why would a dealer want me to fill out a 1099 for a purchase?

drfish

Out of state b.m. dealer(that also sells on ebay since 2002 and thru a website) and I purchased 24- 1/2 oz collectible gold coins thru the website-four days later he refunded my paypal payment and he says he needs me to fill out a 1099 before the sale can proceed.Never had this happen before-potential scam?

Barndog

http://money.cnn.com/2010/05/21/smallbusiness/1099_deluge/index.htm?source=cnn_bin&hpt=Sbin

notwilight

Everything I've heard says that starts in 2012. I think he missed that part. --Jerry

291fifth

He is probably just being cautious.

DuPapa

He is mistaken...
You are paying him. He is receiving the money and is the one that should get the 1099.

PerryHall

<< <i>He is mistaken...
You are paying him. He is receiving the money and is the one that should get the 1099. >>



Agree. Ask him for his SSN so that you can send him a 1099. Let us know how he reacts.

UtahCoin

I'm trying to picture walking the brouse at a major coin show, cash to buy in one hand, and a stack of 1099-K's in the other....

Me: "Nice coin, would you take $700 for it?"
Seller: "Yes, I can do $700"
Me: "Great! I'll just need your complete name and address, tax payer ID or Social Security number, and a copy of your Drivers License and I'll get started on your 1099-K"
Seller: "Ahhhh, never mind, I really don't want to sell it..."

OPA

Another clusterfork created by the Fed's .... when this "law" becomes effective, it's going to create total chaos.

PerryHall

<< <i>Another clusterfork created by the Fed's .... when this "law" becomes effective, it's going to create total chaos. >>



Can you be a little more specific as to who is responsible?

BigRick

Agreed. If YOU are paying HIM there is no need for HIM to get a 1099 on YOU. He is mistaken.

ModCrewman

Could his inquiry have more to do with the anti-money laundering provisions? I'm a little bit familiar with those requirements, and would think that is more the line he's on. But if you were trying to launder drug money or something like that converting it to bullion would be a pretty good method to turn it into a liquid asset that would be easily transferrable.

IRS Publication 1544 talks about what types of cash transactions need to be reported.

hammered54

you just say thank you and move along, there are plenty of others that will deal with you in a less intrusive way.

TwoSides2aCoin

Some dealers are weird. I had one cancel my order of pandas because I have "coin" in my name.
Gee , maybe I should have started a barber shop.

ziggy29

<< <i>Out of state b.m. dealer(that also sells on ebay since 2002 and thru a website) and I purchased 24- 1/2 oz collectible gold coins thru the website-four days later he refunded my paypal payment and he says he needs me to fill out a 1099 before the sale can proceed.Never had this happen before-potential scam? >>


That's 12 ounces of gold, and thus the sale price would be over $10,000. That has special IRS reporting requirements for cash transactions over that amount. It might have something to do with that.

[Edit to add: Looking at the IRS web site, it looks like a Form 8300 should be used, not a 1099.]

ttown

<< <i>Could his inquiry have more to do with the anti-money laundering provisions? I'm a little bit familiar with those requirements, and would think that is more the line he's on. But if you were trying to launder drug money or something like that converting it to bullion would be a pretty good method to turn it into a liquid asset that would be easily transferrable.

IRS Publication 1544 talks about what types of cash transactions need to be reported. >>



Maybe PayPal is considered a cash transaction. I'm not sure what the form is but any transaction that exceeds $9,000ish has to be reported to prevent money laundering.

ziggy29

<< <i>Maybe PayPal is considered a cash transaction. >>

If it's a payment from a bank account, it's a cash transaction. If it came from a credit card (unlikely in this type of transaction), it wouldn't be.

2manycoins2fewfunds

I always found it odd that you could buy $100,000+ in gold, silver and platinum direct from the US Mint with no paper work at same time another branch of treasury was trying to crack down and track purchases of over $10,000

drfish

Form 8300 is the money laundering form (cash transaction) This was paid by paypal with a credit card so money laundering shouldn't be an issue......These are some low mintage spouses at a decent price otherwise I would have already passed on the sale.

notwilight

<< <i>Form 8300 is the money laundering form (cash transaction) This was paid by paypal with a credit card so money laundering shouldn't be an issue......These are some low mintage spouses at a decent price otherwise I would have already passed on the sale. >>


Have you called him and gotten his understanding of the issue? --Jerry

drfish

Yes I called and the dealer claims that any sale over $1000 requires a 1099.When I told him that I couldn't find any references on line to back that up he said it was required by Mass to prevent money laundering by terrorists(kind of odd)?He says the form is in the mail.My accountant is also stumped-only thing he could come up with was a 1099b to cover the dealer's a** if he considered the coins bullion rather than collectible.At this point I'll see what form I get.Do you guys see any potential scams?I'm hoping the dealer is just misinformed

sinin1

call him up and say you are filling out the 1099

he requested and ask him what he wants to you to put down on the form for his name and SS# or business tax id#?

and does he want the form with payment?

pf70collector

ziggy29

<< <i>Yes I called and the dealer claims that any sale over $1000 requires a 1099.When I told him that I couldn't find any references on line to back that up he said it was required by Mass to prevent money laundering by terrorists(kind of odd)?He says the form is in the mail.My accountant is also stumped-only thing he could come up with was a 1099b to cover the dealer's a** if he considered the coins bullion rather than collectible.At this point I'll see what form I get.Do you guys see any potential scams?I'm hoping the dealer is just misinformed >>

He's clueless. First of all, the right form concerning money laundering (for whatever reason -- terrorism, drug dealing, whatever) -- is 8300, not a 1099. Second of all, the threshold that triggers a reporting requirement is $10,000 -- not $1,000. (Though a moot point in this case, since 12 ounces of gold sell for more than $10K anyway.)

Unless there's something peculiar about him receiving PayPal payments that were paid with a credit card that require it be treated like cash for IRS reporting purposes (unusual that a bullion seller would take a credit card / PayPal hit unless they charged a 2-3% fee for it), paying with a credit card shouldn't trigger the reporting requirements.

I think this dealer/seller is probably engaging in CYA and is misunderstanding the laws. That's how it sounds to me. Either he doesn't understand *existing* laws about money laundering or he's already acting on requirements that don't kick in until 2012 (and even then, the threshold is $600, not $1000).

timcoin

Just one more reason to abolish the income tax with a consumption based fair tax. Honestly, life is too damn short to have to be constantly filling out forms and sending to big brother.

truthteller

Patriot Act requirements are specific. A 8300 form must be generated for any cash, cashlike or cash instrument transactions for the amount of $10,000 or any transaction structured within a calender year of payments totallying $10,000. A dealer must file a 1099 for specific bullion transactions such as a quantity of k-Rands( I believe 25 or more) and $1000 bags of 90% US coinage. The 1099's are old carryover laws that dealers must comply.

The Patriot Act affects your bank accounts also. The threshold for most banks is $3000 cash when banks start to monitor your account. If you deposit $10,000 cash in increments or withdraw the same, with a certain period, the bank eventually will require you to fill out forms.



TRUTH

johnny9434

ya know its simply amazing what were gonna have to do. so much for makeing life a tad bit easier

mumu

Small steps that lead to socialism.

Cladiator

From BD's link...

"All business payments or purchases that exceed $600 in a calendar year will need to be accompanied by a 1099 filing. That means obtaining the taxpayer ID number of the individual or corporation you're making the payment to -- even if it's a giant retailer like Staples or Best Buy -- at the time of the transaction, or else facing IRS penalties."


Does this apply to a non-business individual as well? If I, as a collector...not any kind of business, buy or sell coins over $600 (or any other type of item for that matter) will I have to send in the forms?

TwoSides2aCoin

Maybe he knew you posted here and thought he could get free advertising

ModCrewman

<< <i>From BD's link...

"All business payments or purchases that exceed $600 in a calendar year will need to be accompanied by a 1099 filing. That means obtaining the taxpayer ID number of the individual or corporation you're making the payment to -- even if it's a giant retailer like Staples or Best Buy -- at the time of the transaction, or else facing IRS penalties."

Does this apply to a non-business individual as well? If I, as a collector...not any kind of business, buy or sell coins over $600 (or any other type of item for that matter) will I have to send in the forms? >>


No...only payments made in conjunction with a business are reportable. You buying product from XYZ retailer isn't reportable unless in conjunction with your business.

tahoe98

<< <i>Another clusterfork created by the Fed's .... when this "law" becomes effective, it's going to create total chaos. >>



...i truly don't think they care! that's this administration's MO!

tahoe98

<< <i>call him up and say you are filling out the 1099

he requested and ask him what he wants to you to put down on the form for his name and SS# or business tax id#?

and does he want the form with payment? >>



...

truthteller

<< <i>From BD's link...

"All business payments or purchases that exceed $600 in a calendar year will need to be accompanied by a 1099 filing. That means obtaining the taxpayer ID number of the individual or corporation you're making the payment to -- even if it's a giant retailer like Staples or Best Buy -- at the time of the transaction, or else facing IRS penalties."


Does this apply to a non-business individual as well? If I, as a collector...not any kind of business, buy or sell coins over $600 (or any other type of item for that matter) will I have to send in the forms? >>




If I understand the requirements correctly, this will mean that every transaction at a coin show or coin shop dealer to dealer will be a required 1099 filing. This will be the death of the coin industry. I rarely see a dealer to dealer transaction UNDER $600, and one one K-rand sale will require this paperwork. And I KNOW this will be inforced since at large coin shows, the feds and state make the rounds making sure dealers are in compliance with patriot act and state tax provisions, especially in CA.

Now, I'm sure the auction houses will have a devil of a time sorting this out. Expect buyers premiums to go to 40%




TRUTH

Smittys

Not every transaction.
The entire amount per year if over 600.00 could be 1000 transactions.


I personally never seeing it enforced, way way to much bookkeeping.
Will be a great audit tool though

roadrunner

No...only payments made in conjunction with a business are reportable. You buying product from XYZ retailer isn't reportable unless in conjunction with your business.

What truthteller mentioned about the Patriot Act 2 law is my general understanding as well. It doesn't matter if you are a dealer, collector, or investor. It just comes down to the cash/cash-like transaction. To satisfy the requirements of PA2 the selling dealer needs to keep track of their annual bullionesque transactions and ensure they aren't being made by money-laundering terrorists. That requires a little more due diligence than asking for a name, and nodding acceptance when they say "Lucas Skywalker." If the business transacts over the $50,000 threshold per year (sum of all sources) they need to have records to show due diligence. So a record of this $10K transaction certainly makes sense. I believe bank checks, traveler's checks, and wire transfers also count as cash-like transactions.

Then again, I always figured anyone wanting to launder money could use the cash to buy regular numismatic coins. Then later on they could use those numismatic coins to trade for gold bullion via a different dealer. There would be no reporting requirements that I can see as cash was never directly exchanged for bullion. And the money still gets turned into bullion.

roadrunner

Wolf359

<< <i>I always found it odd that you could buy $100,000+ in gold, silver and platinum direct from the US Mint with no paper work at same time another branch of treasury was trying to crack down and track purchases of over $10,000 >>



The rules only apply to the little people.

EagleEye

if it is 6 oz of gold (12 X 1/2 oz), the amount should be under $10K (abt. $8K). I think the dealer is trying to get you to pay with a certified check. Why he has to bring up a 1099, I don't know, but buying bullion with paypal? I wouldn't sell to you either.

pennyannie

<< <i>Just one more reason to abolish the income tax with a consumption based fair tax. Honestly, life is too damn short to have to be constantly filling out forms and sending to big brother. >>



LOL, A lot of small stores would be in favor of collecting that tax as extra profit for them. They can add it to the 8 plus percent they fail to send the correct amount into the government.

Actually i would be in favor of that

To the OP in this, why not just break the sale up into smaller groups of 2500 or so, instead of putting all the liability into 1 transaction? That 10k form BS is a pain in the .... 10k just not buy that much anymore.

drfish

I originally purchased the coins off his website and paid with paypal as that was one of the website's options for payment.The coins are first spouse gold so some might argue these are collectibles-not bullion-they are priced at collectible premiums.The whole 1099 issue arose when I contacted the seller and asked him to remove the sales tax when I found that the dealers state exempts sales tax on coins/bullion transactions over $1000.Thats when he canceled the paypal payments-told me he would hold the coins,mail a 1099 and when he had that back completed he would send a new paypal invoice without sales tax.Since the dealer claims he's required to get a 1099 for any sale over $1000(not $10000)there would be no benefit to multiple small sales.If the dealer wouldn't accept paypal - there is no way I would send this guy a check for $16000+.

mrearlygold

It would be great to hear from the dealer on this and mumu,wake up, we're already there and have been for quite some time.

BAJJERFAN

<< <i>

<< <i>Maybe PayPal is considered a cash transaction. >>

If it's a payment from a bank account, it's a cash transaction. If it came from a credit card (unlikely in this type of transaction), it wouldn't be. >>



But unless it is green money cash, it is not really a cash transaction since THERE IS A PAPER TRAIL. You would be on the hook if they audited your bank or paypal accounts. If you paid with C notes at a show, there is no paper trail.

EagleEye

Drfish,

Thanks for clarifying the details. It seems the dealer is just trying to protect himself from having to not collect state sales tax. I still don't see why he needs a 1099, I guess to show that you are in fact out-of-state. I doubt this falls under Federal guidelines.

coindeuce

It does appear from the OP's clarification of the dealer's response, that the dealer panicked when asked to delete the MA. sales tax from the invoice, which the OP is entitled to request for a bullion purchase that exceeds $1,000 (with MA. as the point of sale). All that the dealer is actually obligated to have on file presently for the purpose of satisfying both the state and federal requirements is a valid form of ID from the OP, such as a state driver's license number or U.S. Passport number. The OP's electronic transfer of funds via Paypal is NOT considered a cash transaction requiring Federal form 8300.

MsMorrisine

1099 is a Federal Form

Why would a State Law require filing a Federal Form ?

Barry

<< <i>1099 is a Federal Form

Why would a State Law require filing a Federal Form ? >>


For the same reason many state require including copies of W2s and form 1040, both of which are federal forms, with their state forms.

As already stated above many times. the dealer is clueless. On one hand, the feds say to protect your SSN to avoid identity theft. OTOH, they want use to give it to every vendor we buy from (or will, in 2012, if the law doesn't change).

BTW, the 10K limit for a CTR is for cash. A check or credit card purchase is not cash and isn't reportable. The 3K limit is for a SAR (suspicious activity report), which is done by banks if they suspect funny business with a cash transaction.

roadrunner

The coins are first spouse gold so some might argue these are collectibles-not bullion-they are priced at collectible premiums.

For PA2 reporting compliance, "bullion" is defined as anything that gets 50% or more of its market value from the intrinsic metal. Hence, even an MS65 Saint priced around $2000-$2200 today, would be considered "bullion" to dept of Homeland Security. It's also a moving target with the price of gold which muddles the view as well.

roadrunner

truthteller

To the OP in this, why not just break the sale up into smaller groups of 2500 or so, instead of putting all the liability into 1 transaction?


This is considered a structured payment IN ORDER TO CIRCUMVENT the $10K reporting law as well as the Patriot Act. If caught, this type of transaction would likely land you in prison. Seriously.

The Feds are cracking down on this stuff. It's no longer, "they won't enforce it". The Feds will set you up at coin shows, either as a buyer or seller, and crack your nuts.





TRUTH

golfer72

Another example of our govt ramming laws thru without much thought on the consequences. You can thaink GWB for the Patriot Act which pretty much gives the Prez authority to whatever the hell he wants in the name of fighting terrorism. Unreal.

TwoSides2aCoin

The thread shines the light on the ignorance of some businessmen and the paranoia of some people

jmski52

It always seems to be the legitimate businesses that suffer, and the legitimate taxpayers that get penalized. This is just more paperwork and closer scrutiny of your daily lives. I'm guessing that the jerks who created this stuff wouldn't stand up to the same tests.

BillJones

To file this thing, I think he wants your Social Security number. Don't give it to him. I smell a scam.