Doug Stockman always has had a passion for firearms, so 20 years ago he made a business out of it.
Today, his shop, SSG Tactical, is one of the largest gun dealers in Virginia, with 10 employees, training classes and concealed-carry fashion bags.
Mr. Stockman and co-owner Curt Sebastian are part of an industry that adds $31.8 billion to the U.S. economy — roughly equivalent to Nigeria’s national budget.
But Mr. Stockman and others in the industry worry that heightened federal scrutiny and government regulations will put them out of business.
Last year, when an inspector from the Bureau of Alcohol, Tobacco, Firearms and Explosives dropped by SSG Tactical’s Fredericksburg shop for an unannounced audit, Mr. Stockman thought he was prepared.
Each of the roughly 7,500 guns his business sold that year required a Form 4473, the federal document that the purchaser and seller must complete, in addition to a background check.
The Form 4473 asks questions such as where the purchaser lives and whether the person has ever committed a crime.
Leaving one of the 132 items on the six-page questionnaire blank, or filling it in incorrectly, is an ATF violation. One violation can lead to a license revocation, which would put Mr. Stockman out of business.
Out of SSG Tactical’s 7,500 guns sold, the company could have made as many as 990,000 mistakes from the Form 4473 alone.
Turns out, Mr. Stockman’s team made about 180 errors — a 99.98 percent accuracy rate.
The majority of the violations were on the 4473 and included incorrect information on ethnicity, wrong dates and leaving a box empty when the city and county go by the same name, Mr. Stockman said.
“These mistakes were anything but willful — they were simply human error,” he said. “Now, if anything more turns up, in any future audit, we could lose our license — our business.”
Federal law obligates licensed firearm dealers to record all transactions so guns connected to crimes can be traced. In addition to 100 percent compliance on the Form 4473, dealers must log all “acquisitions and dispositions” by manufacturer, purchaser, model, serial number and caliber, and the date the dealer bought and sold each gun.
All paperwork needs to be kept for 20 years and be made available for inspection. Mr. Stockman’s audit took about seven months to complete and required him to make one of his full-time employees available to help ATF’s compliance officer sift through the shop’s records.
“The government is making it virtually impossible to grow a business,” said Mr. Stockman. “The amount of oversight and regulations has only grown over the years and in this administration.”
More scrutiny under Obama
Indeed, the government’s scrutiny of gun retailers has increased under President Obama’s watch.
Since 2005, the number of field inspections ATF has conducted on firearms dealers has doubled. During Mr. Obama’s term, the number of violations uncovered has jumped 30 percent, according to the ATF’s Industry Operation Inspection Results, a report tracking the agency’s 2013 audits for the industry.
Although the number of inspections and violations has jumped, the severity of the offenses has not, the data show.
The most common “failing federal firearms licensees” committed last year was improperly completing the Form 4473, according to the report. The next four most common errors were other violations relating to paperwork, including incorrect dates and failure to record inbound shipments within a specified time.
Selling a firearm to a person who should not have been allowed to buy a gun ranked 10th out of 10 on the list.
“The most common violation — and it’s usually almost always the same — is the 4473,” said Larry Keane, senior vice president of the National Shooting Sports Foundation, the firearms trade association. “A lot of times these guys will make the same mistake on these forms repeatedly and it has nothing to do with public safety. It makes the violation numbers seem a lot worse than they are.”
Everyone within the industry agrees that selling firearms to known criminals and not keeping proper tabs on inventory are serious violations that the ATF should track and that dealers should be held to account. It’s the small stuff — such as inadvertent clerical errors — that beefs up violation statistics, creates public relations misconceptions, raises the risk for license revocation and increases compliance costs for those already in the industry.
To prevent ATF violation numbers from mounting, the National Shooting Sports Foundation conducts seminars and has posted a “Sweat the Details” slide on its website to coach firearms dealers through the paperwork.
The ATF also conducts such classes and allows an electronic version of the Form 4473 to be used, which flags mistakes and omissions before the form can be printed. Because the software is expensive, only larger, big-box retailers have employed it, Mr. Keane said.
“We now have a very high percentage of retailers being inspected frequently, and they’re required to have 100 percent accuracy,” Mr. Keane said. “This requires a lot of time and energy to train your employees, to double-check all work. We spend a lot of time and energy pushing the gospel of compliance because we want to keep these guys in business. One violation can put them under.”
Audits and discrepancies
About half of the gun retailers who undergo audits come out with violations, according to ATF data. Those retailers are given a list of wrongdoings, warning letters of possible revocation and conferences with ATF inspectors to hash through the discrepancies if needed.
“We take our responsibility for licensing persons engaged in manufacturing, importing and dealing in firearms, and ensuring those who are licensed to engage in those businesses do so in compliance with applicable laws and regulations, very seriously,” said Elizabeth Gosselin, a spokeswoman at ATF. “It is critical that [gun dealers] comply with the Gun Control Act and its implementing regulations first and foremost to ensure public safety, and second to assist law enforcement efforts and prevent the diversion of firearms from lawful commerce to the illegal market.”
Although the number of licenses the ATF revokes — 81 last year — represents a small percentage in the industry, the threat of being shut down looms large for small-business owners such as Mr. Stockman.
SSG Tactical has met with ATF to work through the audit. The shop has created a plan to address all of the government’s concerns, and it has retrained its employees on the importance of paperwork.
Mr. Stockman estimates he has spent $100,000 in hourly wages triple-checking his books. His shop will be audited again at an unknown time this year — as is protocol when a violation is found — and his license could be revoked if government concerns persist.
Gun control advocates view dealer compliance efforts as the price of entering the firearms industry and are pushing the government for more inspections and tougher regulations.
“We believe that not taking measures to ensure that dangerous people can’t get guns has a very high cost as we can see in the many Americans killed by gun violence every day,” said Erika Soto Lamb, a spokeswoman for Everytown for Gun Safety — an organization started by former New York Mayor Michael R. Bloomberg.
The Brady Campaign to Prevent Gun Violence and other organizations would like all firearms dealers to go through audits annually. In fiscal year 2011, ATF conducted inspections on 9.4 percent of its federal firearm licensees. By contrast, 2011 audits of individual income tax returns by the Internal Revenue Service was 1.1 percent. Last year, 14 percent of all federal firearms licenses were audited.
Federal law handcuffs ATF by “barring it from conducting more than one spot inspection a year for gun dealers, or from requiring store inventories,” Becca Knox, director of research for the Brady Campaign, said in an email to the Center for Public Integrity.
Balancing regulation for public safety with industry growth is tricky and politically skewed against those in the business, said Matthew Bergstrom, the managing attorney at Arsenal Attorneys, which represents gun owners and the firearm industry nationally.
“If you talk about simplifying regulation on gun dealers, people will accuse you of trying to get guns in the hands of bad guys, so it’s very hard to have an honest conversation,” said Mr. Bergstrom. “How many people commit a crime involving a firearm they’ve obtained only because a mistake was made on a 4473? It’s got to be zero.
“There’s a huge burden on the individual gun dealer to complete all the paperwork 100 percent accurately or they can be put out of business for the most insignificant practices,” said Mr. Bergstrom. “We’ll never have an answer as to how much is too much regulation, because deep down inside the anti-gun advocates don’t want anyone to own any guns. And so the regulations will continue — small-business owners will be hurt.”