ATF's 'New Era of Reform' in Plain English: What FFLs Need to Know About Order 5370.1H

I sat across from an IOI in late 2024 who told me, without smiling, that if she found one missing signature on a 4473 she was going to recommend revocation. That was the old world. The "zero tolerance" era—formally the Enhanced Regulatory Enforcement Policy—meant a handful of cited violations could end your license, and intent was beside the point. That policy is gone. ATF Order 5370.1H replaced it in May 2025, and the rhetoric coming out of Washington calls it a "new era of reform."

Here is what I want you to take away before you read another word: reform does not mean relief. It means the framework changed. The inspections did not. The records still have to be right. If anything, the new system rewards dealers who can prove a culture of compliance and punishes dealers who can't—because now the distinction between an honest mistake and a pattern of negligence is the whole ballgame, and patterns get built out of your bound book and your 4473s.

Let me walk you through what actually changed, what didn't, and what to do about it before your next inspection.

What the old zero tolerance policy actually did

The Enhanced Regulatory Enforcement Policy was rolled out in June 2021. The agency identified a short list of "willful" violations that would trigger a presumption of revocation on a single citation. The list included:

Transferring a firearm to a prohibited person
Failing to run a NICS check before transfer
Falsifying records, including the 4473 and the A&D (acquisition and disposition) book
Failing to account for firearms in inventory
Failing to report a multiple handgun sale

On paper, "willful" still required some level of knowing conduct. In practice, IOIs and ATF counsel were treating repeat or even first-time documentation failures as willful because the dealer had been trained, had signed acknowledgments, and "should have known." A missed signature, a transposed serial number, a NICS check run after the firearm walked out the door—any of those could and did end licenses. Revocations roughly quintupled between FY 2021 and FY 2023.

The policy did real damage to small dealers who made honest mistakes. It also, to be fair, caught some dealers who had been sloppy or worse for years. The problem was the lack of proportionality. A one-person shop with a single clerical error was treated the same as a high-volume operation with hundreds of missing records.

The April 2025 repeal and May 2025 replacement

In April 2025, ATF formally repealed the Enhanced Regulatory Enforcement Policy. In May 2025, Order 5370.1H took its place. The new order adopts a tiered administrative-action framework and explicitly instructs IOIs and Directors of Industry Operations (DIOs) to consider good-faith error, the dealer's compliance history, the nature and number of violations, and any corrective action taken.

The tiers, in plain language, run roughly like this:

Warning conference or warning letter. For minor or isolated violations where the dealer is cooperative and shows a credible path to correction.
Report of violations with required corrective action. A formal finding that the dealer must fix specific problems and demonstrate the fix at a follow-up.
Hearing and possible suspension, fine, or revocation. For serious violations, repeat findings, or evidence of willfulness.

The order also creates more room for IOIs to recommend training, written compliance plans, and follow-up inspections in lieu of jumping straight to revocation paperwork. That is a real change. It is not, however, a free pass.

What "good faith error" actually means now

This is where dealers get themselves in trouble by reading too much into the words. "Good faith error" is not "I didn't know." It is closer to "I had systems in place, I trained my people, I caught the mistake or could have caught it on review, and it was not part of a broader pattern."

The factors that make an error look good-faith to an inspector are concrete and documentary:

Written policies and procedures. A counter manual that tells your staff exactly how to complete a 4473 and a bound book entry.
Documented training. Dated certificates showing each person who touches firearms has been trained on the current 4473 (Revision 5300.9) and on bound book rules under 27 CFR § 478.125.
Self-audits. Internal reviews of your 4473s and A&D book that you can show were happening before the IOI walked in.
Corrective action. Evidence that when you found a mistake, you fixed it, documented the fix, and updated your procedures so it would not happen again.

If you have those four things, an isolated error looks like what it is—an error. If you don't, the same error looks like a symptom. That is the line the new framework draws, and inspectors are trained to draw it from the documents in front of them.

This is exactly the use case for training-records documentation that produces a dated, verifiable trail. Saying "we train our people" is not the same as handing the IOI a stack of certificates with names, dates, and course content.

What hasn't changed

I cannot say this loudly enough: the substantive rules are identical to what they were in 2024. Order 5370.1H is an administrative-action policy. It does not amend the Gun Control Act, the regulations, or any ATF rule.

That means:

18 U.S.C. § 922(b), (d), (g), and (t) still govern who can buy, who can sell, and what disqualifies a person from possession.
18 U.S.C. § 932 still makes straw purchasing a freestanding federal crime, and § 933 still does the same for trafficking, both added by the Bipartisan Safer Communities Act of 2022.
27 CFR § 478.124 still requires a completed 4473 for every over-the-counter transfer, and 27 CFR § 478.125 still requires your A&D book to be accurate, current, and retained.
27 CFR § 478.102 still requires a NICS check before transfer to a non-licensee, with the narrow exceptions that have always existed.
ATF Final Rule 2022R-17F (Engaged in the Business, 2024) is still in force and still controls who needs an FFL.
ATF Final Rule 2021R-05F (Frame or Receiver, 2022) is still in force after the Supreme Court upheld it in Garland v. VanDerStok in 2025.
Multiple handgun sale reports are still due by close of business the day of the second sale under 27 CFR § 478.126a.
Form 4473 Revision 5300.9 is still the current edition. Use anything older and you are starting your inspection in a hole.

And inspections themselves? Still happening. The triennial cycle, the for-cause inspections, the application inspections—none of that went away. IOIs are still walking into shops, still pulling 4473s, still reconciling the A&D book against physical inventory.

The new risk: "pattern" is built from your records

Here is the part of Order 5370.1H that I think is genuinely underappreciated. The new framework distinguishes between a one-off error and a pattern of negligence. Most dealers hear "one-off" and relax. They should be focused on the word "pattern."

A pattern is not something an inspector feels. It is something an inspector documents. Five 4473s with missing signatures across two years is a pattern. Three bound book entries with wrong dates and a missing disposition is a pattern. Two NICS checks where the proceed time is recorded after the transfer time is a pattern. The IOI does not have to build a case for willfulness from scratch—your records do it.

Under the old policy, that pattern might have produced revocation on the first finding. Under the new policy, that same pattern produces escalation through the tiers, but it still ends in the same place if you don't correct course. The path is longer. The destination can be identical.

The dealers I see succeed under Order 5370.1H are the ones who treat every error as a signal. One missing signature is not a crisis. One missing signature without a process to catch the next one is.

How inspectors are working in 2026

Based on what I am seeing and what my peers are reporting, IOIs in 2026 are spending more time on three things:

Looking at your compliance program, not just your records. Expect questions about who trained your staff, when, and on what. Expect to be asked for written procedures. "We just kind of know how to do it" is now an answer that hurts you.
Reconciling your A&D book line by line against your 4473 stack and your physical inventory. This was always the core of an inspection. It still is. The bar has not dropped.
Asking about your self-audit process. If you have one, the inspection often gets shorter and friendlier. If you don't, the IOI will essentially run one for you, and you don't want them to be the first set of eyes on your last twelve months of paper.

The conversation tone has shifted. The standard has not.

What to do now

Here is the checklist I would work through in the first quarter of 2026 if I ran a shop and wanted to be inspection-ready under the new framework.

Pull a sample of your last 90 days of 4473s. Check every section. Look specifically at 21 (background information), 27 (NICS), and the transferor certifications. Note error rates and fix what you can fix.
Reconcile your A&D book against physical inventory. Every firearm in the shop should be in the book. Every disposition should tie to a 4473 or a Form 3, Form 4, or interstate transfer record. Course material on bound book management walks the standard.
Write down your procedures. A short counter manual that covers 4473 completion, NICS, bound book entry, multiple sale reporting, and refusal scripts is enough. Date it. Update it when rules change.
Document training for every employee who touches firearms. Dated certificates, course content, and a refresh schedule. This is where DealerReady earns its keep—the certificates produce the paper trail an IOI expects to see, and a Counter Certified or Compliance Certified bundle covers the topics inspectors actually ask about.
Build a self-audit schedule. Monthly or quarterly, depending on volume. Pull a random sample of 4473s and bound book entries. Document the audit and the corrective action.
Refresh your knowledge of the rules that have changed recently. The 2024 Engaged in the Business rule, the 2025 VanDerStok decision on frames and parts kits, the January 1, 2026 elimination of the $200 tax stamp on suppressors, SBRs, SBSs, and AOWs under the One Big Beautiful Bill Act—make sure your staff know what is current. The Form 4 process, fingerprints, photo, background check, wait time, engraving, and state law all still apply; only the tax changed for those four categories. Machine guns and destructive devices still carry the $200 tax.
Decide who answers the door when ATF arrives. That person should know your procedures, where the records are, and what to say and not say. Inspection-day improvisation is how good shops get bad findings.
If you find a real problem, fix it and document the fix. Under Order 5370.1H, evidence of corrective action is doing real work for you. Don't waste it by failing to write it down.

None of this is legal advice—for your specific situation, talk to qualified counsel or an FFL compliance attorney who can look at your records. But operationally, the steps above are the difference between a clean exit interview and a report of violations.

The headline writes itself: zero tolerance is dead. The story underneath it is that the floor for clean recordkeeping and documented training just got higher, not lower. The dealers who understand that will spend 2026 building paper that protects them. The ones who don't will find out, the hard way, that "new era of reform" was never code for "you can relax."