(1) A law enforcement agency that seizes or otherwise comes into possession of a firearm or a part of a firearm subject to disposal under section 14 may, instead of forwarding the firearm or part of a firearm to the director of the department of state police or the director's designated representative for disposal under that section, retain that firearm or part of a firearm for the following purposes:

    (a) For legal sale or trade to a federally licensed firearm dealer. The law enforcement agency shall only use the proceeds from any sale or trade under this subdivision for law enforcement purposes. The law enforcement agency shall not sell or trade a firearm or part of a firearm under this subdivision to any individual who is a member of that law enforcement agency unless the individual is a federally licensed firearms dealer and the sale is made pursuant to a public auction.

    (b) For official use by members of the seizing law enforcement agency who are employed as peace officers. The law enforcement agency shall not sell a firearm or part of a firearm under this subdivision.

    (2) A law enforcement agency that sells or trades any firearm to a licensed dealer under subsection (1)(a) or retains any firearm under subsection (1)(b) shall complete a record of the transaction under section 2 or section 2a, as applicable.

    (3) A law enforcement agency that sells or trades a firearm or part of a firearm under this section shall retain a receipt of the sale or trade for not less than 7 years. The law enforcement agency shall make all receipts retained under this subsection available for inspection by the department of state police upon demand and for auditing purposes by the state and the local unit of government of which the agency is a part.

    (4) Before disposing of a firearm under this section, the law enforcement agency shall do both of the following:

    (a) Determine through the law enforcement information network whether the firearm has been reported lost or stolen. If the firearm has been reported lost or stolen and the name and address of the owner can be determined, the law enforcement agency shall provide 30 days' written notice of its intent to dispose of the firearm under this section to the owner, and allow the owner to claim the firearm in that 30-day period if the owner is authorized to possess the firearm. If the police agency determines that a serial number has been altered or has been removed or obliterated from the firearm, the police agency shall submit the firearm to the department of state police or a forensic laboratory for serial number verification or restoration to determine legal ownership.

    (b) Provide 30 days' notice to the public on a website maintained by the law enforcement agency of its intent to dispose of the firearm under this section. The notice must include a description of the firearm and state the firearm's serial number, if the serial number can be determined. The law enforcement agency shall allow the owner of the firearm to claim the firearm in that 30-day period if the owner is authorized to possess the firearm. The 30-day period required under this subdivision is in addition to the 30-day period required under subdivision (a).

    (5) The law enforcement agency is immune from civil liability for disposing of a firearm in compliance with this section.

    (6) As used in this section, "law enforcement agency" means any agency that employs peace officers.