Federal Firearms Licensees

The Bureau of Alcohol, Tobacco and Firearms (ATF) issues various federal firearms licenses, including those for manufacturers and importers of firearms. This report focuses on federal firearms dealer licenses, which are granted to dealers and pawnbrokers who sell firearms at wholesale or retail and gunsmiths who repair firearms. Federal firearms dealer licenses account for about 90 percent of all federal firearms licenses. Since 1993, the number of federally licensed firearms dealers has declined significantly. Some groups have raised concerns about the effects of the decline and the factors contributing to it, including the role of ATF. This report discusses (1) the extent and the nature of recent declines in the number of firearms dealers; (2) factors that have affected the recent declines, including whether ATF had a policy to reduce the number of dealers; and (3) the views of pertinent organizations on the advantages and the disadvantages of reducing the number of dealers.

GAO found that: (1) as of September 30, 1995, the number of federally licensed firearms dealers had declined by about 35 percent nationwide from its high point in April 1993; (2) the decline occurred in every state and in applications for both new licenses and renewals; (3) more applications were abandoned or withdrawn and licenses voluntarily surrendered than were denied or revoked by ATF; (4) the reasons for the decline included new ATF efforts to increase enforcement of existing laws through increased inspections, revised application requirements and forms requiring more information, and new legislation that increased license fees and licensing requirements; (5) increased state and local enforcement of their laws may have also contributed to the decline; (6) there was no evidence that ATF had a policy or deliberately sought to reduce the number of licensed firearms dealers, although ATF realized that its strict enforcement of the Gun Control Act of 1968 and the new legislation would likely reduce the number of licensed dealers; (7) officials of 7 organizations representing firearms interests concurred with GAO-identified factors that led to the decline in dealers; (8) a survey of former dealers found various reasons for their not renewing their licenses; and (9) some organizations believed that reducing the number of firearms dealers would lead to a reduction in crime and better monitoring of dealers and guns, while other organizations believed that the decrease would curb competition, raise prices, and limit the lawful availability of firearms.