NFA weapons in police inventory now need to be registered with the Treasury Department, a fairly simple process that requires no tax payment. This results in a different category of possession than a Form 4 for an individual owner of a transferable NFA weapon, and the weapon cannot generally be transferred to anyone other than a law enforcement agency.

This has not always been the rule. The National Firearms Act of 1934 came along well after many thousands of automatic weapons and other NFA devices were already in private hands, acquired quite legally. Also, the registration requirements under NFA have changed multiple times over the years, there have been amnesty registration periods, and multiple exemptions existed at various times.

The current status of a NFA weapon in LE inventory today would probably be determining (if possible) the date of acquisition, how the weapon was acquired (purchase, seizure, contraband), and whether or not there had been any prior Treasury Department records of the agency's possession or ownership. Anything manufactured in the past 30 years is generally prohibited from any subsequent transfer to anyone other than a government agency, and would never have been transferred to the agency without Treasury approval and documentation.

Older NFA weapons probably include those originally sold to the LE agency as well as large numbers of recovered contraband weapons, recovered weapons stolen from dealers or in transit, illegally altered or manufactured weapons, and those that walked in the door for surrender when found in a decedent's belongings after a funeral.

I have read that the first major shipment of Thompson SMG's was for the US Postal Police, was hijacked from a railroad car, and subsequently used by the 1930s gangsters terrorizing Chicago.

General Thompson was in a tough financial position after World War I ended before his "trench sweeper" could be put into production. With his own personal fortune heavily invested, stockholders and creditors hounding him constantly, the marketing efforts went into public sales during the 1920s. Farmers, ranchers, private and corporate security organizations could order by mail or through the local hardware store.

Same situation with the Browning Automatic Rifle, another WW1 development that was not completed prior to the 1918 Armistice that was also marketed directly to the public prior to NFA.

Additionally, US manufacturers marketed heavily to foreign governments and military agencies, with many thousands produced and shipped with very little documentation other than whatever corporate records may have been kept (and survived).

Even after NFA, US citizens travelling abroad could purchase all sorts of weaponry and carry or ship it home easily. WW2, Korea, Indochina, and other military events resulted in thousands of souvenirs and war trophies coming home in duffel bags and foot lockers. Many of those pieces were subsequently registered, and Congress has proclaimed amnesty periods several times allowing citizens to register without penalties, but it still happens with some frequency that these things show up in estates, gun shows, and at the front desk of police departments in the hands of widows and surviving children wondering what to do with Grampa's old guns.

Hundreds of thousands of NFA weapons are in the hands of private citizens with proper registrations, but I suspect that those amount to perhaps half or less than the total number existing in the US.

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