The TRACE Act: New Rules Mandate Hidden Gun Serial Numbers, Expand Federal Definition of 'Firearm'

The Trafficking Reduction And Criminal Enforcement Act, or the TRACE Act, is a major overhaul of how firearms are tracked, manufactured, and sold. If this bill passes, it’s going to change things significantly for gun manufacturers, licensed dealers, and even hobbyists who build their own firearms.

The Double-Secret Serial Number

The biggest change under Section 2 is the requirement for a second, hidden serial number on all new firearms manufactured in the U.S. Within a year of enactment, the Attorney General has to issue rules requiring every gun to have a second serial number that is either concealed inside the receiver or only visible using infrared light. This is in addition to the regular, visible serial number. The goal here is clearly to help law enforcement trace guns used in crimes, even if the visible markings have been filed off. For manufacturers, this means new, mandatory production steps and compliance costs, which could eventually trickle down to the consumer price tag.

Goodbye, Ghost Guns: Expanded Definitions

Section 2 also radically updates the federal definitions of “firearm” and “manufacturing firearms.” The bill explicitly brings “unfinished frames or receivers” under federal regulation. Think about the popular “80% lowers” or similar kits people buy to build guns at home—those would now be classified as firearms. This means anyone who molds, machines, or 3D prints a frame or receiver is now considered a manufacturer and must comply with federal marking and licensing rules. This change is designed to close the so-called “ghost gun” loophole, but it will directly impact the rights of hobbyists and individuals who currently enjoy the freedom to build their own firearms for personal use without federal oversight.

Longer Paper Trails for Background Checks

If you’ve ever bought a gun from a licensed dealer, you’ve gone through the National Instant Criminal Background Check System (NICS). Under current law, those records have to be destroyed quickly. Section 3 of the TRACE Act changes that, requiring that all NICS records be preserved for a minimum of 180 days. For the average person, this doesn't change the buying process, but it significantly extends the government’s ability to retain and potentially use records of legal firearm purchases. The Attorney General has six months to issue the regulations for this extended record keeping.

Mandatory Inventory Counts for Dealers

Licensed firearms dealers (FFLs) are also getting new homework under Section 4. The bill requires them to conduct a physical count and check of their entire inventory. Right now, the frequency and method of inventory checks can vary, but this bill makes physical counts mandatory, with the Attorney General setting the specific schedule and rules within 180 days. This is intended to increase accountability and reduce the number of firearms lost or stolen from dealer inventory, but it adds a new layer of mandatory administrative burden and cost for every FFL, especially small, independent shops.

Removing the ATF’s Funding Handcuffs

Finally, Section 5 is a major administrative cleanup that could have big implications. It strikes down several specific restrictions placed on the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) budget in appropriations acts dating back to 2003. Crucially, it removes language that previously banned the ATF from using funds to implement any tax or fee related to the NICS background check system. While this bill doesn't create a new tax or fee, removing this prohibition means the ATF is now legally able to use its appropriated funds to implement one in the future if Congress or the administration decides to pursue it. It essentially takes away a long-standing statutory barrier against funding mechanism changes for the background check system.