H.R. 7135

[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[H.R. 7135 Introduced in House (IH)]

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119th CONGRESS
2d Session
H. R. 7135

To improve the licensing requirements for the retail sale of firearms, 
and for other purposes.

_______________________________________________________________________

IN THE HOUSE OF REPRESENTATIVES

January 16, 2026

Mr. Frost introduced the following bill; which was referred to the 
Committee on the Judiciary

_______________________________________________________________________

A BILL

To improve the licensing requirements for the retail sale of firearms, 
and for other purposes.

Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

This Act may be cited as the ``Prevent Illegal Gun Resales Act''.

SEC. 2. INCREASED LICENSING FEES.

Section 923 of title 18, United States Code, is amended--
(1) in subsection (a)--
(A) in paragraph (1)--
(i) in subparagraph (A), by striking 
``$1,000'' and inserting ``$2,000'';
(ii) in subparagraph (B), by striking 
``$50'' and inserting ``$2,000''; and
(iii) in subparagraph (C), by striking 
``$10'' and inserting ``$1,000'';
(B) in paragraph (2)--
(i) in subparagraph (A), by striking 
``$1,000'' and inserting ``$2,000''; and
(ii) in subparagraph (B), by striking 
``$50'' and inserting ``$2,000''; and
(C) in paragraph (3)--
(i) in subparagraph (A), by striking 
``$1,000'' and inserting ``$2,000''; and
(ii) in subparagraph (B)--
(I) by striking ``$200'' and 
inserting ``$400''; and
(II) by striking ``$90'' and 
inserting ``$180''; and
(2) in subsection (b), by striking ``$10'' and inserting 
``$20''.

SEC. 3. ANTI-TRAFFICKING PROCEDURES.

(a) Dealer's License Application Required To Specify Business 
Practices To Prevent Diversions From Lawful Commerce.--Section 
923(d)(1)(G) of title 18, United States Code, is amended to read as 
follows:
``(G) in the case of an application to be licensed as a 
dealer--
``(i) the applicant certifies that secure gun 
storage or safety devices will be available at any 
place in which firearms are sold under the license to 
persons who are not licensees (subject to the exception 
that in any case in which a secure gun storage or 
safety device is temporarily unavailable because of 
theft, casualty loss, consumer sales, backorders from a 
manufacturer, or any other similar reason beyond the 
control of the licensee, the dealer shall not be 
considered to be in violation of the requirement under 
this subparagraph to make available such a device);
``(ii) the applicant submits with the application a 
specification of the firearms business practices, 
policies, and procedures of the applicant; and
``(iii) the Attorney General determines that the 
specification describes policies, practices, and 
procedures comply with regulations prescribed under 
section 926(d).''.
(b) Regulations To Require Licensed Dealers To Implement Business 
Practices, Policies, and Procedures To Prevent Business Inventory 
Firearms, Ammunition, and Accessories From Being Diverted From Lawful 
Commerce, and Prevent Business Inventory Firearms From Being 
Transferred to a Straw Purchaser.--Section 926 of such title is amended 
by adding at the end the following:
``(d) The Attorney General shall prescribe regulations requiring 
licensed dealers to implement business practices, policies, and 
procedures sufficient to prevent firearms, ammunition, and accessories 
in the business inventory of a licensed dealer from being diverted from 
lawful commerce, and to prevent business inventory firearms of a 
licensed dealer from being transferred to a straw purchaser, and shall 
do so in consultation with government entities with expertise similar 
to that of the White House Office of Gun Prevention.''.
(c) Penalties for Failure To Implement Business Practices, 
Policies, and Procedures Specified in Approved Dealer's License 
Application.--Section 924 of such title is amended by adding at the end 
the following:
``(q) The Attorney General may impose a civil money penalty of not 
more than $5,000 on, and may suspend the license issued under section 
923 to, any person who is a licensed dealer who fails to comply with 
any practice, policy, or procedure specified in the application 
approved under section 923 of the person to become a licensed 
dealer.''.

SEC. 4. PREVENTING FIREARM TRAFFICKING.

(a) Duties of Firearm Licensees.--Section 923(g) of title 18, 
United States Code, is amended--
(1) in paragraph (1)(B)--
(A) by striking ``or'' at the end of clause (ii); 
and
(B) by redesignating clause (iii) as clause (iv) 
and inserting after clause (ii) the following:
``(iii) for ensuring compliance with the regulations 
prescribed under section 926(d); or'';
(2) in paragraph (3)(B)--
(A) by inserting ``a firearm involved in a crime 
or'' after ``thereof regarding'';
(B) by striking ``, and shall destroy each such 
form and any record of the contents thereof no more 
than 20 days from the date such form is received'' and 
inserting ``and shall retain each such form and any 
record of the contents of the form for 180 days after 
the date the form is received''; and
(C) by striking the 2nd sentence; and
(3) by striking paragraph (7) and inserting the following:
``(7)(A) Each licensee shall respond immediately to, and in no 
event later than 24 hours after the receipt of, a request by the 
Attorney General for information contained in the records required to 
be kept by this chapter as may be required for determining the 
disposition of 1 or more firearms in the course of a bona fide criminal 
investigation. The requested information shall be provided orally or in 
writing, as the Attorney General may require. The Attorney General 
shall implement a system whereby the licensee can positively identify 
and establish that an individual requesting information via telephone 
is employed by and authorized by the agency to request the information.
``(B) Each licensee shall, in the absence of unique and special 
circumstances and approved in writing by the Attorney General, maintain 
records of all such crime gun trace requests for firearms disposed of 
by the licensee within the preceding 3 years, with copies of the 
transaction records for the firearms in the possession of the licensee, 
if any, to review before the transfer of any firearm.
``(C) Each licensee shall review all records of crime gun trace 
requests before transferring any firearm, and report sales or other 
dispositions whenever the licensee sells or otherwise disposes of any 
firearm to an unlicensed person to whom a crime gun has been traced. 
The report shall be prepared on a form specified by the Attorney 
General and forwarded to the office specified thereon and to the 
department of State police or State law enforcement agency of the State 
or local law enforcement agency of the local jurisdiction in which the 
sale or other disposition took place, not later than the close of 
business on the day that the licensee determines that the sale or other 
disposition occurs.
``(D)(i) Each licensed dealer shall update the practices, policies, 
and procedures referred to in section 923(d)(1)(G)(ii) of the licensee, 
whenever--
``(I) the licensee reports to the Attorney General 5 or 
more lost or stolen firearms in any period of 12 consecutive 
months; or
``(II) 5 or more firearms that were used in a crime under 
Federal, State, or local law within 3 years after the last 
known retail sale of the firearm are traced to the licensee 
within any such 12-month period.
``(ii) Each licensed dealer shall maintain physical records of 
costs incurred to implement and update the business practices, 
policies, and procedures, including the installation of audio and video 
surveillance of firearms transactions, and the implementation of an 
electronic record keeping system, or of physical security to prevent 
loss or theft of firearm inventory, and shall make the records 
available for inspection on the premises covered by the license until 
the licensee ceases to engage in the business of selling firearms.''.
(b) Duties of the Attorney General.--The Attorney General shall--
(1) develop, draft, and distribute to persons licensed 
under chapter 44 of title 18, United States Code, materials 
setting forth best business practices, policies, and procedures 
to prevent the diversion of firearms inventory from lawful 
commerce, and from time to time revise the materials as 
appropriate; and
(2) during the 3 fiscal years that first begin after the 
date of the enactment of this Act, prioritize for compliance 
inspections those firearms dealers that have not been inspected 
within the then preceding fiscal year with a high number of 
crime gun traces relative to other firearms dealers.

SEC. 5. MENS REA REQUIREMENT FOR VIOLATIONS OF RULES APPLICABLE TO ONLY 
LICENSEES.

Section 924(a)(1)(D) of title 18, United States Code, is amended by 
striking ``willfully'' and inserting ``knowingly''.

SEC. 6. FIREARMS TRAFFICKING OFFENSE.

(a) In General.--Section 933 of title 18, United States Code, is 
amended to read as follows:
``Sec. 933. Trafficking in firearms
``(a) Prohibitions.--
``(1) In general.--It shall be unlawful for any person to--
``(A) ship, transport, transfer, cause to be 
transported, or otherwise dispose of 2 or more firearms 
to another person in or affecting interstate or foreign 
commerce, if the person knows or has reasonable cause 
to believe that the use, carrying, or possession of a 
firearm by such other person would constitute a felony 
(as defined in section 932(a));
``(B) receive from another person 2 or more 
firearms in or affecting interstate or foreign 
commerce, if the person knows or has reasonable cause 
to believe that the receipt would constitute a felony; 
or
``(C) attempt or conspire to commit conduct 
described in paragraph (1) or (2).
``(2) Licensees.--It shall be unlawful for any licensee to 
ship, transport, transfer, cause to be transported, or 
otherwise dispose of any firearm to another licensee if the 
licensee knows or has reasonable cause to believe that--
``(A) in the preceding year, 5 or more firearms 
that were used in a crime under Federal, State, or 
local law within 3 years after the last known retail 
sale of the firearms have been traced to such other 
licensee;
``(B) in the preceding year, to the knowledge of 
the licensee, such other licensee has since failed to 
implement or update business practices to prevent 
firearm trafficking or straw purchasing;
``(C) such other licensee lacks adequate security 
to prevent loss or theft of firearms or ammunition from 
the inventory of such other licensee; or
``(D) in the most recent inspection of such other 
licensee under this chapter, the Attorney General has 
found 3 or more violations relating to failures to 
timely or accurately record information in firearm 
acquisition and disposition records.
``(b) Affirmative Defenses.--It shall be an affirmative defense to 
a charge of violating--
``(1) subsection (a)(1) of this section, that the licensee 
took all reasonable steps, including the implementation of and 
updates to business practices pursuant to subsection 
923(g)(7)(D), to prevent the diversion of inventory firearms 
from lawful commerce; and
``(2) subsection (a)(2) of this section, that the licensee 
took all reasonable steps to comply with subsection (a)(2) and 
failed to discover facts that would render disposition of 
firearms to a licensee unlawful under subsection (a)(2) only as 
the direct result of a violation of Federal law by the 
licensee.
``(c) Penalties.--
``(1) In general.--Any person who violates subsection 
(a)(1) shall be fined under this title, imprisoned for not more 
than 15 years, or both.
``(2) Licensees.--
``(A) Civil penalties.--Any licensee who violates 
subsection (a)(2) shall, after notice and opportunity 
for a hearing, disgorge all profits from the transfer 
of the firearms that are the subject of the violation, 
and the court may impose on the licensee a civil money 
penalty equal to the greater of--
``(i) $10,000 for each firearm involved, or 
$50,000 with respect to any such firearm that 
was subsequently used in a crime under Federal, 
State, or local law; or
``(ii) the total amount expended by the 
Attorney General in the preceding 3 fiscal 
years to trace firearms used in a crime under 
Federal, State, or local law, multiplied by the 
percentage of the firearms traced to the 
licensee that were recovered during that 
period.
``(B) License suspension or revocation.--In 
addition to any penalty under subparagraph (A), the 
Attorney General may, after notice and opportunity for 
a hearing, suspend or revoke the license issued to the 
licensee under this chapter in the case of the first 
violation of this section and, in the case of any 
subsequent violation, shall immediately revoke the 
license.''.
(b) Directive to Sentencing Commission.--
(1) In general.--Pursuant to its authority under section 
994(p) of title 28, United States Code, the United States 
Sentencing Commission shall review and, if appropriate, amend 
the Federal sentencing guidelines and policy statements 
applicable to persons convicted of offenses under section 933 
of title 18, United States Code (as added by subsection (a) of 
this section).
(2) Requirements.--In carrying out this section, the 
Commission shall review the penalty structure that the 
guidelines provide based on the number of firearms involved in 
the offense and determine whether any changes to the penalty 
structure are appropriate in order to reflect the intent of the 
Congress that the penalties reflect the gravity of the offense, 
the number of trafficked firearms purchased by or from the 
defendant, the extent of the knowledge of the defendant about 
the overall scheme to traffic firearms, the amount of money or 
nonmonetary compensation provided to the defendant for the 
participation of the defendant, and the culpability of the 
defendant, including whether the defendant is a licensed 
manufacturer, importer, or dealer and, as mitigating factors, 
whether the defendant is a relative or current or former 
intimate partner of another individual involved in a conspiracy 
to traffic firearms, is a domestic violence survivor, or has 
been otherwise exploited by personal affection, fear of 
reprisal. or economic need to commit an offense under section 
933 of title 18, United States Code.
(c) Directive to ATF.--
(1) Duty to investigate.--The Director of the Bureau of 
Alcohol, Tobacco, Firearms and Explosives shall investigate the 
source of firearms trafficked in violation of section 923 or 
933 of title 18, United States Code, and in particular, whether 
the source is engaged in the business of importing, 
manufacturing, or dealing in firearms in violation of section 
922(a)(1) of such title, and refer prosecutions of the source 
to the Attorney General. The Director shall assess whether 
regulations, informal guidance, licensee resources regarding 
trafficking, and the conduct of a firearms transferee would 
indicate, to a reasonable person, that the transferee may be 
violating section 932 or 933 of such title, and revise and re-
issue the materials developed under section 4(b) of this Act, 
accordingly.
(2) Gun trafficking awareness program.--The Director shall 
establish a program, to be known as the ``Gun Trafficking 
Awareness Program'', in which licensees under chapter 44 of 
title 18, United States Code, who have transferred firearms to 
an individual who has violated section 932(b) of such title, 
but who lack the mens rea to have committed a violation of 
section 933 of such title, may be enrolled for purposes of 
preventing future such violations. The program shall include, 
at a minimum--
(A) electronic or in-person training of such a 
licensee and all employees of the licensee who are 
responsible for handling firearms to identify signs of 
straw purchasing or gun trafficking;
(B) the adoption by such a licensee of electronic 
record keeping and collation of records relevant to 
trafficking, including crime gun trace requests and 
multiple purchase reports;
(C) a requirement that such a licensee who operates 
retail premises from which firearms are transferred 
maintain audio and video surveillance of all areas of 
the premises; and
(D) inspections of such a licensee, as appropriate, 
and not more frequently than quarterly, for a period of 
1 year, to ensure compliance with such chapter.
(d) Directive to the Attorney General.--Within 2 years after the 
date of the enactment of this Act and annually thereafter, the Attorney 
General shall submit to the Committee on the Judiciary of the Senate 
and the Committee on the Judiciary of the House of Representatives a 
report containing the following information:
(1) For the preceding 12-month period--
(A) the number of investigations initiated for 
violations of section 933 of title 18, United States 
Code;
(B) the number of individuals, entities, and 
Federal firearm licensees charged criminally or civilly 
for the violations;
(C) the number of individuals, entities, and 
Federal firearm licensees indicted for the violations;
(D) the number of investigations referred to the 
Attorney General by the Bureau of Alcohol, Tobacco, 
Firearms and Explosives that did not result in criminal 
or civil charges; and
(E) the number of licensees enrolled in, and the 
number of licenses determined to have successfully 
completed, the program established under subsection 
(c)(2).
(2) To the extent the information is available, the average 
length of the sentences of imprisonment and average and mean 
monetary fines imposed on persons convicted of violations of 
section 933 of title 18, United States Code, during the 
preceding 12-month period.
(3) A narrative describing the trafficking schemes 
prosecuted in the preceding 12-month period, including the 
sources of firearms, the roles of various defendants in the 
scheme, the number of firearms trafficked, and a description of 
any trafficking practices or trends common among various 
firearm trafficking schemes.

SEC. 7. ENHANCED REGULATION OF HIGH RISK DEALERS.

Chapter 44 of title 18, United States Code, is amended by adding at 
the end the following:
``Sec. 935. Regulation of high risk dealers
``(a) In General.--On a determination by the Attorney General that 
a licensed dealer is a high risk dealer, the Attorney General shall--
``(1) require the dealer to permanently alter the business 
practices of the dealer or make physical improvements to the 
firearms business premises of the dealer to reduce the 
diversion of firearms from the firearms inventory of the 
dealer, which requirements shall include requiring the dealer 
to--
``(A) adopt electronic acquisition and disposition 
record keeping;
``(B) provide the National Tracing Center with 
electronic access to all records required to be kept 
under this chapter that are possessed by the dealer;
``(C) make video and audio recordings of all 
firearms transactions, and maintain the recordings for 
360 days; and
``(D) retain for more than 360 days, any video or 
audio recording of a firearm transaction that was the 
subject of a trace request; and
``(2) not less frequently than biennially, inspect or 
examine the inventory, records, and business premises of the 
dealer without reasonable cause or warrant.
``(b) Cessation.--On application of a high risk dealer, on a form 
prescribed by the Attorney General, and approval of the application by 
the Attorney General in writing, the inspections of the dealer under 
subsection (a)(2) shall cease--
``(1) on certification by the Attorney General that the 
dealer--
``(A) has permanently altered the business 
practices of the dealer or made the physical 
improvements required under subsection (a)(1); and
``(B) will maintain the practices and improvements 
until otherwise notified by the Attorney General; and
``(2) if, on 2 separate and consecutive occasions at least 
6 months apart, the Attorney General has inspected and examined 
the books and records of the dealer and, during that period, 
the dealer has not been notified of any violations of Federal, 
State, or local law.
``(c) Notice.--The Attorney General shall inform high risk dealers 
in writing of their obligations under this section.
``(d) Definition.--The term `high risk dealer' means any dealer 
identified by the Attorney General as lacking sufficient policies, 
procedures, or controls to prevent the diversion from lawful commerce 
of firearms or ammunition in the firearms business inventory of the 
dealer or transferred by the dealer, and firearms possessed by the 
dealer that are to be destroyed, and, thus, necessitating enhanced 
regulation and enforcement including regular inspection and examination 
of the inventory, records, and premises of the firearms business of the 
dealer. The Attorney General shall so identify such a dealer if--
``(1) the Attorney General has issued to the dealer a 
report of violation or warning letter;
``(2) the dealer has been the subject of a warning 
conference with the Attorney General within the preceding 36 
months; or
``(3) in the preceding 12 months, the dealer was the source 
of 2 or more firearms that were used in a crime under Federal, 
State, or local law within 36 months after the last known 
retail sale of the firearm.''.

SEC. 8. EFFECTIVE DATE.

Sections 2 through 6 shall take effect on the date that is 180 days 
after the date of the enactment of this Act.
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