An SOT (Special Occupational Taxpayer) is an FFL (Federal Firearms Licensee) that makes or sells NFA firearms (silencers, machine guns, short barreled rifles, etc).
The SOT is a "taxpayer" because they pay a special annual tax in order to deal with a special class of firearms called NFA Firearms.
In this article I'm going to tell you everything you need to know about SOTs - but first, why should you listen to me? Simple, I'm a firearms attorney who has helped thousands get their FFL and become an SOT and I've represented and helped hundreds of FFLs stay out of trouble with the ATF.
SOTs are sometimes (incorrectly) referred to as someone who has a Class 3 License or even an SOT License.
These are incorrect because a Class 3 SOT is a type of taxpayer you can become (not an SOT license to have). The license held by an SOT is an FFL which is one of 9 types of FFL. And, an SOT can be one of three classes of taxpayer - either a Class 1, Class 2, or Class 3.
If this is confusing, don't worry - government bureaucracy is a mess. That's why we offer our Become an SOT course, to make everything simple.
The classes of SOT are:
- Class 1 SOT - Importer of NFA firearms
- Class 2 SOT - Manufacturer of NFA firearms
- Class 3 SOT - Dealer of NFA firearms
Another way the term "Class 3" is often used is when someone is calling an NFA Firearm a "Class 3 Firearm." There is no such thing as a "Class 3 Firearm."
Instead, an NFA Firearm, or a Title II firearm, (more on these below) is imported by a Class 1 SOT, or it is made by a Class 2 SOT. Then, a Class 3 SOT is the dealer that sells it. Therefore, the firearm being sold by the Class 3 SOT came first from a Class 1 or 2 SOT.
We'll take a closer look at each class of SOT below.
SOT License - What is it?
A special Occupational Taxpayer ("SOT") is something that a Federal Firearm License ("FFL") holder becomes to engage in certain business activities with National Firearms Act ("NFA") firearms (also called Title II firearms) like short barreled rifles, silencers, and more.
To better understand what an SOT is, it's helpful to first understand what an FFL is.
Q: What is an FFL? A: An FFL, or Federal Firearms License holder, is a person or entity engaged in the business of making and/or selling firearms. FFLs are gun dealers or firearm manufacturers.
The process to become an FFL is fairly straight forward. However, there's a right and a wrong way to set it up.
SOT Licenses
There is a special class of firearms called NFA firearms (more on that next) that incur a special making and transfer tax