Hidden Gun Manufacturers in Illinois

The Appeal of the Type 07 FFL

The Gun Control Act of 1968 (GCA) established the current federal licensing system for manufacturers, importers, wholesalers, and dealers of firearms. Under the GCA, any person “engaged in the business” of making or selling firearms must be licensed by ATF.¹⁰

The ATF graphic below describes the nine types of Federal Firearms Licenses issued by the agency.

Both the Type 01 FFL dealer’s license (the basic license to sell firearms other than destructive devices ^{11 12}) and the Type 07 FFL manufacturer’s license (the basic license to manufacture firearms other than destructive devices) exempt the license holder from many of the restrictions on the sale and transfer of firearms that private citizens are subject to under the Gun Control Act. Unlike ordinary citizens, these license holders can:

• buy and sell firearms in interstate commerce and receive firearms via common carrier;

• purchase firearms from wholesalers at discount and in unlimited quantities; and,

• bypass requirements that apply to unlicensed individuals, such as background checks.

In addition, by paying an annual “Special Occupancy Tax” (SOT) a Type 07 license holder, in addition to manufacturing standard firearms, can also manufacture weapons and firearm accessories that come under the more restrictive regulations of the National Firearms Act of 1934 (NFA), such as fully automatic machine guns and firearm silencers.

According to the “federal firearms license experts” at FFL123,¹³ a commercial site that sells online kits for private citizens who want to obtain an FFL:

The Type 07 FFL is the most powerful and popular FFL to get. With it you can do everything a Type 01 FFL can (buy, sell and repair firearms) plus manufacture guns and ammo. When you add a[n]…SOT to this license you can also make NFA items like silencers and even machine guns!¹⁴

The fee for a Type 07 FFL is $150 to apply and $150 to renew every three years. The annual fee for the Type 02 Special Occupancy Tax (SOT) is $1,000 per year.¹⁵

FFL123 also promotes the Type 07 license with an SOT as a way for the license holder to undercut the 1986 ban on the private possession of new machine guns. In May 1986, Congress banned the production of new machine guns for civilian sale (private citizens can, however, purchase pre-1986 machine guns under federal law if they meet the heightened sale and possession standards of the NFA as well as state and local laws). The Type 07 license (like the Type 01 license) combined with the SOT allows the possessor access to new, post-1986 machine gun “samples,” ostensibly for law enforcement or similar sales or review.¹⁶

As FFL123 trumpets, “In fact, this is the most common way to gain access to post May 1986 machine guns and combine business with pleasure!”¹⁷

However, with the Type 07 license, the license holder can also build their own machine guns for what can be, in reality, personal use. In a July 2021 blog titled “Who Can Own a Full-Auto Machine Gun?,” FFL123 owner Brandon Maddox — noting that “You might think that this sounds shady, but it’s not” — enthusiastically answers his own question as seen in the extended quote below:

Who can own a full-auto machine gun? Well, the simple answer is: you! You can own a machine gun. Yes, that’s right. It’s perfectly legal for you to own a machine gun! They are not some mythical object made up of Unobtainium…

Under current law, only government agencies can acquire newly-made machine guns – but they still need dealers to buy them from and manufacturers to make them.

Sales of such guns go through FFL gun dealers with either an 03 SOT (retail sales of NFA items with an 01 or 02 FFL) or an 02 SOT (manufacturing of NFA items with an 07 or 10 FFL).

Here’s where it gets interesting…

An 03 SOT needs a letter from a law enforcement agency asking to see a particular machine gun demonstrated. This is called a demo letter, and the gun is called a dealer sample. Only 02 and 03 SOTs can acquire dealer samples, and only with a demo letter. Once you allow the agency to examine the gun, it is yours to keep as long as you maintain your SOT. Many SOT holders acquire demo guns from friendly local law enforcement requests.

However, if you cannot get a demo letter, an 03 SOT gun dealer has no other way of acquiring a machine gun. If you are an 02 SOT, though, you are legally allowed to build as many machine guns or other NFA devices as you wish (following a certain procedure, of course) and may retain them for as long as you maintain your SOT.

That’s right: you can build a machine gun (full-auto machine gun) legally and keep it for as long as you wish and are in business!

Too Good to Be True?

You might think that this sounds shady, but it’s not. As long as you are conducting legal business, there are all sorts of reasons to build legal machine guns, including proof of concept, experimentation, range rentals, demo guns, movie prop rentals, and more. Along the way, as an incidental to doing business, there is absolutely nothing wrong with enjoying the machine guns you have built or acquired. In fact, it would be stupid not to do so!¹⁸

FFL123 also notes that “ATF inspectors can only come to inspect during ‘business hours.’ They can only inspect once every 12 months. Do not expect an inspection but once every 20 years, as we understand that is their average.”¹⁹

This is not an exaggeration. For fiscal year 2021, only five percent of all FFL holders (6,643 out of 134,516) were subject to ATF firearm compliance inspections.²⁰ As a result of these 6,643 compliance inspections, 149 inspections (two percent) resulted in “warning conferences.” Thirty-one FFL holders had their licenses revoked by ATF — less than half of one percent of the FFL holders that were inspected.²¹ In 2022, ATF inspected only about five percent (6,979 of 136,563) of all types of FFL holders nationwide, including Type 07s.²² More recently, in June 2025, the Trump Administration announced plans to eliminate 541 of the estimated 800 ATF investigators responsible for inspecting FFLs.²³

At the same time, whether these license holders are meeting state and local zoning regulations, business licensing and other regulations, or any other related fees or requirements remain open questions.

The stark reality is that in states across America — including Illinois — an unknown number of communities are home to “kitchen table” gun manufacturers that are mostly hidden from public view, as the data and photos contained in the next section illustrate.

The Gun Manufacturer Next Door

For this study, the VPC conducted a series of analyses of the state’s 226 Type 07 license holders in 2022. As part of this process, the VPC identified Illinois gun manufacturers who produced fewer than 10 guns that year. While only a snapshot for a specific period in time, the data offers a window into the prevalence of Type 07 license holders in residential areas in the state. As of January 2025, ATF’s list of FFL license holders still lists the pictured structures as the license holder’s place of business.

The review revealed that while the majority of FFL holders’ place of business appear to be non-residential structures, a not insignificant portion appear to operate out of homes, in a residential neighborhood, with no easily discerned signage. It is highly unlikely that the presence of the manufacturer would be known by local residents or passersby from sight alone. Other sites include unrelated commercial entities.

The hidden nature of these gun manufacturers is all the more important keeping in mind the unique privileges granted the Type 07 license holder as detailed throughout this report.

The VPC found that in 2022 only 18 percent (40 of 226) of Type 07 license holders in Illinois reported manufacturing any guns that year. Of the license holders who did manufacture guns, 15 of the 40 manufactured 10 guns or less.

For this group of 15, we used each license holder’s publicly available address, in conjunction with an online tool developed by the VPC that utilizes Google Earth, to identify the structure associated with the “place of business.”

Below is the “place of business” for J PHOENIX TECHNOLOGIES LLC, which manufactured one rifle in 2022 and is located in Centralia, Illinois.

Below is the “place of business” for SEASTRONG CUSTOMS LLC, which manufactured 10 rifles in 2022 and is located in Hindsboro, Illinois.

The slideshow below shows the “place of business” for Illinois Type 07 license holders who manufactured 10 or fewer firearms and appear to operate out of a residential structure.

Of the 25 license holders who manufactured more than 10 firearms, five appeared to be operating out of a residential structure as revealed by Google Earth (see below).

The photos above present Type 07 license holders who actually reported manufacturing firearms. Yet, as noted earlier, the vast majority of license holders did not (82 percent). And like their gun manufacturing brethren, a significant number of these license holders also appear to be located in homes in residential neighborhoods.

Using Google Earth and their listed “place of business,” we found that roughly a third (60 of 186, or 32 percent) appeared to be operating out of a residential structure (examples below).

Although these license holders reported no firearms manufactured, as noted earlier they can conduct a range of activities that unlicensed individuals cannot, including: buying and selling firearms in interstate commerce and receiving firearms via common carrier; and, purchasing firearms from wholesalers at discount and in unlimited quantities.

Illinois Regulations

As in other states, the first step to becoming a firearms manufacturer in Illinois is to obtain a Type 07 Federal Firearms License (FFL). Federal law requires that applicants for any FFL must certify that their business will comply with all applicable state and local laws, recognizing that:

The business to be conducted under the license is not prohibited by State or local law in the place where the licensed premise is located; within 30 days after the application is approved the business will comply with the requirements of State and local law applicable to the conduct of the business; and the business will not be conducted under the license until the requirements of State and local law applicable to the business have been met; and that the applicant has sent or delivered a form to be prescribed by the Attorney General, to the chief law enforcement officer of the locality in which the premises are located, which indicates that the applicant intends to apply for a Federal firearms license.²⁴

In Illinois Type 07 FFL license holders must also meet specific state requirements. As of 2019, all Type 07 applicants must comply with the Firearm Dealer License Certification process administered by the Illinois State Police.²⁵ An annual two-hour training program “regarding legal requirements and responsible business practices as applicable to the sale or transfer of firearms” is also mandatory.²⁶

Additional requirements, per the Firearms Dealer License Certification, include that the applicant must:

• be 21 years or older, including all employees who sell or transfer any firearm

• have a valid Firearm Owner’s Identification Card

• adhere to the requirements for safe storage of firearms

• keep an up-to-date inventory and record of sales, which must be electronic-based

• install and maintain state-approved video surveillance equipment

• have clearly posted signage on the premises for customers presenting approved language from the Illinois State Police regarding safe storage, firearm sales or transfers by the customer, and the reporting of lost or stolen guns

• have a sign posted in a conspicuous location at each entrance warning that the premises are under video surveillance for retail sites

• pay a fee — $300 for a non-retail location, such as a suburban home, and $1,200 to $1,500 for a retail location, such as a brick-and-mortar store

According to FFL123, Illinois’ licensing requirements are “heavy-handed.”²⁷

Not content with the Federal FFL requirements, Illinois now requires FFL holders to take a certification training online, purchase and install state approved video surveillance systems, pay extensive fees, post certain signs, and more…

Illinois doesn’t make compliance simple either. They only accept digital payment by e-check, will only accept digital documents, and only offer the training materials online. While it is true this is the most efficient means of operation for them, it puts up a barrier to entry to people who for whatever reason may not be comfortable with an all digital licensing and compliance interface.²⁸

In addition, FFL holders must also comply with local zoning regulations. FFL123 competitor RocketFFL offers its opinion on obtaining an FFL in Illinois:

Local zoning requirements are usually one of the biggest problems when applying for an FFL. Most importantly, you must ensure the location you use as a base of operations (often a home-based FFL) allows for a business. This is especially true in Illinois, where certain cities are especially strict on their requirements.

It’s common to inquire about an FFL for a home-based firearms business and be told you can’t operate in a residential area. But don’t give up yet!

The site goes on to say:

When a zoning department hears “FFL,” they may assume regular retail business and heavy foot traffic (which doesn’t fly in residential locations). But most home-based FFLs don’t have retail-level traffic and only have customers stop by on occasion.²⁹

Weighing in on the zoning issue, FFL123 adds:

Did we mention that Illinois is very unfriendly to gun owners and FFL’s? Well, the same holds true for a lot of local jurisdictions. Because Illinois is a very changing situation when it comes to how local jurisdictions issue business licenses for gun dealers, we can’t say what problems you might face in a given location when trying to set up shop.

The ATF will require that you be able to conduct business in your chosen location before issuing an FFL. Depending on where in Illinois you are, you should expect local government to make it very hard for you to set up your business. You may be restricted from selling guns in certain areas of the city or town you live in. Home based FFL’s will likely face the most scrutiny and resistance from local authorities, as we’ve already seen on a state level.³⁰

Is There a Gun Manufacturer Next Door to You?

As part of its research on the illegitimate possession of Type 07 FFLs, the Violence Policy Center developed an online tool that allows the user to enter their home (or any) address to see if there are any Type 07 federally licensed gun manufacturers near them. The tool also allows the user to search for Type 01 gun dealer license holders. The tool can also be used to identify license holders by state or zip code. To access the online tool, please click on the graphic below.

Conclusion and Recommendations

The proliferation of apparently illegitimate licensed firearm manufacturers poses a significant threat to public safety. Our research suggests that a significant proportion of licensed manufacturers may have obtained the Type 07 license to exploit the privileges granted to licensees rather than to operate a legitimate business. In addition, a significant number of manufacturers are located in residential areas. Below are recommendations to reduce the number of illegitimate licensed manufacturers and help ensure that licensees comply with relevant laws and regulations.

Illinois Recommendations

As detailed throughout this report and as seen by the requirements of the Firearms Dealer License Certification process, Illinois clearly recognizes the public safety threat posed by the illegitimate possession of Type 07 manufacturing licenses (as well as Type 01 dealers licenses) and, recognizing the potential for misuse, the need for comprehensive statewide regulation.

Yet, as noted in the beginning of this study, in 2022 82 percent (186 of 226) of Illinois Type 07 license holders did not report producing any guns that year. Combined, Type 07 license holders who did not report producing any guns and Type 07 license holders who produced 10 guns or fewer that year represented 89 percent of all Type 07 license holders in the state.³¹

The primary recommendation stemming from this study’s findings is that the state and local communities should identify ways to confirm in an ongoing manner that license holders are currently obeying all state and local requirements.

An additional recommendation is that the Illinois Secretary of State and the Illinois Department of Financial and Professional Regulation review their respective business databases to ensure that all Type 07 FFL holders — who should have a business license — have obtained the license and are listed with all relevant information on these publicly available online resources.

In addition, general recommendations on the local, state, and federal levels are listed below.

General State and Local Recommendations

• All state and local jurisdictions should review FFL holders in their state/community to ensure that they are in compliance with all tax, zoning, business licensing laws, and other relevant regulations.

• All states, and where possible local jurisdictions, should implement new standards for manufacturers to decrease the number of Type 07 license holders who have obtained the license for personal use.

• All states should establish manufacturer licensing requirements, including the authority to routinely inspect license holders.

• For each state, a registry of Type 07 FFL holders should be available, preferably in map form, on local government websites to further inform the public of firearms manufacturing within residential and other sensitive areas.

Federal Recommendations

• The fees for a Type 07 manufacturer’s license should be increased significantly. The fees for the Special Occupancy Tax (SOT) should also be increased. The fees should also be indexed for inflation.

• Repeal the current restrictions limiting the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) to one inspection in a 12-month period and allow ATF to conduct routine inspections of licensed manufacturers.

• The issuance of Type 07 manufacturers’ licenses should be restricted to entities with locations zoned for industrial activities. No licenses should be issued to persons operating from residential locations.

• Manufacturers should be required to routinely submit proof to federal, state, and local authorities demonstrating that the manufacturing facility is in compliance with all applicable zoning laws.

• ATF should ensure that all manufacturers are supplying accurate reports of firearm production and export.

• Further research should be conducted examining the practice of Type 07 license holders with an SOT obtaining or building “dealer sample” machine guns for government agencies (for example, local law enforcement) when, in fact, the weapons are obtained/manufactured for personal use by the license holder.