The way I understand it, if a firearm is being shipped out for repair or customization (engraving), and no transfer of ownership is taking place, you do not need to go through an FFL as long as the firearm is being returned to the owner.
I am doing a SBR now and have found out two important things in talking with ATF. Read....the resident "expert" in Martinsburg who now supervises all the examiners.
He says that the receiver or the barrel must be engraved. I know there are some people that have gotten away without having it done at all. It will not happen on this "experts" watch.
He also stated that names may not be abbreviated even though it states in the NFA Title 26, Chapter 53, Section 479.102,a,(2),(iii) that a "recognized abbreviation" would be acceptable. It is not acceptable to him.
My bud just got his form 1 returned to him for this very reason. And, IMO, and in the opinion of this "expert", is the reason you should wait until you have a approved form 1 prior to engraving.
I've come to the conclusion that these folks will do as they damn well please when it comes to the fine print/gray area issues.

