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Huge Upcoming Tax Implications for Coin Sales Over $600

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biokemist6
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 Posted 06/30/2010  11:08 am Show Profile Check biokemist6's eBay Listings Bookmark this topic Add biokemist6 to your friends list Get a Link to this Message

$600 Sale? Get Ready for Tax Form
By David L. Ganz, Numismatic News
June 29, 2010


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.


ANA R-3151318
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 Posted 06/30/2010  11:48 am  Show Profile Check Libertad's eCrater Listings Bookmark this reply Add Libertad to your friends list Get a Link to this Reply
So do you think the IRS is trying to identify silver bugs?
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 Posted 06/30/2010  11:54 am  Show Profile Bookmark this reply Add jbuck to your friends list Get a Link to this Reply
Great.

Now there is a firm deadline for me to buy my key date coins!

When will they realize that the multi-billion dollar loophole is all of the earmarks, pork, and special considerations attached to every single piece of legislation?
Jbuck! ... Coin Collector since 1978 ... Learn about my new avatar and my old one.

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 Posted 06/30/2010  11:56 am  Show Profile Bookmark this reply Add fioti to your friends list Get a Link to this Reply
I sell in the name of a special needs trust:EXEMPT.
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 Posted 06/30/2010  12:23 pm  Show Profile Bookmark this reply Add steve199 to your friends list Get a Link to this Reply
Oh my, how crazy is that.


Quote:
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.


I believe this is a misinterpretation of the new law. An individual (who is not in the coin business), and who also spends more than $600 on coins at a certain dealer/store, will not have to issue a 1099 to the dealer. Just like I will not have to issue a 1099 to Wal-mart for all the groceries I bought that year. The law is not about coins/bullion...it is regarding *all* goods and services.
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 Posted 06/30/2010  12:43 pm  Show Profile Check macmercury's eBay Listings Bookmark this reply Add macmercury to your friends list Get a Link to this Reply
I knew I should saved all my receipts from those law makers.
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 Posted 06/30/2010  1:15 pm  Show Profile Bookmark this reply Add pls to your friends list Get a Link to this Reply
The IRS would definitely feel my "sense of outrage" if I paid my taxes with "Yap stone money" ...
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 Posted 06/30/2010  3:53 pm  Show Profile Check BadThad's eBay Listings Bookmark this reply Add BadThad to your friends list Get a Link to this Reply
Unbelievable! .....or I guess not...considering the lawmakers and President we currently have. TAX AND SPEND AND TAX SOME MORE. They are going to drive this country into the ground and send all our jobs overseas.

If this does survive, I wonder what the compliance rate will be? LOL
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 Posted 06/30/2010  4:02 pm  Show Profile Bookmark this reply Add nod2003 to your friends list Get a Link to this Reply
For cash transactions I would say the compliance rate will be the same rate as finding a real Seated dollar on eBay from a seller in China.
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 Posted 06/30/2010  4:42 pm  Show Profile Bookmark this reply Add jbuck to your friends list Get a Link to this Reply

Quote:
I wonder what the compliance rate will be?
I believe that the answer to your question and the question "What is the compliance rate for collecting proper sales tax on all transactions?" could probably be the same.
Jbuck! ... Coin Collector since 1978 ... Learn about my new avatar and my old one.

>>> Chicago Blackhawks - 2013 Stanley Cup Champions <<<

Did you know that our members sell on eBay and that there is a better way to search it?
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 Posted 06/30/2010  9:52 pm  Show Profile Bookmark this reply Add Billie to your friends list Get a Link to this Reply
Just wait til they start counting your employer provided health insurance as W-2 income, as in tax it. Coming in 2012.
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 Posted 07/01/2010  3:38 pm  Show Profile Bookmark this reply Add Namachieli to your friends list Get a Link to this Reply
You would think politicians would think about cutting expenses, not raising taxes...

Huh? Oh yea... forgot this was the USA.

Nevermind. : /
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 Posted 07/01/2010  6:01 pm  Show Profile Bookmark this reply Add RPT to your friends list Get a Link to this Reply
They just started adding a tax for people who use the tanning booths at the gym. I'm not sure how they came up with that one.
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 Posted 07/01/2010  6:35 pm  Show Profile Bookmark this reply Add coinguybrian to your friends list Get a Link to this Reply
Its probably going to be just as enforced as illegal downloading....it'll hurt big dealers somewhat, but regular people will likely take it about as seriously as speed limits...
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 Posted 07/01/2010  6:38 pm  Show Profile Check Libertad's eCrater Listings Bookmark this reply Add Libertad to your friends list Get a Link to this Reply
You think they'll tax taxes when there's nothing left to tax?
http://gtacoins.ecrater.com
Want to Buy or Trade: Nuevos Pesos Méxicanos UNC!: P95, P96, P97, P98, P99, P105a and P105b. :)
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 Posted 07/01/2010  7:01 pm  Show Profile Bookmark this reply Add acidic1 to your friends list Get a Link to this Reply
I see a lot of $599 dollar coins in my future.
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