In May the Prince Law firm identified an inconsistency in definitions between the National Firearms Act and the Gun Control Act. The ATF took the position that for the purposes of the Gun Control Act the definition of Person did not include trusts. (This stance allowed them to require FFLs to perform a NICS check on anyone purchasing NFA firearms through a trust.) What the ATF did not see, and what Joshua Prince put together, is that the Gun Control Act prohibition on the ownership and possession of newly manufactured machine guns applied to Persons as defined in the Gun Control Act, which by the ATF’s ruling excludes trusts. Thus Mr. Prince reasoned that trusts could Form 1 a machine gun without violating 18 USC 922(o). (You can read his full article here.)
This information made the rounds and a few hundred people trusts (best estimates) applied on a Form 1 to manufacture a machine gun. The first adopters applied via paper forms because the e-Forms system was down at the time of the discovery. These trusts have not heard back from the ATF. However, later adopters sent applications in via e-Forms.
Some of the e-Forms have come back, and the results are a bit comical. The ATF approved the first forms and sent notifications to the trusts! They then discovered what was happening and contacted the trusts (by phone) to tell them the application was actually disapproved, please send the approved form back, and we will be refunding you your money.
This inconsistent response has certainly raised the ire and eyebrows of some. Prince has written in detail on the ATF response and there is a running discussion on AR15.com regarding this and first hand accounts of those who apply. By all accounts, those who have applied, or at least a number of them, will bring a lawsuit against the ATF for not following the law and abridging their rights.
It appears too late to apply on a Form 1 and get an approved stamp in return, but you can still submit a Form 1 and acquire standing for a suit (and join in with the fellows above). If you received an approved Form 1 I would caution heavily against completing a machine gun and suggest you call either Prince or myself for further details. Also, do not cash any check sent to you by the ATF.
The ATF is taking the stance that trusts must act through people, who are Persons, and that these Persons are prohibited from possessing the machine guns in questions. This is splitting hairs so that the ATF may require background checks on trustees but still prevent the acquisition and ownership of new machine guns. Specific case law in this area is sparse, but one case that may be helpful is US v. Vest.
In Vest, the ATF charged an Illinois police officer with possessing a machine gun registered to the police department. The court found the argument that only the agency, and not the persons within, could possess the firearm too contrived and held the law unconstitutionally vague as applied. The question here will be similar: whether trusts can effectively own, and the trustees possess on their behalf, post 1986 machine guns without personally being in possession and invoking the prohibitions of 18 USC 922(o).
Unfortunately, it may take legal action and a Federal case to create the binding precedent that answers this question. Keep watch, and we’ll see where it goes.