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. Bacchus

    If you were to apply and receive a FFL 07, would you need to apply for both a SOT 2 AND a SOT 3? A SOT 2 will give you the ability to manufacture it but does it also give the ability to sell what you manufacture as well? Or do you need a SOT 3 for that on top of it?

    1. Ryan

      Good question. In most cases, you’d only need a Class 2. We cover the differences in our courses.

    2. Adam F

      SOT2 also allows you to sell.

      1. Ryan

        Correct.

  2. MARK JANUSZ

    HI Ryan, So First Get The FFL Then Apply For Slot 2? I can Build/sell And Transfer Firearms?

    1. Ryan

      Yep! We walk through each step of the process in our courses. You may not need to be a Class 2 SOT – it depends on what kind of firearms you intend to make.

  3. Alexander moon

    Do you need an SOT if your a private seller/ manufacturer that won’t deal in special NFA items like SBRs and suppressors?

    1. Ryan

      No. Being an SOT is ONLY for NFA Firearms.

  4. Joe Borges

    We have a type 7 FFL and engrave firearms for the larger gun companies. The gun companies would like us to start engraving silencers for them now. Would the Type 7 FFL be enough to be able to receive, engrave and ship back or would we need to add an SOT 2 to our FFL to be able to do that?

    1. Ryan

      You MUST be an SOT to work with NFA Firearms (like silencers)

      1. Joseph Borges

        Thank you so much. You have put together an incredibly informative product here and I look forward to continuing learning.

        1. Ryan

          Thanks, Joseph!

  5. Davide Alessio

    Hi Ryan. I’m a permanent resident in the USA and an Italian citizen.
    I want became an FFL 07 (but manufacturing will be limited to no NFA items) and FLL 08 (importing regular gun and if requested NFA items). So the SOT is just to buy and resell (and import) NFA items because manufacturing will be limited to assemble parts of semiauto guns, that I will buy and resell. So the 2 questions:
    1) is it possible to combine with the FFL 07 a SOT 3 (not 2) and with the FFL 08 a SOT 1?
    2) Or the SOT 1 is good for both: import NFA and/or buy and resell NFA items?

    Thank You

    1. Ryan

      Thanks for reaching out, Davide! I think you’re going to want a Class 1 and Class 2 SOT – we explain this in our courses.

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