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What Federal Regulation States that this is Legal?

(last updated on 9/24/2010)
The ATF maintains a FAQ about firearms issues. The following is excerpted from their FAQ at www.atf.gov/firearms/faq/

May an unlicensed person obtain a firearm from an out-of-State source if he arranges to obtain the firearm through a licensed dealer in his own State?

A person not licensed under the GCA and not prohibited from acquiring firearms may order a firearm from an out-of-State source and obtain the firearm if an arrangement is made with a licensed dealer in the purchaser's State of residence for the purchaser to obtain the firearm from the dealer.

[18 U.S.C 922(a)(3) and (5), 922(b)(3), 27 CFR 178.29]

The ATF's Code of Federal Regulations, Part 478 - Commerce in Firearms and Ammunition is available at the following link:
http://ecfr.gpoaccess.gov/cgi/t/text/text-idx?c=ecfr&rgn=div5&view=text&node=27:3.0.1.2.3&idno=27