Gold Transactions with Dealers Over $600 Will Require IRS Filing in 2012

[Rael]

Gold Transactions with Dealers Over $600 Will Require IRS Filing Effective January 1, 2012


Source: Cryptogon

Via: Numismaster:

A blizzard of paperwork could be about to hit numismatics.

Passage by Congress of the national health care legislation has had an unintended consequence to the nation’s coin collectors, vest-pocket dealers who buy and sell coins, and larger dealers who are frequent buyers of coins that collectors periodically liquidate as they trade up their collections for better coins, or simply sell to take a small profit or loss.

What has happened is that effective Jan. 1, 2012, the whole system of giving and receiving Internal Revenue Service 1099 forms will be turned on its head and all persons (including corporations) who are in business will now have to give 1099 tax reporting forms for coins and other goods that they sell as well as buy.

The responsibility for issuing forms kicks in at $600 for coins or bullion – not a very high level and one that has already started sounding alarm bells. It doesn’t matter in what form payment is made, whether cash, check, credit card, or Yap stone money, the $600 threshold applies.

There’s a bill introduced by Rep. Dan Lungren (H.R. 5141), which has gathered over 80 members of Congress as co-sponsors to repeal this section. Evidently, however, the drafters of the provision think there is a $17 billion loophole that this plugs.

The Industry Council for Tangible Assets is alerting member dealers and the public at large in the hope that some sense of outrage will lead to a ready modification before the law becomes operational in 2012.

Form 1099 is used to report independent contractor income, income from dividends, income from other things – and is one of the reasons why children receive tax bills for work or labor or services performed.

Section 9006 of the Patient Protection and Affordable Care Act (Public Law 111-148, signed into law by President Obama this spring) turns 1099 forms into reporting forms not only for independent contractor’s income – what they have long been used for – but also to show sales, gains and losses on purchases and sales of goods as part of a trade or business.

The section reads (in relevant part) “SEC. 9006. EXPANSION OF INFORMATION REPORTING REQUIREMENTS. (a) IN GENERAL. – Section 6041 of the Internal Revenue Code of 1986 is amended by adding at the end the following new subsections:

‘‘(h) APPLICATION TO CORPORATIONS. – Notwithstanding any regulation prescribed by the secretary before the date of the enactment of this subsection, for purposes of this section the term ‘person’ includes any corporation that is not an organization exempt from tax under section 501(a).

‘‘(i) REGULATIONS. – The secretary may prescribe such regulations and other guidance as may be appropriate or necessary to carry out the purposes of this section, including rules to prevent duplicative reporting of transactions.’’

(b) PAYMENTS FOR PROPERTY AND OTHER GROSS PROCEEDS. –

Subsection (a) of section 6041 of the Internal Revenue Code of 1986 is amended –

(1) by inserting ‘‘amounts in consideration for property,’’ after ‘‘wages,’’
(2) by inserting ‘‘gross proceeds,’’ after ‘‘emoluments, or other’’, and
(3) by inserting ‘‘gross proceeds,’’ after ‘‘setting forth the amount of such.’’

The property section means that if B. Max Mehl was selling coins to another major dealer of that era, a 1099 would have to be issued. When he bought from the public, the same thing is also required. The “report” does not necessarily measure profit or loss, but it does show activity.

The old exemption against corporations is also gone. If you buy or sell more than $600 of coins, or whatever, from, to or with a bullion dealer, for example, you have an obligation under the new law to issue 1099s.

[WaltM]

how the hell do you buy gold under $600???

[RCA]

how the hell do you buy gold under $600???

fractionals

[VBRonPaulFan]

It's pretty easy to get around this, just don't report it. Kind of the same how tons and tons of people don't report their activity to the IRS every year. The administration keeps dumping more and more responsibility on the IRS for making sure people comply with legislation without giving the IRS more people with which to do it. They just don't have enough people to follow up on everyone.

[ARealConservative]

It's pretty easy to get around this, just don't report it. Kind of the same how tons and tons of people don't report their activity to the IRS every year. The administration keeps dumping more and more responsibility on the IRS for making sure people comply with legislation without giving the IRS more people with which to do it. They just don't have enough people to follow up on everyone.

you will also have to rely on the other party not reporting it.

I could cash out my IRA too, and not report it. But what is the chances the other party involved also chooses to not report?

[Elwar]

In a scenario where gold is difficult to buy or sell would that mean that prices will go up or down?

[Political Terror]

Just another example of how governments create black markets.And then the black market artificially inflate the value of the good.

[Peace&Freedom]

you will also have to rely on the other party not reporting it.

I could cash out my IRA too, and not report it. But what is the chances the other party involved also chooses to not report?

This is the key to the IRS's fraudulent system, third party hearsay reports, as tax honesty writers have pointed out. If the other party says in writing you received income, even though it's unsworn or erroneous, it stands if unrebutted as prima fascie evidence of a tax liability. So you don't have to report if you're not liable, BUT as a practical matter, you have to file to correct the record of information reports that make an equitable case that you do have liability.

If you rebut it and persist at it, you can get the IRS to back down, OR they may refuse to acknowledge your sworn affidavits and continue to stand by the unsworn hearsay data they received. They may tell you to sort it out with the job or business, but then the job or business will tell you to sort it out with the IRS. It's the perfect scam! Prior to the new gold rule there was no requirement for gold sellers to report you if you were buying as a COLLECTOR, not as an investor. The new rule slyly circumvents the collector-investor distinction in order to put all gold buyers on the third party reporting control grid.

[Jordan]

This applies to everything, not just bullion.

[idirtify]

If the other party says in writing you received income, even though it's unsworn or erroneous, it stands if unrebutted as prima fascie evidence of a tax liability. So you don't have to report if you're not liable, BUT as a practical matter, you have to file to correct the record of information reports that make an equitable case that you do have liability.

If you rebut it and persist at it, you can get the IRS to back down,

So without any evidence other than hearsay, you are guilty until you prove yourself innocent?

[teamrican1]

In a scenario where gold is difficult to buy or sell would that mean that prices will go up or down?

Gold would not be difficult to buy. It would be difficult for non-wealthy Americans to buy. The world gold market, as well as people wealthy enough to make purchases overseas, would not be affected. So taking out a good chunk of the American market, we would expect spot gold price to go down. I imagine many of us in the States would shift to silver if it became impossible to buy gold confidentially, so silver would presumably go up.

[Peace&Freedom]

So without any evidence other than hearsay, you are guilty until you prove yourself innocent?

Yup, as per the IRS's Napoleonic system of adminstrative "determinations." Under legal due process sworn statements trump unsworn hearsay. But the IRS views an unsigned W-2, 1099, their computerized form letters, etc as the voice of God, while your sworn affidavit disputing the third party reports may be endlessly ignored, or designated as 'frivolous' if it includes a phrase they have 'determined' is such (without first establishing, with verified proof of claim, that you have a liability that makes you subject to their authority to make determinations). They use hearsay to 'prove' you are guilty/liable, then demand in their 'due process' procedures for you to prove you are not---that is, to prove a negative.

[lester1/2jr]

this will pull us out of a recession and help us win the war on terror!

[t0rnado]

This is like buying or selling stuff on Ebay or any other web site. You're apparently required to report it, but no one does.

[Original_Intent]

I expect the price to skyrocket as the deadline to the reporting date approaches.

I won't deal with any dealer that complies.

[Acala]

The future is in the underground economy

[Dr.3D]

So why did they just hit on bullion rather than the entire commodity market? Are they finally admitting that gold and silver are money?.

[Jordan]

So why did they just hit on bullion rather than the entire commodity market? Are they finally admitting that gold and silver are money?.

No, it applies to all transactions over $600, not just bullion.

[itshappening]

The margins are razor thin especially in the wholesale market, dealers will definitely have to increase commissions because they will need to employ someone to file the paperwork

it sucks and will hurt the industry

[itshappening]

I expect the price to skyrocket as the deadline to the reporting date approaches.

I won't deal with any dealer that complies.

Most of them will feel they will have to comply otherwise they can be shut down, some transact millions a year and they wont risk being shut down so will have to employ someone to help them

[Dr.3D]

No, it applies to all transactions over $600, not just bullion.

What? Every transaction on the commodity market that comes out over $600?

[Jordan]

What? Every transaction on the commodity market that comes out over $600?

Every business to business transaction of greater than $600 will require a 1099 form. That includes bullion dealers. Hell, that includes a small business that buys a printer and computer paper with a value greater than $600.

[Agorism]

If you get married and divorced there is then a record of it also. Someone now knows that you have it.

[KCIndy]

I wonder if the law would apply if I were to make, say... three $400 payments for my 1 oz of gold?


$400 payment up front

$400 payment

$400 payment to ship


Three separate transactions.

[WaltM]

What? Every transaction on the commodity market that comes out over $600?

if it doesn't, sales taxes, fees, shipping, handling costs would exceed the new tax they're proposing.

[WaltM]

I wonder if the law would apply if I were to make, say... three $400 payments for my 1 oz of gold?


$400 payment up front

$400 payment

$400 payment to ship


Three separate transactions.

most likely, yes.

It's a $1200 transaction, $400 installment plan is just a deferred payment.

[cindy25]

1) everything on ebay is via paypal, which leaves a paper trail.

2) cash transactions with local dealers, face to face, will not be covered by this in reality.

just as items at flea markets could be purchased sales tax free if no receipt was issued

[Dr.3D]

Every business to business transaction of greater than $600 will require a 1099 form. That includes bullion dealers. Hell, that includes a small business that buys a printer and computer paper with a value greater than $600.

So if a person buys 4 bars of silver on the NY COMEX, do they have to report that transaction or does it only get reported after the person demands delivery?

[WaltM]

1) everything on ebay is via paypal, which leaves a paper trail.

2) cash transactions with local dealers, face to face, will not be covered by this in reality.

just as items at flea markets could be purchased sales tax free if no receipt was issued

wait til you get underground informants.

[t0rnado]

1) everything on ebay is via paypal, which leaves a paper trail.

2) cash transactions with local dealers, face to face, will not be covered by this in reality.

just as items at flea markets could be purchased sales tax free if no receipt was issued

Not sure why the IRS hasn't subpoenaed PayPal yet, but most people who sell shit online don't pay taxes.

[Dr.3D]

wait til you get underground informants.

Seems like a good way for the informants to end up underground.

[cindy25]

http://boards.collectors-society.com/ubbthreads.php?ubb=showflat&Number=2717997

paypal is reported as of 2011.

but you should assume that any non-cash transaction is reported. if there is a receipt it can be reported

[qh4dotcom]

how the hell do you buy gold under $600???

Don't buy gold...buy silver

[TruckinMike]

//

[idirtify]

Seems like a good way for the informants to end up underground.

Yeah right. :rolleyes: Just like the users/pushers used to say about drug informants back in the 70s. Not only was it a bunch of hot air, nowadays there are literally more methhead “informants” than non-informants. But mind you that the modern “informant” actually only refers to a user/dealer/cook who is “in the system” (either “is only allowed to do meth in exchange for names and/or meth", or “is only allowed to make/sell meth with 'permission' from the local cop who is on the take – skims a percent from all sales").

[libertybrewcity]

I can't see this being much of a problem. Every time someone sells silver for any price you are supposed to pay taxes, but how many actually do besides the big sellers and companies?

[cindy25]

for silver, just a matter of split transactions. easy enough

but for gold even a half oz is over that.

and its another way to push small businesses out. not just coins but anything. fewer buyers mean less liquidity.

[Jordan]

I can't see this being much of a problem. Every time someone sells silver for any price you are supposed to pay taxes, but how many actually do besides the big sellers and companies?

Except its a total pain in the ass, as well as a documentation nightmare:

http://www.irs.gov/pub/irs-pdf/f1099msc.pdf

[WaltM]

Don't buy gold...buy silver

yikes, do you have any idea what you just hinted???

"they" (the government) are expecting by 2012, silver will be near $600 an ounce and nearly impossible to buy less than that!!

[WaltM]

for silver, just a matter of split transactions. easy enough

but for gold even a half oz is over that.

and its another way to push small businesses out. not just coins but anything. fewer buyers mean less liquidity.

if you need to cut gold into less than half an ounce, the insurance, handling other fees won't be worth the taxes you dodge.

[2young2vote]

So if I buy silver or gold from the local coin dealer or an online store, will I have to report any increase in value of my precious metals to the government as income? Seeing as how they would know how much I own it wouldn't be hard for them to figure out how much I am worth. Or do I not have to record it until I actually exchange my metals for dollars?

Does anyone think that this new law is a reason to buy silver or gold now rather than in 2012 or later?

[Dr.3D]

Am I wrong or did Obama just repeal this?

Small biz applauds 1099 repeal (http://www.crainsnewyork.com/article/20110420/SMALLBIZ/110429986)

New York entrepreneurs are breathing a collective sigh of relief after President Barack Obama's last week signed a bill to repeal a provision of the federal health care reform law. It would have required small business and real estate owners to file 1099 forms with the government for purchases of $600 or more.

[Bern]

Looks like you are correct:

http://www.govtrack.us/congress/bill.xpd?bill=h112-4

[Dr.3D]

I'm still trying to figure out why such a thing was in a "health" bill and how much other stuff was inserted in that huge thing.

[Bern]

So is Nancy Pelosi.

[Dr.3D]

So is Nancy Pelosi.

Well, she did say we would have to read it after it was passed to find out what is in it. The big problem there is, who has the time or money to spend on a team of attorneys to figure out what it does say.

[oyarde]

how the hell do you buy gold under $600???

Five dollar gold pc.'s , one tenth of an ounce.

[tangent4ronpaul]

Something no one brought up is that it is incredibly brain dead to write a dollar amount into law in a economic system with planned inflation.

$26 in 1910 bought what $600 buys today. Imagine having to fill out a 1099 every time you bought groceries of filled up the tank...

-t

[Revolution9]

I'm still trying to figure out why such a thing was in a "health" bill and how much other stuff was inserted in that huge thing.

It was backing for bonds from what I recollect and of course bond holders wanted collateral..hence the access to bank accounts and tax liabilities. To sum it up swiftly.

I did not pay this crap much mind. I am 54, have been medically trained, am a natural healer and the last time I visited a doctor was in 1987 for a physical my wife made me take. I was of course fit. So I should toss 14K USD per year away so some clown can eat mystery meaf microwaved tacos with cheese substance, smoke the worst pack tobacco and cheap liquor can take the limo of an ambulance twice a week to the hospital like a former neighbor of mine. Doctors killed my mother and fave uncle with pharmaceuticals. I owe the whole cabal NOTHING except a swift kick in the ass. That is ALL I will pay.

Rev9

[Fredom101]

The guy who I used to buy gold from when I had more money didn't keep track of anything, and had a computer from around 1986 with one of those green screens. I'm guessing he will not comply with this.

[TCE]

The guy who I used to buy gold from when I had more money didn't keep track of anything, and had a computer from around 1986 with one of those green screens. I'm guessing he will not comply with this.

It got repealed, so now nobody will have to.

[Dr.3D]

It got repealed, so now nobody will have to.

Might need a separate thread to let people know about that. Can't seem to get this thread title fixed to reflect that.