I don’t know if y’all allow posts of this type, but this article is
germane to those of us in the gold business.
Gold coin sellers angered by new tax law
By RICH BLAKE
Amendment Slipped Into Health Care Legislation Would Track, Tax Coin
and Bullion Transactions
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.
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
“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.”
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
Beck, who through his spokesman, Matt Hiltzik, declined to comment
for this story, and Goldline marketers 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.
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
“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
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