SOT License Guide

SOT License Guide [2021] – Everything You Need to Know


An SOT is a Special Occupational Taxpayer. It is a Federal Firearms Licensee who pays a special annual tax in order to deal with a special class of firearms called NFA Firearms.

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 discuss each class of SOT more below.

SOT License – What is it?

SOT licence

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.

Before we answer what an SOT is more fully, let’s first explore 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 each time the NFA firearm is made or changes possession. For most NFA Firearms, the transfer (or making) tax is $200.

This tax is paid by the maker of the firearm and, when it comes to transfers, the transferee of the NFA firearm (who it’s going to). Unless you are an SOT, the tax is paid per firearm.

FFLs, in order to avoid the per item tax, and also to have special permission to make them, sometimes elect to become an SOT in order to pay a once-per-year tax that exempts them from the per item tax.

The once a year tax is only $500 for smaller FFLs and most home-based FFLs.

As you can see, there’s a big benefit to becoming an SOT: with an SOT, you’re already saving money once you get your 3rd NFA firearm in a year ($600, 3 X $200, vs $500 once) and if you’d like to make NFA Firearms as a Type 7 FFL, then you’ll need an SOT by requirement.

What are NFA Firearms?

NFA Firearms are guns (silencers are legally considered to be firearms) that are regulated under the National Firearms Act of 1934.

NFA Firearms are also sometimes referred to as Title II firearms because the National Firearms Act is considered to be Title II of federal gun laws (The Gun Control Act of 1968 is Title I – even though it came about later). This is why an NFA item is sometimes referred to as a Title II Firearm.

NFA Firearms are:

  • Silencer (or suppressor)
  • Full-auto machine gun
  • Short Barreled Rifle or SBR (rifles with a barrel less than 16″ or an overall length less than 26″)
  • Short Barreled Shotgun or SBS (shotguns with a barrel less than 18″ or an overall length less than 26″)
  • Destructive Device (grenades and certain types of ammunition)
  • Any Other Weapon or AOW (pen guns, certain special handguns, etc.)
SOT NFA Firearm Silencer

In order to purchase an NFA item, an individual must purchase the firearm from an FFL/SOT and then apply for the transfer with the ATF.

There are special requirements for owning a machine gun.

Transfer approval times for individuals take up to 10 months (or sometimes longer). Whereas, the transfer times for an SOT are typically only a business day or two. This is just one of the reasons we like having an FFL and an SOT – SOTs can get NFA firearms in a matter of days.

SOT Classes

There are three available types of SOT called “classes.” Each Class of SOT allows different activities with NFA Firearms.

Each one of these classes of SOT and firearm business purpose requires a different FFL type.

Here’s a table showing the SOT class, the purpose of that SOT, and the types of FFLs for each:

SOT Classes

SOT ClassPurposeFFL Types
Class 1 SOTImporting NFA FirearmsType 08 and 11 FFLs
Class 2 SOTManufacturing NFA FirearmsType 7 and 10 FFLs
Class 3 SOTDealing NFA FirearmsType 01, 02, and 09 FFLs

Now, let’s dive a little more into each SOT class.

Class 1 SOT

A Class 1 SOT is the rarest type – this class of SOT is only for importing NFA Firearms and won’t apply to most people getting their FFL.

However, it should help you to remember that there’s no such thing as a “Class 3 Firearm” as there’s a good chance that the NFA Firearm you’re referring to actually started its life in our country through a Class 1 SOT.

This class of SOT receives NFA weapons from another gun dealer or manufacturer on an ATF Form 3 and typically sells them to a customer on an ATF Form 4 where the customer pays the transfer tax for the tax stamp.

In order to get a post-86 machine gun, a law enforcement demo letter is needed, unless the FFL from where the machine gun is coming is closing their SOT.

Class 2 SOT

A Class 2 SOT is the second most common class of SOT.

In order to manufacture an NFA Firearm, a Type 07 or Type 10 FFL must register as a Class 2 SOT.

The really cool thing about a Class 2 SOT is that it doesn’t just allow an FFL to manufacture NFA Firearms, it also allows that FFL to also deal/sell those firearms.

A Class 2 SOT costs $500 per year if the company makes less than $500k a year. If the company makes over $500k a year, then the Class 2 SOT costs $1,000 per year.

Class 2 SOTs can make a machine gun whenever they want (no LE letter needed), however, machine guns are only supposed to be made for potential law enforcement or government sales/use.

Class 3 SOT

Class 3 SOT

A Class 3 SOT is the most common type of SOT and the only type that many people are aware of because this is the Class of SOT that your dealer is from whom you’re purchasing an NFA Firearm.

A class 3 SOT may NOT manufacture their own NFA Firearms – they can only purchase them and sell them.

A class 3 SOT costs $500 per year for Type 01 and Type 02 FFLs.

How do I Become an SOT?

First, you need to get your FFL. Then, you can register as an SOT.

As a note, the special occupational tax is paid on a special SOT tax year which starts July 1 of each year. This means, if it’s Spring time, you’d pay the full tax up until the end of June and then again starting July 1. In this case, it’d probably be better just to wait and start July 1 to save money.

If you’d like help in this process, please check out our courses on becoming an FFL and getting an SOT.

What does it Cost to be an SOT?

An SOT pays the registration fee once per year. The SOT tax year starts on July 1st of every year, regardless of when the FFL pays the registration fee.

If the FFL business makes less than $500,000 a year, then the registration fee is $500 per year. However, if the business makes more than $500,000 a year, then some SOT classes and FFL Types pay more.

Here’s a table of the SOT registration costs by SOT class and FFL type:

SOT Registration Cost

FFL TypeUnder $500kOver $500kClassYears
Type 01$500$50031
Type 02$500$50031
Type 03n/an/an/an/a
Type 06n/an/an/an/a
Type 07$500$100021
Type 08$500$100011
Type 09$500$100031
Type 10$500$100021
Type 11$500$100011

SOT FAQ

SOT FAQ

Is an SOT the same thing as a Class 3 License?

No. A class 3 SOT is required for an FFL Dealer to buy and sell NFA Firearms as part of a business. Other classes of SOT make and import the very same firearms sold by the dealer.

In most cases, it costs $500 per year to be an SOT.

There are 3 classes of SOT.

An SOT registration lasts one year.

An SOT registration expires on June 31st of each year, regardless of when the registration started.

An SOT is a taxpayer registration for an FFL to work with NFA Firearms.

SOT stands for Special Occupational Taxpayer.

NFA Firearms are a special class of firearms that carry extra registration and taxation requirements like silencers, short barreled rifles, short barreled shotguns, machine guns, and more.

To become an SOT, you first need to get your FFL and then register as an SOT by paying your yearly registration fee.

You don’t really “get” and SOT because an SOT is something that you become once you register and pay a tax as an FFL.

A Class 2 SOT is for manufacturing NFA Firearms like silencers, SBRs, and more. A Type 07 or Type 10 FFL can register as a Class 2 SOT.

A Class 3 SOT is for being a dealer of NFA Firearms like silencers, SBRs, and more.

That’s nearly impossible to answer, as there is no clear definition of an assault weapon. Can you own a full-auto machine gun or other automatic weapons (including a pistol)? Yes! Can you own an AR-style or AK-style rifle? Yes, of course, however, only anti-gunners call these “assault weapons” and no SOT is required.

It depends on your needs. For most purposes, we recommend an FFL and SOT because it allows you to make, buy, and sell firearms. A gun trust used to be a handy (and necessary) tool, but since the ATF made the process easier to not use a trust, we usually recommend against them.

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).

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45 thoughts on “SOT License Guide [2021] – Everything You Need to Know

Comments
  1. John Doe

    If an SOT makes or acquires NFA items, do all the items need to be surrendered when they retire?

    1. John Doe II

      Unless they can be legally transferred, they are to be destroyed by the ATF.

  2. Jon hawley

    Are FFL’s and SOT’s transferable to other states say, I became an FFL with SOT in one state but ended up moving to another state, would I have to reapply?

    1. Ryan

      You wouldn’t “re-apply” but you would have to file an address change with the ATF.

      1. Lawrence pasoni jr

        Your a great man thank you …im native to america and stripped of my knowledge on the rights we N/A own by and the land we should be protecting. With any means or resource to provide and secure our family. Religon and fellow partners.friends. acquaintances. From. Bully’s and unfair justice from keeping the peace.

      2. Corey

        Can a SOT be paid for at the same time that the FFL application is sent in?

        1. Ryan

          No, you’ll need your FFL number as part of the application. We cover the steps on how to do this in our courses.

  3. Davon Powell

    What is required of me if i want to manufacture ammo only

    1. Ryan

      At a minimum, a business intent, an appropriate location (zoning), and a Type 06 FFL. However, there’s a lot more to consider that we cover in our course if you need help.

  4. Todd Carlisle Pearson

    Is the process still in going to the ATF website, getting your two 5320 forms, getting fingerprinted, having the local sheriff, chief of police, or DA sign off on it then mailing it in with the $200? Or am I wrong?

    1. Ryan

      If you’re referring to getting an NFA firearm via a Form 4, you’re mostly right (there’s plenty of considerations to consider). However, if you’re talking about how to become an SOT, the info is wrong.

    2. Herbert Antonio Hidalgo

      Question how can we disband the NFA

  5. Dan Hansinger

    Is having you SOT similar to the FFL in that you can purchase for personal use also, or is it only to allow for sales/transfers? I am interested in getting my FFL & SOT, but I want to benefit by acquiring some personal items also. Is it as simple as a “transfer” as referred to elsewhere on this site?

    1. Ryan

      Good question – might be a bit too much to get into here. Our courses definitely explain all this, though.

      The short answer is this: the FFL is the license that allows you to make/buy/sell guns and transfer them. Being an SOT is a tax status that allows you to avoid the per-item NFA tax and allows certain business activities with NFA items. So, an FFL is what is needed first. Then, you can become an SOT to work with NFA stuff. The transfer process for NFA Firearms is much more involved than standard firearms.

      1. Tyler

        Related to this, if I got a FFL and Class 2 SOT then starting making suppressors to sell to my friends, would they still have to pay the $200 tax stamp and get it registered in their name?

        1. Ryan

          Yes.

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