appropriate tax:

Step 1 – Ensure that You Have the Correct FFL/Business Structure

You must ensure that you set your business up properly and got the correct type of FFL. If you took our course, don’t worry – you’re all set!

If you want to be a dealer, you may use a Type 7 manufacturer’s license. The opposite isn’t true – a Type 1 dealer may not manufacture firearms.

NFA firearms will be registered to the entity. We recommend using an actual business entity (a corporation or LLC) for liability purposes, but being a sole proprietor does have one benefit for some. If you decide to go out of business and give up your FFL, then all of the firearms, including NFA firearms (except post-1986 machine guns), can transfer freely (no transfer tax) to you as an individual. This is because the NFA firearms are registered to the SOT (the entity) and not the FFL license.

Step 2 – Select Your Class of SOT and Tax-rate

As we covered above, the Class of SOT you must become depends on the activity you want to engage in. Once you’ve determined that Class of SOT you need to become, you must then figure out your tax rate. For some FFLs, the SOT tax rate changes depending on whether your total sales are over or under $500,000 annually.

As you can see in this chart, the SOT Class is what you get depending on your FFL type. So, a “Class 3 License” is really a Dealers FFL License with a Class 3 SOT.

SOT Registration Cost

FFL Type	Under $500k	Over $500k	Class	Years
Type 01	$500	$500	3	1
Type 02	$500	$500	3	1
Type 03	n/a	n/a	n/a	n/a
Type 06	n/a	n/a	n/a	n/a
Type 07	$500	$1000	2	1
Type 08	$500	$1000	1	1
Type 09	$500	$1000	3	1
Type 10	$500	$1000	2	1
Type 11	$500	$1000	1	1

Step 3 – Take an Online SOT Registration Course

The actual process of getting your FFL License and registering as an SOT can be difficult. However, thanks to online SOT certification courses, it’s never been easier.

However, it’s incredibly important that you take the right one.

When choosing an SOT Registration course, you should look to make sure that you are getting: legal advice from an actual firearms attorney that has the appropriate certifications.

-legal advice from an actual firearms attorney that has the appropriate certification guidance from a true industry insider/professional who knows the ins-and-outs of both the firearms industry and the ATF

-guidance from a true industry insider/professional who knows the ins-and-outs of both the firearms industry and the ATF professional software that helps you track your progress automatically notifies you of any updates in the law and provides follow-on training and certifications for both you and your employees

-professional software that helps you track your progress, automatically notifies you of any updates in the law and provides follow-on training and certifications for both you and your employees

There are currently only a few online SOT registration guides. To figure out which one is the best for you, here is a comparison chart breaking down the two:

RocketFFL vs Others

Features	RocketFFL	Others
Online Course	✓	✓
Step-by-Step Instructions	✓	✓
Satisfaction Guarantee	✓	✓
Created and Taught by Firearms Attorney	✓	X
Hours of Video in Lessons	✓	X
Free Compliance Tools	✓	✓
One-on-One Legal Counsel Available	✓	X
Follow-On Advanced Training Available	✓	X
Course Certifications	✓	X
Discounts on Software and Services	✓	✓
Automatic Notifications on Changes in Laws	✓	X
Employee-Level Training Available	✓	X

Step 4 – Apply for and Register as an SOT

Upon ensuring you have the correct FFL and business type, have chosen the right Class of SOT, and taken your course, you’re finally ready to apply for your SOT registration to become a Class 3 dealer, a Class 2 Manufacturer, or a Class 1 Importer.

Now, the steps to this can be very difficult and may require multiple forms and extra steps depending on your situation.

However, if you completed our Become an SOT start-up guide, you’ll have every detail and access to all the necessary forms in order to become an SOT.

So, there you have it.

You don’t want a Class 3 License – instead, you might want to be a Class 3 SOT with a Dealer License, or a Class 2 SOT with a manufacturer’s license.

In four simple steps, you can become a licensed firearm manufacturer, dealer, and/or international arms exporter or importer of NFA firearms as a Class, 1, 2, or 3 special occupational taxpayer (SOT).

I’m looking forward to having you in our industry,

AUTHOR

Ryan Cleckner

Check out Ryan Cleckner 's Courses

Ryan Cleckner is a former special operations sniper and current attorney specializing in firearms law/ATF compliance and is a firearms industry executive (former govt. relations manager for NSSF, Vice President of Remington Outdoor Company, and a SAAMI voting board member).