ATF's 'Engaged in the Business' Rule Was Vacated: What Online Sellers and FFLs Should Know

Correction (October 14, 2026): An earlier version said the 2024 rule remained in force. A federal court in Texas vacated it nationwide on June 12, 2026, and reaffirmed that on August 13. DOJ filed a notice of appeal on October 9, 2026; the vacatur remains in effect unless stayed or reversed.

The Bureau of Alcohol, Tobacco, Firearms and Explosives published a rule in 2024 that added 27 CFR 478.13, a regulation establishing presumptions for determining when a person is “engaged in the business” of dealing in firearms for civil and administrative purposes. That rule was vacated by a federal district court in Texas on June 12, 2026, and is not enforceable as of October 2026.

In April 2026, ATF published a notice of proposed rulemaking that would remove and reserve §478.13 entirely. That proposal (Federal Register document 2026-08919, RIN 1140-AB01) remains pending. The comment period closed in August 2026, but no rulemaking has been published.

This guide explains what the vacated rule said, what the court ruling means, what the proposed rulemaking would do, what FFL dealers should tell transfer customers who sell online, and what the underlying statute still requires.

What 27 CFR 478.13 Said

The vacated regulation, which appeared in 27 CFR 478.13, established rebuttable presumptions that a person is engaged in the business of dealing in firearms if the person engages in certain activities. According to the rule, activities that supported a presumption of dealing included:

• Posting firearms for resale on a website, online auction, or other internet platform
• Operating a website offering firearms for sale
• Using business merchant services (credit card processing, payment apps) to collect firearm sale proceeds
• Conducting firearm transactions using a business name, business account, or business entity

The rule specified that these were presumptions, not absolute determinations. A person could rebut the presumption by showing that the activity did not constitute dealing under the applicable legal standard. However, the burden shifted to the person to demonstrate that they were not engaged in the business once the presumptive activity was identified.

The rule applied for civil and administrative purposes. It did not create a new criminal offense, but it informed ATF’s enforcement decisions regarding licensing requirements and administrative penalties.

The rule is no longer enforceable. The text may still appear on the eCFR website, but that text does not reflect current law. The regulation was vacated by court order and may not be applied to anyone.

The Court Ruling: Texas v. ATF

On June 12, 2026, the U.S. District Court for the Northern District of Texas issued a judgment in State of Texas, et al. v. Bureau of Alcohol, Tobacco, Firearms and Explosives, et al., No. 2:24-cv-00089-Z, vacating the 2024 rule in its entirety. The court held that the rule exceeded ATF’s statutory authority and vacated it under the Administrative Procedure Act.

The court specified that the vacatur is “not party-restricted” and that ATF “may not apply the Final Rule to anyone,” including individuals and organizations who are not parties to the case. On August 13, 2026, the court denied the government’s motion to narrow the vacatur, stating that “The Engaged in the Business Final Rule remains VACATED in its entirety.”

Appeal Status: The Department of Justice filed a notice of appeal on October 9, 2026, appealing both the June 12 judgment and the August 13 order to the U.S. Court of Appeals for the Fifth Circuit. The issues on appeal include Article III standing, whether the court erred in its interpretation of “engaged in the business,” and whether vacating the rule in full was error. As of October 2026, no stay of the vacatur has been reported. The vacatur remains in effect unless the Fifth Circuit stays or reverses it.

Butler v. Bondi: Earlier Party-Limited Relief

Before the Texas v. ATF nationwide vacatur, plaintiffs in Butler v. Bondi (N.D. Ala.) obtained relief limited to the parties in that case. That earlier relief has been largely superseded in practical effect by the universal Texas v. ATF vacatur, which applies to everyone.

What the Proposed Rulemaking Would Do

ATF’s April 2026 NPRM proposes to remove and reserve §478.13 entirely. The proposal does not replace the regulation with a different standard; it removes the vacated text from the Code of Federal Regulations. Whether ATF finalizes the removal or not, the vacated rule is not enforceable.

The NPRM explains that ATF reconsidered the presumptions in light of public comment and subsequent judicial developments. The agency opened a new comment period, which closed on August 4, 2026. As of October 2026, no rulemaking has been published. The proposed removal is separate from the court vacatur; the vacatur already prevents enforcement.

The Statute Still Applies

Although 27 CFR 478.13 was vacated, the underlying statute still applies. Under 18 U.S.C. §921(a)(21)(C) and related provisions, a person who is “engaged in the business” of dealing in firearms must obtain a federal firearms license. The statute defines “engaged in the business” as devoting time, attention, and labor to dealing in firearms as a regular course of trade or business with the principal objective of livelihood and profit.

Without the vacated regulatory presumptions, ATF returns to case-by-case analysis using the statutory definition and relevant case law. Factors such as profit motive, repetitiveness, volume, and whether the person holds themselves out as a dealer remain relevant. The vacatur removes the specific presumptions tied to online activity, business accounts, and business names, but it does not create a safe harbor for unlimited online sales without a license.

What to Tell Customers About the Rule Status

When customers ask whether they need a license to sell firearms online, explain the current legal status accurately. The vacated rule is no longer enforceable, but the statute still applies. Use precise language:

• “The 2024 ATF rule at 27 CFR 478.13 was vacated by a federal court and is not enforceable.”
• “The underlying federal statute still requires a license if you are engaged in the business of dealing in firearms.”
• “Whether you are engaged in the business depends on factors like profit motive, volume, and repetitiveness, not just online activity.”
• “If you are not sure whether your activity requires a license, consult a firearms attorney. I cannot give you legal advice.”

What FFL Dealers Should Tell Transfer Customers

If a customer asks whether they need a license to sell firearms online, you face a compliance-education opportunity. The answer depends on whether the person is engaged in the business of dealing, which is a fact-specific determination. You cannot provide legal advice, but you can explain the current legal status and suggest that the customer consult a firearms attorney if they are unsure.

Use this framework:

1. Explain the Statutory Requirement

“Federal law requires a license if you are engaged in the business of dealing in firearms. The statute defines that as devoting time, attention, and labor to dealing in firearms as a regular course of trade or business with the principal objective of livelihood and profit. Whether you are engaged in the business depends on your specific facts, including profit motive, volume, and repetitiveness.”

2. Clarify the Vacated Rule Status

“ATF published a rule in 2024 (27 CFR 478.13) that presumed certain online activities meant you were engaged in the business. That rule was vacated by a federal court in Texas and is not enforceable. The court ruled that ATF may not apply the rule to anyone. The Department of Justice has appealed, but the vacatur remains in effect.”

3. Recommend Professional Advice

“If you are not sure whether your activity requires a license, consult a firearms attorney. I cannot give you legal advice, but an attorney can review your situation and tell you what applies under the statute.”

4. Clarify What Your FFL Does

“If you sell a firearm privately and the buyer wants it transferred through an FFL, I can accept the transfer as the receiving dealer. That does not mean your sale is licensed or unlicensed; it just means we handle the 4473 and background check on the buyer’s end.”

This approach gives the customer the current legal status, avoids providing legal advice, and directs them to qualified counsel.

What FFL Ecommerce Operators Should Know

If you hold an FFL and sell firearms online, the vacatur of §478.13 does not change your existing obligations. You are already licensed and already engaged in the business. The vacated rule addressed whether unlicensed individuals must obtain a license based on their activities.

The vacatur may affect your customers’ understanding of when a license is required. If a customer plans to sell firearms online without a license and believes the vacatur means no license is required, they may misunderstand the statutory requirement. You can help by providing accurate information: the rule is vacated, but the statute still applies, and whether a license is required depends on the facts.

If you operate a platform or marketplace where private sellers list firearms, review your terms of service and user communications to confirm they reflect the current legal status. The vacated rule is not enforceable, but the statute is.

Monitoring the Rulemaking and the Appeal

To follow the status of the proposed rulemaking and the Texas v. ATF appeal:

• Federal Register: Search for document 2026-08919 or RIN 1140-AB01. If ATF publishes a rulemaking, it will appear in the Federal Register with a new document number.
• ATF Rules and Regulations Page: Check ATF’s regulatory page for rulemaking announcements.
• PACER (Public Access to Court Electronic Records): If you have PACER access, search for State of Texas v. ATF, No. 2:24-cv-00089-Z, in the Northern District of Texas or the Fifth Circuit appeal for filings on the vacatur appeal, including any motion for stay.
• Firearms Trade Associations: Organizations such as the National Shooting Sports Foundation (NSSF) and others track regulatory and legal developments and publish updates for members.

Set a reminder to check these sources quarterly or subscribe to ATF’s email updates. If the Fifth Circuit stays or reverses the vacatur, or if ATF publishes a rulemaking, update your customer communications and internal procedures accordingly.

What Happens If ATF Finalizes the Removal

If ATF publishes a rulemaking removing §478.13 from the Code of Federal Regulations, the text will be formally removed. The practical effect is limited because the rule is already vacated and unenforceable. The removal would clean up the regulatory text but would not change the legal status: the vacated rule is not enforceable whether or not ATF removes it.

For private sellers, the vacatur already means the presumptions do not apply. Case-by-case analysis using the statutory definition of “engaged in the business” and existing case law applies. The vacatur does not create a safe harbor for unlimited online sales without a license; the statute still requires a license if a person is engaged in the business.

For FFL dealers, the practical impact is limited. You would continue educating customers about the statutory definition and recommending they consult counsel if unsure. The vacatur and any subsequent removal do not change your own licensing obligation or your role in completing transfers.

What Happens If the Appeal Succeeds

If the Fifth Circuit reverses the vacatur or grants a stay pending appeal, §478.13 could become enforceable again. A stay would restore the rule’s enforceability while the appeal proceeds. A reversal would fully restore the rule unless further appealed.

Monitor the Fifth Circuit docket for any motion for stay, briefs, oral argument, or decision. If the rule becomes enforceable again, update your customer communications and internal procedures to reflect the presumptions. Until then, the vacatur remains in effect.

Practical Takeaways for FFL Dealers

• 27 CFR 478.13 was vacated by a federal court on June 12, 2026, and is not enforceable as of October 2026. The court ruled that ATF may not apply the rule to anyone.
• The Department of Justice filed a notice of appeal on October 9, 2026. The vacatur remains in effect unless the Fifth Circuit stays or reverses it.
• The underlying statute, 18 U.S.C. §921(a)(21)(C), still applies. A person who is engaged in the business of dealing in firearms must obtain a federal firearms license. Whether a person is engaged in the business depends on profit motive, volume, repetitiveness, and other factors, not just online activity.
• When customers ask about licensing requirements for online sales, explain that the rule is vacated, the statute still applies, and whether a license is required depends on the facts. Recommend they consult a firearms attorney.
• Monitor the Fifth Circuit docket for any stay, reversal, or other development in the appeal. If the rule becomes enforceable again, update your customer communications and internal procedures accordingly.
• ATF’s proposed rulemaking (NPRM 2026-08919) to remove §478.13 from the Code of Federal Regulations remains pending but does not change the enforceability status.

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