You got the Type 07. Maybe you are building rifles, maybe you are stamping your own name on a frame, maybe you crossed the line from heavy gunsmithing into production and the license followed the work. The hard part felt like it was behind you. It is not.
Two obligations catch new manufacturers off guard, and neither one shows up at the counter where you are watching. They show up in your tax filings and on a form due every spring. Miss them and you are not looking at a sales-floor finding, you are looking at a tax liability and a reporting failure that compound quietly until someone asks for the paperwork.
The excise tax is not optional, and it is not the dealer sales tax
The Firearms and Ammunition Excise Tax (FAET) lives at 26 U.S.C. § 4181. If you manufacture and sell firearms or ammunition, you owe it. The rate is generally 10% on pistols and revolvers and 11% on other firearms and ammunition. This is a federal tax on the manufacturer, administered by the TTB, not the ATF, and it is separate from any state or local sales tax you already collect.
Here is where new Type 07s get hurt. They price product like a dealer, on cost plus margin, and forget the 11% that comes off the top when they are the one who made the gun. By the time the liability is calculated, the margin is gone. The tax was always due; the planning was not done.
A few things worth confirming against current TTB guidance before you set prices:
- The tax attaches at the manufacturer's sale, not at retail.
- The taxable base and available exemptions have specific rules, and they are not intuitive.
- A manufacturer who is also selling at retail has to understand how the tax applies to that sale.
This is exactly the kind of rule that does not feel urgent until your first quarter of real production closes. Then it is very urgent.
AFMER is due even when you made nothing
The Annual Firearms Manufacturing and Exportation Report, ATF Form 5300.11, is due each year. Read that again: each year. Including a year where you produced zero firearms. New manufacturers assume a report tracks activity, so no activity means no report. Wrong. A zero-production cycle still requires a filed AFMER.
That single assumption is how a clean shop ends up with a reporting failure on the books. You were busy, the first year was slow, you figured there was nothing to report, and the deadline passed. Now you have a gap an IOI can ask about, and "we didn't make anything" is not the same as "we filed."
AFMER also forces a discipline most new manufacturers have not built yet: counting and categorizing what you produced in a way that matches your marking records and your bound book. If your production records are loose, the report is where that shows.
Marking is the third thing, and it is mechanical
While you are sorting tax and reporting, do not skip the obvious one. As a manufacturer you have marking obligations under 27 CFR § 478.92, and they are specific: markings to a minimum height of 1/16 inch and a minimum depth of .003 inch. "Looks engraved" is not the standard. A depth gauge is the standard. This is a measurable finding, which means it is a trainable one.
These are training problems, not talent problems
None of this is exotic. The excise tax rate is published. AFMER has a due date. The marking dimensions are a number you can check with a tool. What sinks new Type 07s is that nobody on the team was ever taught the manufacturer's obligations as a manufacturer, because everybody learned the business as a dealer or a gunsmith. The license changed. The training did not.
That is the gap Manufacturing Rules (Type 07 FFL) is built to close. It covers the marking standards, the AFMER report including the zero-production rule, and how the excise tax actually works so you can price for it instead of discovering it. If your work sits on the line between fixing a customer's gun and producing for distribution, pair it with Gunsmithing vs. Manufacturing, because that line is the one that decides whether these obligations apply to you at all.
For a shop standing up a manufacturing operation, the cleaner path is Manufacturer Certified, the bundle that stacks the manufacturing courses into one credential per employee. Everyone who touches production trains to the same baseline, and you get a dated certificate that proves it.
Documented beats discussed
The reason to make this a credential instead of a conversation is the same reason it matters at the counter. When the IOI asks how your people know the marking standard, or when your carrier asks what training backs your manufacturing operation at renewal, "we went over it" is not an answer. A dated, verifiable certificate is. DealerReady's review of FFL claims shows the large majority trace to documented errors that training would have caught, and manufacturing adds new ways to make them.
None of this is legal or tax advice, and it is not a substitute for the current ATF and TTB forms, instructions, and rulings. Confirm your excise tax obligations and your AFMER filing against the live sources, and bring in counsel where the stakes warrant it. What training gives you is the baseline and the paper trail, so the obligations stop being surprises.
Browse the course catalog to see what your manufacturing staff should be trained on, or bring DealerReady to the shop with a plan that proves it to your carrier.