Ok, you’re thinking about becoming a firearms dealer or even a licensed manufacturer and you know that you’ll need to become a federal firearms licensee (get an FFL), but you’re not sure about the requirements for becoming an FFL holder. We get it – the whole process can seem complicated, and possibly overwhelming. First, you’ll […]
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.
SOT Class Activity
| Activity | SOT Class | FFL Types |
|---|---|---|
| Buy/Sell NFA Firearms | Class 3 | 1, 2, and 9 |
| Make NFA Firearms | Class 2 | 7 and 10 |
| Import NFA Firearms | Class 1 | 8 and 11 |
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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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,
Class 3 License FAQ
How do I get an SOT?
Technically, you do not “get” an SOT. Instead, it is something you become by registering as a “Special Occupational Taxpayer” (SOT) once you already have your FFL.
We break down the process to becoming an SOT in this article.
Should I get an FFL, or become an SOT first?
You must first get an FFL before becoming an SOT.
After you have an FFL, you can then register for whichever class of SOT is appropriate.
Do I need to become an SOT?
Whether you need to become an SOT depends on the type of firearms you want to work with.
If you are only dealing with standard firearms (rifles, shotguns, handguns), then you do NOT need to become an SOT. However, if you’d like to work with NFA Firearms like machine guns, short barreled rifles, silencers, and more, then you must register as an SOT.
If I’m an SOT, can I travel across state lines with NFA firearms?
The ATF permits interstate travel with an FFL/SOT, but that does not exempt you from following state laws. Be very careful with this. We recommend becoming an ATF Compliance member for help with these tougher ATF Compliance topics.
How much does it cost to be an SOT?
In most cases, it costs $500 annually to become an SOT.
However, for businesses making over $500k a year, the cost to register as an SOT goes up to $1000.
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[…] an individual, a silencer can be purchased from a “Class 3 firearms dealer,” or more accurately an FFL with a Class 3 SOT, or from another individual to whom the […]
So if I were to register and get through the whole process in which I have the class 3 dealer license, what would happen to any of the firearms I would buy that are registered in my name like a MP5 or M4, if I died, would they be put in a will or would they be taken by the ATF or something since let’s say my son doesn’t have a license to deal them so he cannot own them
Thank you very much for this information. I would love to become an FFL/SOT without buy/sell just a “make” and “import” SOT. The price per year is what deters me. If I am doing this for personal gain it will be expensive but I get all the cool toys Reagan prohibited. Hope this works.
Do you guys help people through the process class 3 licenses?
Yes, we do! Our most popular option is taking our Get your FFL course and our Become an SOt course.