The Zero Tax on NFA Firearms

The National Firearms Act, chapter 53 of the Internal Revenue Code, finds its basis in U.S. Const. Art. I, § 8, under which “The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises….”  It imposes special occupational taxes for businesses and making and transfer taxes on individual firearm transactions.  It is unlawful for a person “to receive or possess a firearm which is not registered to him in the National Firearms Registration and Transfer Record,” 26 U.S.C. § 5861(d), perhaps the most typical violation.

A “firearm” under the NFA includes eight categories, including short-barreled shotguns and rifles (and weapons made from shotguns and rifles under 26″ overall length); “any other weapon” (small guns other than handguns); machineguns, silencers, and destructive devices.  § 5845.  Under H.R.1—One Big Beautiful Bill Act of 2025, as reported by the Senate Finance Committee on June 16, 2025, § 5845 would have been amended to state: “The term ‘firearm’ means a machinegun or a destructive device.”

As a reconciliation bill, H.R. 1 was subject to the Byrd Rule, under which an amendment is extraneous if it does not produce a change in outlays or revenues.  As I argued here, the bill would have complied because it produced a change in revenues by eliminating certain firearms as taxable.  The Senate parliamentarian opined otherwise.  The final version as passed did not change the definition of “firearm” at all, and instead amended the making and transfer taxes on all NFA firearms except machineguns and destructive devices to $0.

Before the amendment, the making and transfer tax was $200 per firearm (or $5 for “any other weapon”).  While the tax is now zero on most firearms, one must still register each firearm and obtain ATF’s authorization before making and transferring it.  Without any tax being imposed, the rug has been pulled out from the constitutional basis of the NFA.

In Sonzinsky v. U.S. (1937), the Supreme Court held that the NFA contained “no regulations other than the mere registration provisions, which are obviously supportable as in aid of a revenue purpose.”  And in Haynes v. U.S. (1968), the Court described the National Firearms Act as “an interrelated statutory system for the taxation of certain classes of firearms.”  Upholding Obamacare under the tax power in National Federation of Independent Business v. Sebelius (2012), Chief Justice Roberts cited Sonzinsky, writing that “we have upheld such obviously regulatory measures as taxes on … sawed-off shotguns.”

Under H.R. 1, no revenue purpose is left for any of the firearms other than machineguns and destructive devices.  Requiring these other firearms to be registered produces zero in taxes, no different than firearms that are not included in the NFA.  The bill becomes effective on January 1, 2026.  Lacking any jurisdictional hook in the tax power or other constitutional delegation, it will be difficult to prosecute offenses for unregistered firearms (other than machineguns and destructive devices) possessed or transferred on and after that date.

Civil challenges have already commenced.  A complaint filed in the Eastern District of Missouri, Chris Brown v. ATF, challenges the pertinent provisions of the NFA not only on the lack of Congressional power under the revenue clause, but also challenges the restrictions on suppressors and short-barreled rifles under the Second Amendment.  Suppressors and short-barreled rifles pass the Heller test by being arms in common use, and NFA-type restrictions do not pass the Bruen text-history test.  Plaintiffs also include the NRA, Firearms Policy Coalition, Second Amendment Foundation, and American Suppressor Association.

Missouri is in the Eighth Circuit, which in U.S. v. Hall (1999) upheld the NFA under the taxing clause, but rejected an argument that the commerce clause would be a constitutional basis for the NFA.

A second challenge, Silencer Shop Foundation v. ATF, has been filed in the Northern District of Texas.  It is based solely on the lack of Congressional power to require firearm registration without any basis in the tax power.  Gun Owners of America and Firearms Regulatory Accountability Coalition are among its plaintiffs.

As long ago as U.S. v. Matthews (1971), the Fifth Circuit relied on Sonzinsky to uphold NFA provisions.  Not surprisingly, all circuits have rendered similar decisions.

I’ve covered these issues in detail in my article The Power to Tax, The 2nd Amendment, & the Search for Which “‘Gangster’ Weapons” To Tax.  From its inception in 1934, the NFA has been justified solely under the power to tax.

Based on the plain text of the constitutional power of Congress “to lay and collect Taxes” and the consistent Supreme Court precedents on the NFA, the Department of Justice should agree with the pertinent allegations of the above complaints and enter into consent decrees with the plaintiffs to the effect that the NFA may not be applied to any firearms other than machineguns and destructive devices, which remain subject to the tax.

Recognition that the NFA restrictions may no longer be applied to firearms (other than machineguns and destructive devices) does not leave these firearms unregulated.  All of them are still covered under Title I of the Gun Control Act, which subjects dealer sales to the NICS background check system, bans possession by felons and other categories of prohibited persons, and otherwise comprehensively regulates firearms.