I had a very long conversation today with Raymond Gregson (retired IRS agent). He is the person writing the anti-money laundery rules and compliance forms for ICTA members.
All Bullion and all coins with values of 50% or more made up in Bullion value (example: generic Saints selling at $675 with Gold at $500) are considered bullion under the new Patriot Act law.
In a nutshell, the government is worried that terrorists would trade bullion to receive cash and use that money for unlawful purposes.
Major impact will be gold in grades of MS-63 and less. All of these coins sell for small premiums over melt, and are therefor considered bullion by the new standards.
Anyone buying-selling more than $50,000 per year is required to keep records of whom is buying and selling along with the quantity. If you were to walk into a shop or show, and buy two Saints at $675 each, that dealer is supposed to log that transaction and keep that record on hand.
Many dealers at the show are already doing this. It is going to be especially rough on the smaller dealers and shops, where many customers sell and buy across the counter.
There are rumors at the show of 2 dealers already under IRS investigation. This law just became active on Jan 1st. Now if the rumors are true, this is very serious for all involved. Buyers will also be affected if making large purchases. Even if this is done through multiple dealers.
According to Mr. Gregson, all dealers whether selling in mail order, internet, shows, or shops will be forced to comply.
Many CPA's and tax accountants are unable to write the new compliance proceedures, and this is making matters worse.
The IRS and Homeland Security both have jursidiction, and from all early indications, this is going to be a major priority with them.
I spoke with many dealers about this, and some are willing to run the risk, and not comply at this early date, but for me, it isn't worth the possible trouble.
The compliance forms are not cheap, and the paperwork will really be a pain in the butt. I have clients that are considering staying out of the "bullion" market simply to keep their names out of it. Many of them who used to purchase lower end material are now saving for better material. Once you pass the 50% margin, it is once again considered numismatic.
This new law refers to Gold, Silver, and Platinum. Luckily most of the Morgan and
Peace dollars exceed the 50% limit, but things like Silver Eagles are worrying quite a few people.
Just as an example, my firm is keeping the records of purchase at $1000.00 just to be safe.
The worst part of this, is one stupid end of the law. If someone calls on the phone and states that they have 100 generic gold coins in MS-63 and lower and wants to sell them. If the dealer is willing to make a bid on the material, they must be in compliance with the law. This is regardless of whether the deal actually goes through or not. By their willingness to agree to a purchase makes them liable.
I personally think that it will take a few months before the ripple effect reaches the average collector, but make no mistake that it will. If you make purchases of $1000 or more there will be records kept.
I also expect to see a handful of smaller dealers made to be scapegoats in this new era of terrorism. The days of easy transactions are over.
Bump for the stupid TIMED OUT error message
Posted 01/04/2006 12:35 pm
