John. I believe I may have been wrong. I tried to find the law to cite and see no prohibition. Perhaps I have fallen into yet another urban legend trap. I see nothing in this section precluding a FTF handgun transfer. Experts please speak up!
N.J.A.C. 13:54-1.8 Written certification; delivery of permit to purchase
(a) Any person receiving, purchasing or otherwise acquiring a firearm by exhibiting a firearms
purchaser identification card shall sign a written certification on form NJSP 634, which shall
indicate that he or she presently complies with all of the requirements for obtaining an identification
card and does not suffer from any of the disabilities set forth in this subchapter. The certification
shall contain his or her name, address and firearms purchaser identification number or dealer's
license, and any other information deemed necessary by the Superintendent. If the seller is not a
licensed dealer, the certification may be retained by the seller or it may be filed with the chief of
police of the municipality in which he or she resides or, in all other cases, with the Superintendent.
The seller shall retain the certification if he or she is a licensed dealer.
(b) A permit to purchase a handgun shall be issued to the applicant in quadruplicate. Prior to
receiving a handgun from the seller, the purchaser must deliver all copies of the permit to the seller,
who shall complete all of the information on the required form. Within five days of the sale the
seller shall forward the original copy to the Superintendent and the second copy to the chief of
police of the municipality where the purchaser resides; provided that in a municipality having no
chief of police, the second copy shall be forwarded to the Superintendent. The third copy shall be
returned to the purchaser, and the fourth shall be kept by the seller as a permanent record.
EDIT: Looks as if I am in error. Sorry for the confusion factor!