If you're a Colorado gun owner who occasionally sells a firearm from a personal collection, this federal development is worth knowing about. A federal district court vacated ATF's 2024 rule defining when a person is "engaged in the business" as a firearms dealer. The rule is currently vacated nationwide, although future appellate or regulatory developments should still be monitored.
The rule, and where it came from
Federal law has always required anyone "engaged in the business" of dealing firearms to hold a federal firearms license (FFL). The Bipartisan Safer Communities Act of 2022 changed the statutory definition of what that means, replacing the old "principal objective of livelihood and profit" standard with language requiring someone to devote time, attention, and labor to dealing firearms "to predominantly earn a profit" through repetitive purchase and resale.
In April 2024, under the Biden administration, ATF issued a final rule implementing that change — but went further than the statutory text on its own terms. The rule said a seller didn't need profit to be their primary purpose at all for the licensing requirement to kick in, and that simply advertising or offering a firearm for sale could be enough to trigger it. It created rebuttable presumptions for civil and administrative proceedings that shifted how specified conduct would be evaluated unless reliable evidence showed otherwise. Critics — including gun-rights groups and several states — argued this was a backdoor way of pulling ordinary private sales between individuals into a licensing and background-check framework Congress never actually wrote into the statute.
The litigation
Gun Owners of America, Texas, and other states and organizations sued in Texas v. ATF, in the U.S. District Court for the Northern District of Texas. In June 2024, Judge Matthew J. Kacsmaryk issued a preliminary injunction blocking enforcement of the rule against the plaintiffs in that case. The Department of Justice initially appealed that injunction, but voluntarily dropped the appeal in April 2026. With no appeal pending, the district court entered final judgment on June 12, 2026, vacating the rule in its entirety under the Administrative Procedure Act — the court held that ATF had exceeded its statutory authority in writing the rule the way it did.
DOJ and ATF then tried a narrower fallback: rather than accept the full vacatur, they asked the court to modify its judgment so that only certain problematic pieces of the rule would be struck down, preserving the rest while the agency worked on a new rulemaking. On August 13, 2026, Judge Kacsmaryk denied that request outright, writing that the government's position was "too clever by half" and that the rule's core provisions couldn't be severed from the whole — the entire regulation existed to expand background-check coverage through a broadened definition of commercial dealing, and without that core mechanism, nothing else in the rule functioned independently. The rule remains vacated in its entirety.
Why this vacatur is broader than some of the litigation we've covered before
This is worth flagging directly, because we've written before about a different federal ruling—the NFA registration injunction in Silencer Shop Foundation v. ATF — that only applies to specific named plaintiffs and their members and customers, not the general public. This is a genuinely different kind of ruling. A vacatur under the Administrative Procedure Act, which is what happened here, doesn't just block enforcement against the parties who sued — it erases the rule itself, nationwide, for everyone, because the court found the rule was never validly issued in the first place. There's no "am I covered by this ruling" question the way there was with the NFA injunction; if the 2024 rule is vacated, it's vacated for every gun owner in the country, Colorado included.
What this actually means if you sell a gun in Colorado
The 2024 preliminary injunction protected the named states, individual, and organizational plaintiffs rather than every seller nationwide. The June 2026 final judgment is broader because it vacated the rule itself. The underlying statutory standard enacted in the 2022 Bipartisan Safer Communities Act remains in force: licensing can be required when a person devotes time, attention, and labor to dealing firearms as a regular course of trade or business to predominantly earn a profit through repetitive purchase and resale. The statute also preserves exclusions involving a personal collection and other specified conduct.
ATF separately proposed revising portions of the 2024 rule in May 2026. A proposal does not itself change the governing regulation, and the district court declined to preserve portions of the vacated rule while that process continued. Anyone whose activity resembles repetitive, profit-motivated dealing should not treat the vacatur as a blanket private-sale exemption.
This has nothing to do with Colorado's own state background-check requirements for private transfers, which we've covered elsewhere — C.R.S. 18-12-112 still requires most private-party transfers in Colorado to route through a licensed dealer for a background check, regardless of what federal "dealer" status requires. This ruling is purely about the separate federal question of when a private seller needs to hold an FFL in the first place.
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