$0 Tax Left NFA with No Constitutional Basis

In a decision issued on August 5, U.S. District Judge James Wesley Hendrix (N.D. Tex.) ruled in Silencer Shop Foundation v. Bureau of ATF that the One Big Beautiful Bill Act, which repealed the taxes for the making and transferring of certain firearms under the National Firearms Act (NFA), left the law without any basis for its registration requirements in the authority of Congress to “lay and collect Taxes.” U.S. Const. art. I, § 8. cl. 1.  The firearms affected are short-barreled rifles, short-barreled shotguns, silencers, and “any other weapon[s],” all defined in 26 U.S.C. § 5845.  Machineguns and destructive devices remain subject to the $200 tax.

This result is a no-brainer, as Congress enacted the NFA as a tax measure under the Internal Revenue Code and the Supreme Court upheld it as such in Sonzinsky v. United States (1937), which the Court reaffirmed in NFIB v. Sebelius (2012), the Obama-care case.  Citing this author’s article on the subject, the district court wrote that “the NFA was Congress’s attempt to regulate so-called ‘gangster weapons’ linked to Prohibition Era violence.”  The purpose of the NFA requirement that the “firearms” under the Act be registered was to keep track of who paid the tax.  Repeal of the tax pulled the rug out from under the registration requirement.

Silencer Shop next considered the government’s argument that the regulatory requirements for the making and transfer taxes support the collection of the NFA’s special occupational taxes (SOTs), which persons in the business of manufacturing, importing, and dealing in NFA firearms must pay annually.  But collection of those taxes is implemented through the registration requirements for such businesses and the penalties for noncompliance.  The regulatory scheme for the SOTs is completely distinct from that for the making and transfer taxes.

Quoting Printz v. United States (1997), the court next turned to the government’s claim that the provisions at issue are valid under “the Necessary and Proper Clause—the ‘last, best hope of those who defend ultra vires congressional action.'”  But the making and transfer regulatory provisions are not “necessary” to administration of the regulatory scheme for the SOTs.  Nor are they “proper,” as Congress has no plenary police power such as the States have.

ATF claimed that that the challenged registration provisions support the collection and enforcement of the SOTs.  But registration information is barred from use in criminal prosecutions per 26 U.S.C. § 5848(a) and the Fifth Amendment privilege against self-incrimination, see United States v. Freed (1971).

The government argued next that the NFA provisions may be sustained under the Commerce Clause.  While courts respect the lawmaking power of Congress, the court wrote, that is “not a get-out-of-unconstitutionality-free card.”  By its plain text, the NFA is a taxing statute.  Nothing in the provisions at issue mention interstate or foreign commerce.  By contrast, Title I of the Gun Control Act (GCA) includes such commerce as the jurisdictional hook of every one of its provisions.  That is, with one exception.

That exception is the ban on possession of a post-1986 machinegun, 18 U.S.C. § 922(o).  The Fifth Circuit had suggested in dicta in United States v. Ardoin (1994) that, although ATF would not collect NFA taxes for new machineguns because of § 922(o), that part of the NFA as applied might be sustained under the Commerce Clause.  But as the Silencer Shop court points out, Ardion preceded the Supreme Court’s decisions in Lopez and Morrison, which invalidated two federal laws respectively – the Gun Free Schools Act and the Violence Against Women Act – as police power measures having no basis in the Commerce Clause.

That left only the Second Amendment claim, but at oral argument, all of the parties agreed that that issue need not be decided if the court found that the NFA provisions exceed the powers of Congress.  That claim was thus forfeited.  I previously addressed the arguments in the briefs here.

With that, the court issued a permanent injunction as the final judgment enjoining the Department of Justice and ATF from “from enforcing the challenged NFA provisions as to untaxed firearms against the plaintiffs and, where applicable, the plaintiffs’ agencies, political subdivisions, members, and customers—both current and future.”  The plaintiffs include individuals, nonprofit associations, businesses that deal in NFA firearms, together with Texas and thirteen other states.  The injunction’s scope is broad as to the businesses inasmuch as they may sell firearms to both current and future customers.  Its scope is narrow as applied to the fourteen state plaintiffs, who are not subject to the NFA requirements when the state itself and its political subdivisions acquire NFA firearms, but whose citizens are not covered by the injunction.

The affected firearms in Silencer Shop include short-barreled rifles, short-barreled shotguns, silencers, and “any other weapon[s],” AOWs.  The case was consolidated with Jensen v. ATF and the court’s holding mostly applies to both cases equally, except that the Jensen plaintiffs raised no AOW claim, and so the court’s injunction doesn’t apply to those plaintiffs as to AOWs.

This is not a universal, nationwide injunction, which is precluded by the Supreme Court’s decision in Trump v. CASA (2025).  Moreover, imposition of a universal injunction would short-circuit review of similar challenges pending in the Eastern District of Missouri and the Eastern District of Kentucky.

The court stayed the injunction order for seven days to give the government an opportunity to appeal to the Fifth Circuit, which seems sure to issue its own stay pending appeal.  The challenges could easily end up in the Supreme Court.  Given the longstanding, solid anchoring of the NFA in the tax power, plaintiffs have reason to be optimistic about ultimately prevailing.  But that doesn’t mean the sky will fall.  Recall that the Senate had been poised to delete the affected firearms from the NFA altogether, but the parliamentarian ruled that to be disallowed by the Byrd Rule concerning reconciliation bills.  That’s why the Senate simply zeroed out the tax.  See my post here.

As Winston Churchill said after the British victory at the Battle of El Alamein, “This is not the end. It is not even the beginning of the end. But it is perhaps the end of the beginning.”