What is a Class 3 SOT?
The Class III Special Occupational Taxpayer (SOT) is essential for anyone holding a Federal Firearms License (FFL) interested in handling firearms regulated under the National Firearms Act (NFA). These items, often called Title II firearms or NFA items, include machine guns, short-barreled rifles, short-barreled shotguns, suppressors, and destructive devices. Obtaining a Class 3 SOT enables a federally licensed firearm dealer to sell or transfer NFA weapons in compliance with federal law across the United States. This license is a critical requirement for operating legally and responsibly in the NFA marketplace.
Types of NFA Items
Each of these NFA weapons comes with its own set of regulatory requirements to ensure public safety and responsible handling.
Machine Guns and Full-Auto Firearms
A machine gun (a fully automatic firearm) fires multiple rounds with a single trigger pull, making it one of the most highly regulated categories under the National Firearms Act.
Destructive Devices
Destructive devices include explosive devices like grenades and certain large-bore firearms with a diameter greater than half an inch (excluding certain shotguns). Due to their destructive potential, they require a thorough background check and compliance with stringent regulations for transfer and possession.
Short-Barreled Rifles
Short-barreled rifles (SBRs) feature a barrel length under 16 inches or an overall length under 26 inches.
Short-Barreled Shotgun
Like SBRs, short-barreled shotguns (SBS) have barrels shorter than 18 inches. Their size makes them more concealable, subjecting them to specific federal government restrictions.
Suppressors (Silencers)
Suppressors, or silencers, reduce the noise of gunfire and are categorized as an NFA item due to their ability to mask firing noise.
Any Other Weapon (AOW)
This category includes unusual or concealable firearms that don’t fall neatly into standard classifications, like disguised pistols. Ownership of an AOW still requires compliance with federal law.
How to Apply for a Class 3 SOT
Step 1
Before applying for the Class 3 SOT, applicants must have a specific FFL license.
- Type 01: For dealing in firearms (not manufacturing).
- Type 02: For pawnbrokers dealing in firearms.
- Type 09: For firearm dealers importing firearms.
Applicants must complete the appropriate Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF) Form, submit an application, and pass a background check.
Step 2
The next step is submitting your SOT application (ATF Form 5630.7) and paying the associated application fee or transfer tax. The annual tax for SOT registration can vary, but the fee for Class 3 Gun Licenses is $500.
Ongoing Compliance Responsibilities for Class 3 SOTs
Annual SOT Renewal Cycle
Once approved, a Class 3 SOT taxpayer operates under an annual special occupational tax registration tied to the business or FFL, not an individual license. The SOT tax year runs from July 1 through June 30, regardless of when the initial registration was filed. To remain active, the business must submit the renewal application using ATF Form 5630.7 and pay the required tax on or before July 1 each year. If payment is not made on a timely basis, interest will be charged, and penalties may be incurred. For that reason, the FFL or business entity should track renewal deadlines carefully and plan submissions ahead of July 1.
Recordkeeping Expectations for NFA Dealers
Dealers operating as a Class 3 SOT (FFL/SOT) are subject to heightened recordkeeping responsibilities under federal regulation and the Gun Control Act. Accurate records support firearm safety, protect the business owner, and reduce compliance risk during ATF reviews. This is especially important when dealing with NFA firearms such as suppressors, short-barreled firearms, and full-auto weapons.
Best practices for NFA recordkeeping include:
- Complete and accurate acquisition and disposition entries for each NFA firearm
- Consistent serial number, model, and classification details
- Internal methods to clearly identify NFA inventory versus non-NFA firearms
- Ongoing tracking of transfer status and supporting documentation
- Records that reflect compliance with federal requirements and applicable local law
While not every internal control is expressly mandated, consistent practices help reduce errors that can compound over time.
Transfer Documentation and Timing
NFA transfers require closer oversight than standard firearms transactions. Dealer to dealer transfers often move more quickly, while dealer to consumer transfers can take longer depending on filing method and review timelines. Clear communication is important, particularly for a firearm enthusiast unfamiliar with the NFA process. Dealers should document each stage of the transfer and retain all related paperwork until final approval. Strong internal tracking helps avoid missed filings, delayed handoffs, and interruptions to NFA business activity.
ATF Inspections and Audit Readiness
ATF inspections review required records and inventory for compliance purposes. If a business deals in NFA firearms, inspections will also include a review of NFA inventory and transfer documentation. Inspectors commonly examine:
- Acquisition and disposition records
- NFA transfer paperwork and approval history
- Current SOT status and renewal filings
- Business information on file with ATF
- General adherence to firearm safety and recordkeeping requirements
Keeping records organized and current helps inspections proceed efficiently and minimizes disruption to day-to-day operations.
FastBound’s Impact on Compliance and Growth
FastBound is designed to take the stress out of managing NFA compliance by automating critical processes for FFL Holders. With FastBound, users gain access to:
- Automated ATF Form 4473: Simplifies the preparation and submission of forms with built-in error checks to prevent common mistakes.
- Background Check Integration: Seamlessly integrates with NICS and online state systems, streamlining the approval process.
- Bound Book Maintenance: Ensures accurate, ATF-compliant records that meet federal requirements, reducing the risk of violations during inspections.
By easing the administrative burden, FastBound equips firearms dealers, including those selling short-barreled rifles, short-barreled shotguns, and machine guns, with the tools they need to stay compliant and grow their businesses with confidence. Our system supports federally licensed firearm dealers in efficiently managing NFA-related transactions while focusing on building long-term success in the firearms industry.
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Try for Free!FAQs
The main difference between the Class 3 and Class 2 SOT is that Class 2 is aimed at manufacturers, while Class 3 is aimed at dealers. They both allow a licensee to work with NFA items and can be used in conjunction with an FFL (Type 7 and 10 for Class 2 and Type 2 and 9 for Class 3, respectively).
The Special Occupational Tax rate for importers and manufacturers under the SOT is $1,000 per year, and the tax rate for dealers is $500 per year. All Class 3 dealers fall under the $500 fee.
Yes, starting January 1, 2026, the $200 tax stamp fee is eliminated (set to $0) for suppressors, short-barreled rifles (SBRs), short-barreled shotguns (SBSs), and Any Other Weapons (AOWs) under H.R. 1 (One Big Beautiful Bill Act). The ATF filing/approval process still applies, so a federal firearm license holder and buyers must continue using Form 1/Form 4 as required.
