§ 479.105 Transfer and possession of machine guns.

(a) General. As provided by 26 U.S.C. 5812 and 26 U.S.C. 5822, an application to make or transfer a firearm shall be denied if the making, transfer, receipt, or possession of the firearm would place the maker or transferee in violation of law. Section 922(o), Title 18, U.S.C., makes it unlawful for any person to transfer or possess a machine gun, except a transfer to or by, or possession by or under the authority of, the United States or any department or agency thereof or a State, or a department, agency, or political subdivision thereof; or any lawful transfer or lawful possession of a machine gun that was lawfully possessed before May 19, 1986. Therefore, notwithstanding any other provision of this part, no application to make, transfer, or import a machine gun will be approved except as provided by this section.

(b) Machine guns lawfully possessed prior to May 19, 1986. A machine gun possessed in compliance with the provisions of this part prior to May 19, 1986, may continue to be lawfully possessed by the person to whom the machine gun is registered and may, upon compliance with the provisions of this part, be lawfully transferred to and possessed by the transferee.

(c) Importation and manufacture. Subject to compliance with the provisions of this part, importers and manufacturers qualified under this part may import and manufacture machine guns on or after May 19, 1986, for sale or distribution to any department or agency of the United States or any State or political subdivision thereof, or for use by dealers qualified under this part as sales samples as provided in paragraph (d) of this section. The registration of such machine guns under this part and their subsequent transfer shall be conditioned upon and restricted to the sale or distribution of such weapons for the official use of Federal, State or local governmental entities. Subject to compliance with the provisions of this part, manufacturers qualified under this part may manufacture machine guns on or after May 19, 1986, for exportation in compliance with the Arms Export Control Act (22 U.S.C. 2778) and regulations prescribed thereunder by the Department of State.

(d) Dealer sales samples. Subject to compliance with the provisions of this part, applications to transfer and register a machine gun manufactured or imported on or after May 19, 1986, to dealers qualified under this part will be approved if it is established by specific information the expected governmental customers who would require a demonstration of the weapon, information as to the availability of the machine gun to fill subsequent orders, and letters from governmental entities expressing a need for a particular model or interest in seeing a demonstration of a particular weapon. Applications to transfer more than one machine gun of a particular model to a dealer must also establish the dealer's need for the quantity of samples sought to be transferred.

(e) The making of machine guns on or after May 19, 1986. Subject to compliance with the provisions of this part, applications to make and register machine guns on or after May 19, 1986, for the benefit of a Federal, State or local governmental entity (e.g., an invention for possible future use of a governmental entity or the making of a weapon in connection with research and development on behalf of such an entity) will be approved if it is established by specific information that the machine gun is particularly suitable for use by Federal, State or local governmental entities and that the making of the weapon is at the request and on behalf of such an entity.

(f) Discontinuance of business. Since section 922(o), Title 18, U.S.C., makes it unlawful to transfer or possess a machine gun except as provided in the law, any qualified manufacturer, importer, or dealer intending to discontinue business shall, prior to going out of business, transfer in compliance with the provisions of this part any machine gun manufactured or imported after May 19, 1986, to a Federal, State or local governmental entity, qualified manufacturer, qualified importer, or, subject to the provisions of paragraph (d) of this section, dealer qualified to possess such, machine gun.

[T.D. ATF–270, 53 FR 10510, Mar. 31, 1988]

Crime with Legally Owned Machine Guns

In 1995 there were over 240,000 machine guns registered with the ATF. (Zawitz, Marianne,Bureau of Justice Statistics, Guns Used in Crime [PDF].) About half are owned by civilians and the other half by police departments and other governmental agencies (Gary Kleck, Targeting Guns: Firearms and Their Control, Walter de Gruyter, Inc., New York, 1997.)

Since 1934, there appear to have been at least two homicides committed with legally owned automatic weapons. One was a murder committed by a law enforcement officer (as opposed to a civilian). On September 15th, 1988, a 13-year veteran of the Dayton, Ohio police department, Patrolman Roger Waller, then 32, used his fully automatic MAC-11 .380 caliber submachine gun to kill a police informant, 52-year-old Lawrence Hileman. Patrolman Waller pleaded guilty in 1990, and he and an accomplice were sentenced to 18 years in prison. The 1986 'ban' on sales of new machine guns does not apply to purchases by law enforcement or government agencies.
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Thanks to the staff of the Columbus, Ohio Public Library for the details of the Waller case.

Source: talk.politics.guns FAQ, part 2.

The other homicide, possibly involving a legally owned machine gun, occurred on September 14, 1992, also in Ohio (source).

In Targeting Guns, Kleck cites the director of ATF testifying before Congress that he knew of less than ten crimes that were committed with legally owned machine guns (no time period was specified). Kleck says these crimes could have been nothing more than violations of gun regulations such as failure to notify ATF after moving a registered gun between states.

Handguns with a forward vertical grip. It is therefore illegal to place an aftermarket foregrip on any pistol without first registering it as an AOW and paying the $200 "making tax" imposed by the Act.