H.R. 4222 — Fire Sale Loophole Closing Act of 2025

This section expresses the sense of Congress that the Bureau of Alcohol, Tobacco, Firearms and Explosives has authority to regulate how federal firearms licensees discontinue their firearms businesses and to clarify statutory requirements for firearms remaining in the possession of a former licensee (or responsible person) upon license termination.

This section establishes restrictions under new 18 U.S.C. §922(aa) on the transfer of business inventory firearms (i.e., firearms required to be recorded in a firearms business's acquisition and disposition logs, as defined in new §921(a)(38)) by persons notified of Federal Firearms License revocation or renewal denial, or after such revocation becomes effective or license expires. Specifically, it prohibits (1) after notice, transferring such firearms into a personal collection, to an employee, or to certain related individuals, or receiving them back; (2) after effective revocation or expiration, engaging in the conduct in (1), transferring them to non-licensees (except law enforcement), or—after 30 days—transferring them to licensees; and (3) transferring such a firearm out of a personal collection within one year of the transfer into it. (Exceptions apply if the revocation or denial determination is rescinded or reversed.) It further (1) makes transfers after revocation subject only to §922(aa) and law enforcement transfers (via conforming amendment to §923(c)); (2) imposes penalties under new §924(a)(9) of up to one year imprisonment and fines for knowing violations (five years if willful); and (3) requires revocation or denial notices under §923(f)(1) to include unlicensed dealing prohibitions and §922(aa). (Thus, the provision closes a potential loophole allowing revoked licensees to shift business inventory to personal collections and continue unlicensed dealing.)