Out with the old, in with the old: Understanding the ATF’s Latest Inspection Memo Without Crying into Your Bound Book

ATF just released the latest version of its Administrative Action Policy and Procedures memo(ATF Order 5370.1H) to its field staff.  This “internal” memo provides guidance to IOIs and DIOs regarding how to interpret regulatory violations and when to recommend license revocation or other enforcement actions after an ATF inspection.  Some prior versions of this “law enforcement sensitive” memo have been held secret by DOJ or only publicly released with HEAVY redactions. 

This cycle represents an effort by DOJ to be more transparent and return to the pre-Zero Tolerance era of reasonable and collaborative enforcement, with a focus on education and good-faith correction.  Though there are definite improvements in this version, with less emphasis on clerical errors and more on preventing violent crime, much of the underlying Zero Tolerance policy can still be seen lurking in the new memo’s language.

Improvements in ATF’s Enforcement Philosophy

Not all news is grim. The memo includes positive shifts that should give responsible FFLs reason for cautious optimism.  The memo instructs field personnel to conduct case-by-case analysis. Instead of a rigid formula, ATF is emphasizing individualized evaluations—meaning decisions will consider the specific facts and circumstances of each case, not just a checklist of violations. There is also more focus on real risks. Clerical errors (like a transposed digit or incomplete middle name) may no longer carry the same enforcement weight as violations tied to public safety or violent crime.  However, mistakes that interfere with ATF’s trace functions are still considered top-tier serious.

Is Zero Tolerance Really Gone?

Despite the more nuanced approach, remnants of the zero-tolerance language remain and the memo affirms that a single inspection—with no prior warnings or violations—can still result in license revocation if willfulness is established.  There’s no requirement that you’ve been warned before. There is no “three strikes” rule. The memo expressly counsels field personnel that ATF “does not require violations be addressed by a series of increasingly severe actions” and that revocation can occur after a single inspection.  This makes it critically important for FFLs to understand what might be interpreted as willful—which leads us to the next section.

The Old/New Willfulness Standard

The willfulness standard hasn’t changed, nor does ATF have jurisdiction to change it.  The standard is mandated by federal statute and defined by federal courts.  However, while some prior versions of ATF’s 5370.1 memo attempted to deemphasize ATF’s need to show willfulness when recommending enforcement action, this version is more transparent about ATF’s burden of proof.   

Willfulness remains the benchmark test for revocation, just as it did under the Zero Tolerance policy.  Just as before, willfulness is defined to mean “a purposeful disregard of, a plain indifference to, or a reckless disregard of a known legal obligation.”  However, this memo subtly indicates that the key element is “plain indifference” because this is the lowest threshold of the three-part test, meaning it’s the easiest for ATF to show.

Quantifying Willfulness

Though the memo discusses the need for case-by-case analysis, it nonetheless outlines several types (and in some case quantities) of evidence IOIs, DIOs, and Area Supervisors can use toestablish willfulness:

• Statements or admissions by the FFL or its employees. 
• Past violations, especially repeat offenses.
• Training or publications you were provided or that were “easily accessible” to you.
• Your past compliance with similar rules—showing that you knew the requirement.
• Experience level. The more seasoned you are, the less slack you’re likely to get.
• Your internal records or lack thereof. If you don’t have written policies, ATF might assume you’re winging it.

One note here is that this current version of the memo continues past practices of treating what should be seen as “positive behavior” like risk factors.  For example, being an established and longer-standing FFL, complying with regulations, and attending training are clearly positive factors but ATF still indicates they can be used against you to show “you should have known better.”  Based on this, one strategy is to establish automated compliance functions, when possible, to avoid human errors that can always occur even with experience and training.

Mitigating Factors: What Can Help You?

On the positive side, the memo outlines several mitigating factors that weigh in your favor if something goes wrong:

• Did you self-report the issue before inspection?
• Are you taking responsibility?
• Have you demonstrated a genuine willingness AND ability to fix the problem?
• If it was an employee’s fault, did you take appropriate corrective action with the employee?

These aren’t just good ideas—they’re lifelines. Compliance isn’t about never making mistakes; it’s about establishing reasonable SOPs, conducting proper training, and addressing mistakes properly when they happen.

More Indications That Zero Tolerance Persists

Despite a more flexible tone in some areas, the memo confirms that certain violations remain under a “generally recommend revocation” standard:

• Repeatedly failing to execute or use a Form 4473 for the transfer of a firearm to a non-licensee.
• Transferring a firearm to someone the FFL has reasonable cause to believe is prohibited or lacks capacity.
• Refusing to comply with background check requirements—it’s not clear whether this includes failure to properly document the check (e.g., failure to report NTN on 4473) or technical violations such as relying on a check that is slightly expired.
• Refusing to respond to a trace request within 24 hours.
• Making false or fictitious written statements in the FFL’s required records—this is a rephrasing of the prior “falsifying records” language, which actually expands its scope and tracks ATF’s construction of the prior language under the Zero Tolerance policy.
• Allowing an employee who is a prohibited person to possess a firearm—FFLs should consider strict use of background checks.
• Failing to timely report theft or loss of firearms to ATF and local LEO after a prior inspection identified the same failure—this is a notable example of ATF including a prior-violation requirement, which serves to emphasize the lack of such a requirement for revocations based on other violations.
• “Extensive or systematic” failure to record A&D—this is another rare situation where ATF is creating a new threshold, which implies other types of violations do not need to be “extensive or systematic” to lead to enforcement action.

Bottom line: Some errors carry more risk than others. If you’re unsure whether your recordkeeping procedures meet expectations, now is the time to double-check.

Warning Conferences: Not All Violations Lead to Revocation

The memo also lists violations that will generally result in a warning conference, rather than immediate revocation:

• Failing to record NICS or State POC background check information on Forms 4473 (also, failing to include proper transferee identification, or “complete and accurate information” for any other items, on Forms 4473 is a stated basis for issuing a Warning Letter).
• Failing to file three or more 3310.4 (multiple sale forms).
• Missing disposition info that leads to missing firearms—except when it’s a one-off situation.
• Completely failing to report a theft or loss to both ATF and local law enforcement.

Warning conferences are one step removed from revocation and can serve as part of the basis for a future revocation, so establishing solid SOPs around these requirements is key.

Final Thoughts

ATF’s updated memo reflects a blended approach—retaining strict enforcement for serious violations while allowing more discretion and case-by-case analysis in other areas. It’s been billed as the end of the Zero Tolerance policy, but a careful review of the memo will find many of the same practical guidelines for revocation haven’t changed.

Notably, the ATF Form 4473 continues to play a prominent role in the inspection process and appears in the memo’s sections regarding revocation, warning conferences, and warning letters.  Upgrading to an electronic 4473 system not only helps to avoid incomplete or inaccurate forms, it also can serve as part of an overall showing of the FFL’s good faith efforts to establish a solid compliance program.

Lastly, once you are using an electronic 4473 take the next step and start storing your 4473s digitally.  Digital storage of your 4473s is infinitely more secure than paper, allows you to complete ATF traces in a matter of seconds and conduct internal audits from anywhere with internet connection. Click here to learn more!

Get started today - It's free for the first 30 days!

Get Started