SOT License: What Is It, Types, and Cost

As you might know, FFL owners have gained the right to buy and sell firearms legally. However, there is a special category of guns that requires paying an additional fee, in order to be able to deal with.

Introducing, the SOT license. 

Short for Special Occupational Taxpayer, obtaining this license allows firearms dealers to participate in specific firearms-related operations, which an FFL, on its own, does not permit.

Let’s learn more about it.

What Is an SOT?

SOT, as the name suggests, is a special tax. An FFL holder must pay it, in order to engage in certain business activities with National Firearms Act (NFA) firearms (also known as Title II firearms) such as short-barreled rifles, silencers, and so on.

In this context, we must emphasize that FFL and SOT might seem similar, but they have their differences.

An FFL holder is someone who is in the business of making and/or selling firearms. However, if you wish to deal with a special class of firearms called NFA firearms, you need an SOT license.

SOT License Types

• Class 1 SOT – Importer of NFA firearms. This SOT license type enables holders to import NFA items like machine guns, silencers, etc. Keep in mind that a Class 1 SOT should be paired with a Type 08 FFL for importing NFA items. Meanwhile, a Type 11 FFL is required for bringing in more specialized items, such as explosive munitions or artillery.
• Class 2 SOT – Manufacturer of NFA firearms. With a Class 2 SOT, individuals and companies can manufacture NFA items without paying the standard federal excise tax ($200 per firearm). Types of FFL that pair with this SOT class are 07 or 10, with the first allowing the manufacturing and sale of NFA items, while the latter only permits the manufacturing of NFA items.
• Class 3 SOT – Dealer of NFA firearms. Class 3 SOT allows individuals or businesses to sell retail National Firearms Act (NFA) firearms and devices, without paying the standard federal excise tax. This SOT class needs to be combined with FFL 01 (which allows for the sale of NFA items and other firearms) or FFL 02 (which permits the sale of NFA items).

How to Get a SOT License?

1. Get an FFL
2. Complete the ATF Form 7
3. Submit to a Background Check
4. Wait for the ATF Review

If you want to obtain an SOT license, whether it is Class 1, 2, or 3, you must first get your FFL. It is important, though, to determine which type of Special Occupational Taxpayer license you will need first, as that will help you establish later which FFL you need.

Here’s a quick recap, which type you need, according to the SOT Classification:

1. Class 1 SOT – FFL 08/FFL 11
2. Class 2 SOT – FFL 07/FFL 10
3. Class 3 SOT – FFL 01/FFL 02

The next part of the license process is completing the ATF Form 7. It must be completed and submitted along with the required fee and supporting documentation, which includes fingerprint cards, photographs, and detailed information about you and your business operations.

Last, but not least, the ATF will perform a background check to decide if you are eligible for a Special Occupational Taxpayer license.

What is more, the agency takes into account the financial status of the applicant. This is done to verify that the client has sufficient funds to run a firearms business long term. Other factors that are reviewed are the personal history of the applicant – mental health, history of substance abuse, residence history, etc.

Finally, all that is left is to wait. Of course, don’t forget to check your local laws and regulations for any changes that might affect your SOT license application.

How Much Does a SOT Cost?

SOT registration fees are paid once a year and range between $500 and $1,000. The amount depends on how much the company makes in a year.

For example, if your business makes less than $500,000 per year, the SOT fee will be $500. On the other hand, if you earn over $500,000 a year, the SOT fee will be between $500 and $1,000, depending on the FFL type.

Furthermore, it is important to know that the SOT tax year starts on July 1st, no matter when the FFL pays the registration.

Still, this is much cheaper than paying the transfer tax each time an NFA firearm is made or changes possession. Most NFA Firearms require a transfer/making tax of $200. That’s the price for a single transfer.

Additionally, NFA items can take up to 10–12 months to transfer, but owning a SOT significantly cuts down the time to just several days.

What Is an NFA Firearm?

In short, NFA firearms are all the guns that fall under the regulation of the National Firearms Act of 1934. Such weapons are also referred to as Title II because the National Firearms Act is considered to be Title II of federal gun laws, while the Gun Control Act of 1968 is Title I.

NFA Firearms are divided into the following categories:

1. Machine Gun
2. Suppressor
3. Short Barreled Rifle
4. Short Barreled Shotgun
5. Destructive Device (Explosive Ordnance & Large Bore Firearms)
6. Curios & Relics
7. Any Other Weapon

Note that a few states, like Delaware, California, and New York have completely prohibited ownership of all or certain types of Title II weapons and devices, so you should definitely double-check your local laws to avoid any problems.

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