Bureau of Alcohol, Tobacco, Firearms, and Explosives Reform and Firearms Modernization Act of 2007

Bureau of Alcohol, Tobacco, Firearms, and Explosives Reform and Firearms Modernization Act of 2007 - Amends the federal criminal code to revise the civil penalties for violations of firearms law and the procedures for assessing such penalties.

Revises the definition of "willfully" for purposes of firearms violations and standards for criminal violations of firearms recordkeeping requirements.

Requires the Attorney General to: (1) make preliminary determinations on firearms license applications and notify applicants in writing of a proposed denial; and (2) establish guidelines for Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF) inspections, examinations, or investigations of possible firearms violations.

Prohibits ATF from disclosing information on firearms purchasers other than to a court, law enforcement agency, or prosecutor.

Permits an owner of a firearms business whose license is expired, surrendered, or revoked 60 days to liquidate inventory.

Requires any state agency that stores or keeps explosive materials to report to the Attorney General on the location and amount of such materials.

Allows the transfer and possession of machineguns for use by federal security contractors.

Prohibits taxes or user fees for background checks under the Brady Handgun Violence Prevention Act.

Eliminates the requirement of written permission for the use of a handgun for lawful purposes by a minor (under age 18) where a parent or legal guardian is present at all times during such use.

Restricts the disclosure of information in the ATF firearms trace system database.

Increases penalties for possession of firearms by felons with prior convictions of a crime of violence or a serious drug offense.