ICTA Opposes Bill That Would Force Coin Dealers To Collect Sales Taxes For Other States
EagleEye
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“We’re not dealing with $300 gold anymore,” Piret said. “It doesn’t take a whole lot to reach that $1 million threshold in sales.”
ICTA considers any sales tax on products such as gold coins to be inappropriate anyway since they are bought as investments.
“It doesn’t take a rocket scientist to know this is an investment product,” she said. “Just read the business section of your local newspaper and you’ll usually see quotes on the spot price of gold. To the best of my knowledge, coins and precious metals are the only products accepted for IRAs (individual retirement accounts) that are potentially subject to state sales tax.”
The tax makes it harder for an investor to earn a profit. A frequent sales tax rate in the U.S. is 7%, Piret said. The 7% tax on $1,350 gold would increase the price by $94.50 an ounce.
“Gold would have to go up $94.50 just for you to get to a break-even point on your investment, to cover the cost of the tax,” Piret said.
“Say you added that to Microsoft shares of stock. That’s unthinkable, right?”
“We’re not dealing with $300 gold anymore,” Piret said. “It doesn’t take a whole lot to reach that $1 million threshold in sales.”
ICTA considers any sales tax on products such as gold coins to be inappropriate anyway since they are bought as investments.
“It doesn’t take a rocket scientist to know this is an investment product,” she said. “Just read the business section of your local newspaper and you’ll usually see quotes on the spot price of gold. To the best of my knowledge, coins and precious metals are the only products accepted for IRAs (individual retirement accounts) that are potentially subject to state sales tax.”
The tax makes it harder for an investor to earn a profit. A frequent sales tax rate in the U.S. is 7%, Piret said. The 7% tax on $1,350 gold would increase the price by $94.50 an ounce.
“Gold would have to go up $94.50 just for you to get to a break-even point on your investment, to cover the cost of the tax,” Piret said.
“Say you added that to Microsoft shares of stock. That’s unthinkable, right?”
Rick Snow, Eagle Eye Rare Coins, Inc.Check out my new web site:
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<< <i>Wow...That is ridiculous.... what a monstrosity..... looks like free enterprise is systematically being squashed. Cheers, RickO >>
Looks to me like they are out to quash metals, coin, bullion sales, etc.
Keep in mind that businesses in one state do not fall under the taxing authority of another state. It will take a federal mandate to impose the collection system. One could argue that this is a state's right issue and the feds have no jursidication.
This is a push by the large store front retailers who have to collect taxes to level the playing field with their on line competition who can sell at a lower bottom line price with not taxes.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
<< <i>unfortunately the sales tax is already there (except in states that exempt) on all out of state purchases on all items. It's just not being paid by the buyer to his home state as required. Opponents need to understand this is not a new tax, just a new way of ensuring an existing tax gets paid. Since state tax agencies fail at getting buyers to pay it on out of state purchases (mail order, over the telephone or the internet), they are turning to the sellers to collect it for them. >>
Technically, it's a called a "use" tax. If someone in Wisconsin buys a product from a seller in Illinois, the Illinois seller is not required to collect sales tax. However, the Wisconsin purchaser is supposed to pay "use" tax on the item (equivalent in amount to the Wisconsin sales tax). Yes, many people are shirking this, but the solution is not to impose the massive paperwork headache on sellers. Many states already ask people point-blank on their state tax returns to identify how much $$ they spent on out-of-state retail purchases. That way the "use tax" can captured.
Because the "use" tax is determined by the amount of what would be the home state sales tax it is commonly referred to as a sales tax. But you are correct. Technically it is called a use tax because the home state collecting has no authorization to collect sales tax for purchases in another state. Wonder how long before we see a use tax on property brought into a state by a new state resident?
New store policy: "We ship only to states that charge no state sales tax on similarly purchased items. While we could collect your state's taxes from you, we would still have to eat the bill on the massive record keeping effort to satisfy each state involved."
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
Sadly the sellers don't have such choices. They will be forced to navigate the rules of the 50 States.
I recall that Amazon dropped their opposition to collecting cross border sales taxes since they expected to make money selling software to small vendors to collect, assign and remit sales taxes.
If sellers are forced to collect taxes for other States we might expect less formal sales methods to flourish - like our BST here.
https://www.pcgs.com/setregistry/gold/liberty-head-2-1-gold-major-sets/liberty-head-2-1-gold-basic-set-circulation-strikes-1840-1907-cac/alltimeset/268163
<< <i>
If sellers are forced to collect taxes for other States we might expect less formal sales methods to flourish - like our BST here. >>
This doesn't relieve you of your obligation to pay the tax if your state doesn't exempt it. Seems likely that more sales would be CIP with a seller wanting a portion of the savings.
<< <i>I believe this is just one piece of the Democrats' larger bill to force all retailers to collect sales taxes on out-of-state purchases (even in states in which they have no physical presence). Ridiculous. I have a small business, and collecting and remitting sales tax in just one state, Illinois, on a monthly basis is a pain in the neck. Imagine doing that for 50 states. More red tape, regulation, taxes, and expenses. And then the politicians wonder why the economy sucks. >>
Can't you simply keep 5% or whatever to cover your expenses?
<< <i>
<< <i>
If sellers are forced to collect taxes for other States we might expect less formal sales methods to flourish - like our BST here. >>
This doesn't relieve you of your obligation to pay the tax if your state doesn't exempt it. Seems likely that more sales would be CIP with a seller want a portion of the savings. >>
You are quite right and I expect to see more sales through less formal methods like the BST.
Fortunately my State does not levy sales tax on coin or bullion sales. The collective lobbying effort of our coin and bullion community that flooded the State legislators and Governor in 2010 was impressive.
https://www.pcgs.com/setregistry/gold/liberty-head-2-1-gold-major-sets/liberty-head-2-1-gold-basic-set-circulation-strikes-1840-1907-cac/alltimeset/268163
Below is obviously my own fiction but can't you see this happening?
First they create a problem: Retailers / small businesses you must collect taxes for each and every state, where applicable, that you complete a transaction with an individual.
Then they wait for the resistance, disapproval & complaints: Retailers / small businesses express dismay over the logistical nightmare and increased operating costs to ensure compliance to the proposed legislation.
Then like heroes they come to the rescue with a more palatable solution that still accomplishes the original goal: Due to the complexities involved in having retailers across the country deal with a myriad of state tax language Congress has stepped in to provide relief to small business owners. Congress will now implement the "Small Business Fairness Act" which will allow all retailers across the country, regardless of the State they reside in, to pay one uniform tax code when conducting online commerce. This new VAT (value added tax) will be paid to the Federal Government and then redistributed to the States in an efficient and economically fair manner. We thank Congress for their support of small business and their visionary solution to this problem.
JC
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<< <i>I can just see congress announcing that they will solve this dilemma for us all.
Below is obviously my own fiction but can't you see this happening?
First they create a problem: Retailers / small businesses you must collect taxes for each and every state, where applicable, that you complete a transaction with an individual.
Then they wait for the resistance, disapproval & complaints: Retailers / small businesses express dismay over the logistical nightmare and increased operating costs to ensure compliance to the proposed legislation.
Then like heroes they come to the rescue with a more palatable solution that still accomplishes the original goal: Due to the complexities involved in having retailers across the country deal with a myriad of state tax language Congress has stepped in to provide relief to small business owners. Congress will now implement the "Small Business Fairness Act" which will allow all retailers across the country, regardless of the State they reside in, to pay one uniform tax code when conducting online commerce. This new VAT (value added tax) will be paid to the Federal Government and then redistributed to the States in an efficient and economically fair manner. We thank Congress for their support of small business and their visionary solution to this problem.
JC >>
You wrote that quite well, JC, and yes, I could definitely see that kind of scenario unfolding.
Its the reporting problem I have with it. Currently, ever month I have to break down the NC sales into 100 different counties. Usually there is only 4-6 counties per month where a transaction takes place, but can you imagine if I had to break down all 50 states and figure the taxes independently, then if some states elect to break down like NC does, it would be a big time consuming night mare.
VAT.
Knowledge is the enemy of fear
<< <i>Coming soon....
VAT. >>
Sure. The House Republicans just shut down the federal government in an attempt to shrink government, and now they're going to impose a huge new tax increases? Right...
The whole idea of the cross-border collection of sales tax was pushed by Amazon who holds the copyright on the software need to make it work. It is hardly pushed for or favored by any particular political party. It is favored by many State Governors as "revenue enhancement" regardless of whether they are Republican or Democratic.
Exactly.
<< <i>Everyone opposes "bills" that increase taxes except those writing the bills. >>
Bill doesn't increase taxes. It does make businesses collect taxes for the states (at great expense to the business) since the states themselves have failed to enforce existing tax law.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
WalMart, Target, Staples, etc. see this as a way to increase their sales an build more
online business with a level playing field.
States, counties and cities need more revenue. This is pretty painless.
There should't be tax on coins. In NY the exemptions are so confusing
the sellers that do charge tax impose the tax on everything.
As was stated in the article, it would be considered preposterous to require investors to pay sales/use tax on shares of Apple or Google.
Yes, you will pay a dividend tax on stocks that pay out a dividend and you will also pay capitol gains taxes from any gains earned on those stocks you sell but those taxes are on the newly generated money not the actual instrument itself, not the (virtual) stock certificate.
I thought the ICTA had a valid argument, that taxing the PM's would hamper those investing in PM's from achieving a profit.
I'm not certain about specific tax language but aren't the sale of certain larger sized bullion bars reportable for tax purposes currently via a 1099B from the dealer/buyer.
It seems that you would have to: Pay the premium over melt, pay the sales tax, pay the tax on any gains earned while holding the PM's upon sale via the 1099B and then there is also the potential for two-way shipping costs and costs associated with storing those PM's. That is quite a bit to overcome before any profits could be realized.
JC
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Charles IV Album
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Spanish Colonial Pillar Set
<< <i>
<< <i>Coming soon....
VAT. >>
Sure. The House Republicans just shut down the federal government in an attempt to shrink government, and now they're going to impose a huge new tax increases? Right... >>
Yup. But it will be disguised as a reduction in taxes--that is the number of different taxes. All will be rolled into one big tax. And it is coming.
Knowledge is the enemy of fear
My reply: "Well Bill, if you insist on continuing to give me reasons to vote for the other party I will do so. $1M floor is just a starter to get the door open, it will eventually affect the small time seller who will have to close shop because of the paperwork overhead. Another example of government agencies having citizens do the job of the agency at the expense of the citizen. How long before we have to do your job? You guys are so out of touch with the real world, how do you ever fit back in?"
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
<< <i>Took the time to write my reps. Got the first reply today from Sen. Nelson who told me he supported the legislation and how it would only affect the $1M plus on-line sellers.
My reply: "Well Bill, if you insist on continuing to give me reasons to vote for the other party I will do so. $1M floor is just a starter to get the door open, it will eventually affect the small time seller who will have to close shop because of the paperwork overhead. Another example of government agencies having citizens do the job of the agency at the expense of the citizen. How long before we have to do your job? You guys are so out of touch with the real world, how do you ever fit back in?" >>
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