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doom&gloom
07-21-10, 11:14 AM
(I think there is only one new way to deal with this law. when you buy in bulk, pay for each coin individually, and drive as much paper into the IRS as possible)

http://abcnews.go.com/print?id=11211611

Gold Coin Sellers Angered by New Tax Law

Amendment Slipped Into Health Care Legislation Would Track, Tax Coin and Bullion Transactions

By RICH BLAKE

July 21, 2010

Those already outraged by the president's health care legislation now have a new bone of contention -- a scarcely noticed tack-on provision to the law that puts gold coin buyers and sellers under closer government scrutiny.
The issue is rising to the fore just as gold coin dealers are attracting attention over sales tactics (http://abcnews.go.com/Blotter/goldline-congress-grill-gold-dealer-glenn-beck-sponsor/story?id=11205624).

Section 9006 of the Patient Protection and Affordable Care Act will amend the Internal Revenue Code to expand the scope of Form 1099. Currently, 1099 forms are used to track and report the miscellaneous income associated with services rendered by independent contractors or self-employed individuals.

Coin Dealers Flipping

Starting Jan. 1, 2012, Form 1099s will become a means of reporting to the Internal Revenue Service the purchases of all goods and services by small businesses and self-employed people that exceed $600 during a calendar year. Precious metals such as coins and bullion fall into this category and coin dealers have been among those most rankled by the change.

This provision, intended to mine what the IRS deems a vast reservoir of uncollected income tax, was included in the health care legislation ostensibly as a way to pay for it. The tax code tweak is expected to raise $17 billion over the next 10 years, according to the Joint Committee on Taxation.

Taking an early and vociferous role in opposing the measure is the precious metal and coin industry, according to Diane Piret, industry affairs director for the Industry Council for Tangible Assets. The ICTA, based in Severna Park, Md., is a trade association representing an estimated 5,000 coin and bullion dealers in the United States.

"Coin dealers not only buy for their inventory from other dealers, but also with great frequency from the public," Piret said. "Most other types of businesses will have a limited number of suppliers from which they buy their goods and products for resale."
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So every time a member of the public sells more than $600 worth of gold to a dealer, Piret said, the transaction will have to be reported to the government by the buyer.

Pat Heller, who owns Liberty Coin Service in Lansing, Mich., deals with around 1,000 customers every week. Many are individuals looking to protect wealth in an uncertain economy, he said, while others are dealers like him.

With spot market prices for gold at nearly $1,200 an ounce, Heller estimates that he'll be filling out between 10,000 and 20,000 tax forms per year after the new law takes effect.

"I'll have to hire two full-time people just to track all this stuff, which cuts into my profitability," he said.

An issue that combines gold coins, the Obama health care law and the IRS is bound to stir passions. Indeed, trading in gold coins and bars has surged since the financial crisis unfolded and Obama took office, metal dealers said.

The buying of actual gold, as opposed to futures or options tied to the price of gold, has been a particularly popular trend among Tea Party supporters and others who are fearful of Obama's economic policies, gold industry members such as Heller and Piret said. Conservative/libertarian commentators, such as Fox News Channel's Glenn Beck, routinely tout precious metal on the air as being a safe, shrewd investment in an environment in which the financial system -- and paper money backed by the rest of the world's faith in the U.S. government's credit -- is viewed as increasingly fragile.

The recently revealed investigation by California authorities into consumer complaints against Goldline International, which has used Beck as a pitchman, and Superior Gold Group (which has not) has put a spotlight on what one liberal leaning politician, Rep. Anthony Weiner, D-N.Y., calls the "unholy alliance" between gold coin sellers, such as Goldline, and conservative talk personalities, such as Beck.

Beck, who through his spokesman, Matt Hiltzik, declined to comment for this story, and Goldline marketers (http://abcnews.go.com/Blotter/glenn-beck-fox-hosts-golden-advertiser-goldline-investigation/story?id=11200542)portray gold coins as a better alternative to owning bullion in the event that the U.S. government ever decides, as it did under FDR in 1933, to make it illegal for private citizens to own physical gold. At that time, the U.S. dollar was still pegged to the price of gold; the gold standard was abandoned during the Nixon administration.<!-- page -->

Rep. Daniel Lungren, R-Calif., has introduced legislation to repeal the section of the health care bill that would trigger the new tax reporting requirement because he says it's a burden on small businesses.

"Large corporations have whole divisions to handle such transaction paperwork but for a small business, which doesn't have the manpower, this is yet another brick on their back," Lungren said in a statement e-mailed to ABCNews.com. "Everyone agrees that small businesses are job creators and the engine which drives the American economy. I am dumfounded that this Administration is doing all it can to make it more difficult for businesses to succeed rather than doing all it can to help them grow."

The ICTA's Piret says identity theft is another concern because criminals may set up shops specifically to extract personal information that would accompany the filing out of a 1099.

The office of the National Taxpayer Advocate, a citizen's ombudsman within the IRS, issued a report June 30 that said the new rule "may present significant administrative challenges to taxpayers and the IRS."

metalman
07-21-10, 12:03 PM
won't this law send millions of american gold owners to mexico & canada to sell?

Jim Nickerson
07-21-10, 01:02 PM
won't this law send millions of american gold owners to mexico & canada to sell?

Only if they are trying to be dishonest. If one sells an asset for a gain, then it is taxable. Failure to declare income is illegal, and like murder, I believe, has no statute of limitations. At some point, IF the US is going to get out of its ever deepening financial hole, then someone is going to have to pay taxes.

doom&gloom
07-21-10, 02:18 PM
won't this law send millions of american gold owners to mexico & canada to sell?

yup. or make sales on Craigslist/Ebay/wherever much more popular.

Frankly, I think people will deal under the table as much as possible, including bullion dealers.

metalman
07-21-10, 02:35 PM
Only if they are trying to be dishonest. If one sells an asset for a gain, then it is taxable. Failure to declare income is illegal, and like murder, I believe, has no statute of limitations. At some point, IF the US is going to get out of its ever deepening financial hole, then someone is going to have to pay taxes.

yep, austerity for the politically unrepresented... the poor & middle class will get taxed & services gutted.

metalman
07-21-10, 02:40 PM
yup. or make sales on Craigslist/Ebay/wherever much more popular.

Frankly, I think people will deal under the table as much as possible, including bullion dealers.

read 'em & weep...


The Tax Rules for eBay Sellers (http://www.bottomlinesecrets.com/article.html?article_id=42648)

...if you sell something at a profit -- say, the antique porcelain vase you inherited from your aunt or the collectible child's game you bought at a garage sale -- you must report the gain on your tax return. (Of course, to determine your gain, you'll have to know your basis in an item -- generally, either the amount you paid for it... or, if it was given to you, the donor's basis... or, if you inherited it, its value at death of the decedent.) If you don't know what your basis is, then all of the proceeds are considered profit (gain).

Note: You can minimize taxable gain by adding your selling expenses to your basis. Selling expenses include eBay listing fees (the "insertion fees" paid to eBay to post items for sale) and "final value fees" (a percentage of the item's final selling price that is also paid to eBay). These fees are paid by the seller.

There is no threshold amount of gain or number of sales before you are required to report eBay transactions. All gain must be reported on Schedule D. (You can't take capital losses because these are personal items.)

Gains on the sale of items are capital gains -- long-term if the items have been held for more than a year, or short-term if held for a year or less.

However, unlike most long-term capital gains that are taxed at no more than 15%, gains on the sales of collectibles are taxed at 28% for those in income tax brackets of 28% and above.

Collectibles for this purpose are defined in the instructions for Schedule D as precious metals (such as gold, silver, and platinum bullion) works of art, rugs, antiques, , gems, stamps, coins, and certain other tangible property.

medved
07-21-10, 02:51 PM
Only if they are trying to be dishonest. If one sells an asset for a gain, then it is taxable. Failure to declare income is illegal, and like murder, I believe, has no statute of limitations. At some point, IF the US is going to get out of its ever deepening financial hole, then someone is going to have to pay taxes.

Except taxes are set by the taxing without any consideration of the taxed. If murder related laws were handled the same way, by now we would have a death penalty for squishing an ant.

This just shows you, how your gold will be confiscated: gradually, by taxation and regulation (all for the "common good").;_PU

Jay
07-21-10, 07:26 PM
What if you barter your gold, for a car say? Or 100 ounces for a house. I guess the IRS would expect that you use that spot price during the day of the transaction.

doom&gloom
07-21-10, 09:29 PM
What if you barter your gold, for a car say? Or 100 ounces for a house. I guess the IRS would expect that you use that spot price during the day of the transaction.

it's all gonna end up like the construction market, with remodlers cutting out the tax man for cash.

opps
07-21-10, 09:52 PM
I don't see how it won't surpress prices. Demand will drop.