Enough is Enough, lawsuit filed! - Coinweek podcast link included
Tomthecoinguy
Posts: 849 ✭✭✭✭
Many of you on this board have seen me complain about the Draconian Minnesota Coin Bullion Dealer law. It has really disrupted the hobby in Minnesota and caused a lot of dealers to stop doing business here. I have not just been complaining, I have also been working with a lawyer behind the scenes on a lawsuit in the hopes of getting the Federal courts to declare the law unconstitutional. The plaintiffs are Myself, Treasure Island Coins, and the Numismatist United Legal Defense (NULD), NULD is a new organization designed to defend the rights of Coin Collectors and Hobbyists. It is also possible we may be adding new plaintiffs in the future.
The filing is attached below, and here is a link.
Here is a link to a recording of the Virtual Press Conference we had on Tuesday, the day we filed. The recording only had the organizers video, so I added some still pictures to help show who was talking.
The lawyer has agreed to take the case on contingency, since it is considered a Civil Rights case. However, we have setup a fundraising page to cover other costs such as a PR consultant (studies show this leads to better outcomes in court) and expert witnesses. I don't want to post the link here, because I am not sure if that is against the rules of the forum or not. There is a link to the page in the description of the YouTube video.
Edited to add the following layperson summary of the lawsuit:
The lawsuit is a Civil Rights lawsuit, the state of Minnesota violated our Civil Rights by passing a law that violated our Constitutional rights. Being a Civil rights lawsuit is key to this moving forward, since winning a Civil Rights lawsuit means the State of Minnesota is responsible for the legal fees. That is why my lawyer is willing to take this case on contingency, although there are other expenses such as the PR rep and expert witnesses.
The Minnesota law violates three different constitutional principles. It violates the Dormant Commerce Clause, it is Void for Vagueness, and it is preempted by existing federal law.
The Dormant Commerce Clause: The Constitution gives the Federal government the responsibility to regulate the commerce between the states. The Dormant Commerce Clause, is the principle that a state cannot create laws that put an undue burden on interstate Commerce, or act as a tariff to protect their citizens from out of state competition. There are three different parts of this in our case, and a different balancing test is used for each of them.
The first Dormant Commerce Clause issue is that the impact on out of state commerce is so big that it outways any legitimate interest the state interest. In this section of the suit we explain what a huge impact the law has had on interstate commerce. The fact that a lot of dealers have refused to do business with MN customers, will be really strong evidence in our favor.
The second Dormant Commerce Clause issue is if a law directly discriminates against out of state competition, it is almost always struck down, it would have to be really narrowly tailored to address a legitimate state interest to survive. Part of the law exempts in state trade shows if you do 12 or less, but does not exempt out of state trade shows. This is a really bad error when the legislature wrote the law, they clearly didn't understand the Constitution when they did this.
The third Dormant Commerce Clause issue with the law is that a state is not allowed to regulate a transaction that happens totally outside of its boarders. This happens in a couple of ways with this law. If you are a Minnesota resident you have to register even if you only do transactions outside of the state. Say I (a MN resident) just did transactions at out of state trade shows, the law says I would have to register, but MN cannot regulate a transaction that happens totally outside of it's boards. Also, if you are an out of state dealer and sell to one MN Customer you need to register if your total sales and purchases (not just your MN sales) are over $25,000. Because of the way they do this, it creates a disincentive to transactions that are occurring totally outside of MN. Similarly there is a sliding scale on the surety bond, and your out of MN transaction counts towards that scale, so if you increase your sales that occurred outside of MN your bond requirement under the MN law goes up. So they are disincentivizing out of state transactions. The case law is really good for us on this, the courts will strike down a law if it has this type of affect on transactions, even if the law did not intend this affect.
The next Principle listed in my lawsuit is Void for Vagueness. If a law is written so poorly that a person cannot tell what they can or cannot do it is a violation of your Due Process rights. You have to have fair notice that what you are doing is illegal. This law is void for vagueness because of the poor way it is written, especially in some of the key terms that it fails to define. For example, it only regulates transactions with "consumer", but it does not define what that means. The dictionary defines "consumer" as someone that buys something for personal use. The law regulates buying and selling from a consumer, but with that definition how can you buy from a consumer? It also fails to define other key terms like "wholesale." The law is so poorly written it is just a mess.
The third and final principle is that it is preempted by existing federal legislation. This point might be the most interest to a numismatist, because it deals in part on the whole meaning of a legal tender coin. Federal law is supreme, so if a state law interferes with the objectives of a Federal law, it is void.
The MN law regulates coins that the Federal Government has defined as Legal Tender. The MN law makes no exception for coins traded at face value, so the state says that it could ban someone (refuse to give them a license) from spending a pre '64 quarter, and perhaps even copper cent. Also, the Federal government passed a Federal law, saying the mint needs to maximize the number of dealers that are available to sell their bullion coins. The MN law is a pretty clear impediment to this goal. The MN law also regulates purchase and sales in IRAs, and the Federal IRA law specifically authorizes precious metals investments.
Let me know if you have any questions about the this summary, I would be happy to clarify anything.
For those wanting to contribute:
Join the non-profit go fund me fight against Minnesota's unjust coin dealer tax law. Suggest forum members donating to the cause put their forum name in the donation form "first name" block to show our solidarity on this issue
My lawsuit was featured in the Coinweek podcast, you can listen to it here:
https://coinweek.com/coinweek-podcast/coinweek-podcast-142-a-challenge-to-the-minnesota-coin-law/
Comments
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I get errors on each of these links.
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They worked for me earlier, now they don't either.
Can you quickly summarize the law you’re hoping to change for those of us who are interested, but too lazy to look up old threads?
I attached the document for the filing, and I corrected the link for the youtube video.
Join the fight against Minnesota's unjust coin dealer tax law.
Best of luck on the outcome.
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I wish you all the luck in the world. It’s a stupid law.
Looks like both links are fixed now, thank you to those that pointed out the problem.
Join the fight against Minnesota's unjust coin dealer tax law.
Good luck. I hope that common sense prevails.
the links stinks, nothing there
I just tried all three, the link to PDF, the youtube video, and the attached PDF, and they all worked for me. Are you looking in the original post? I will send them to you over PM and see if that helps.
Join the fight against Minnesota's unjust coin dealer tax law.
Good luck and I hope you get some traction on this. Very unfair how MN is treating coin dealers.
Collector, occasional seller
poof?
I would hope our host would support such and effort.
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Good luck on your suit. I hope you are successful.
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Summary
Law on silver... Blahhh blahhh blahhh... He and his group don't like the law... He got a lawyer to file a lawsuit... He hopes to win lawsuit and change the law.... Blahhh blahhh blahhhh
Good luck
Are you familiar with the current law and how it has affected the industry? If so, I don’t understand your attitude. And even if you are well versed on it, there’s no need to be rude about it.
Mark Feld* of Heritage Auctions*Unless otherwise noted, my posts here represent my personal opinions.
Can there just be a quick summary what the issue is? I appreciate that the filing is attached but it can be overwhelming for those that don't read such things.
Made it through about 10min of the video. What a dumb law. Good luck on the suit!
I certainly wasn't rude nor had an attitude. Someone wanted a summary and I filled in the unnecessary details with blahhhh blahhh blahhhh.
My summary was pretty spot on though.
If you want real specific details, click the link.
https://www.ictaonline.org/index.php?option=com_content&view=article&id=170:minnesota-law-targeting-coin-dealers-gets-amended&catid=26:news&Itemid=128
Thank you. Apparently, I misunderstood your “Blahhh blahhh blahhhh.”
Mark Feld* of Heritage Auctions*Unless otherwise noted, my posts here represent my personal opinions.
This should not go poof. This is a serious issue impacting all coin business in Minnesota. And even more serious if other states would adopt what MN did
I don’t think there’s any good reason why it should or would. And I believe it was ill advised for the person (who, In effect, raised that possibility) to have done so.
Mark Feld* of Heritage Auctions*Unless otherwise noted, my posts here represent my personal opinions.
You make an excellent point, I think I might have some time later tonight to write up a summary. I think it would be really helpful to a board discussion. I have been knee deep in this for so long it is all second nature to me.
Join the fight against Minnesota's unjust coin dealer tax law.
I would contact Senator Amy Klobuchar to see if she can help.
This does not just affect dealers, it affects me as an individual collector as well. There are some dealer websites, outside of Minnesota, that block my ability to buy coins direct. This is irrespective of the the price of purchase. If I attempt to make a purchase it will not allow the transaction without a bullion certificate number. I cant buy coins I want, the dealers from outside Minnesota cant sell them to me. So this already has an indirect impact beyond our state.
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The law in Minnesota is a big deal and disrupts the sale of coins in the state. Im sorry to see that your lack of intellectual curiosity prevents you from digesting the issue
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City and State Governments are hurting for $$ all over the nation because of the pandemic - - I don't think you're going to get a Democratic-Labor-Farmer party Senator to help on passing up tax revenue.
Can someone remind me why collectible coins (not bullion) should be exempt from sales tax??
The Minnesota law being discussed is not whether sales tax should be applied to coins.
It created a series of regulations and requirements for dealers if they sold a single coin/bullion to a MN resident (even a transaction occurring outside the state). The original law was incredibly onerous and the revised version is still a hassle in my opinion. It appears dealers agree given many have or at least used to have terms on their website that they wouldn’t deal with a Minnesota resident.
I’m sure others here know more about it than me, I haven’t followed this carefully.
Link to a description of the revised law from ICTA: https://www.ictaonline.org/index.php?option=com_content&view=article&id=170:minnesota-law-targeting-coin-dealers-gets-amended&catid=26:news&Itemid=128
Choice Numismatics www.ChoiceCoin.com
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Outside dealers are exempt from the sales threshold due to the fairly recent ICTA revisions. How can't outside dealers sell to you? Sounds like they are choosing not to sell to you. This is similar to firearm companies refusing to sell legal products to CA residents. They choose not to, not that they are regulated or restricted.
That just simply isn't the case, the law change didn't really do anything to stop out-state dealers from having to be regulated. You can tell this by looking at the Department of Commerce's website. The law did change the definition of Minnesota Consumer, but MN Department of Commerce ignored this change during enforcement. A dealer could fight them in court, but it typically would have cost them more in legal fees than to just pay the fine, typically $10,000.
Join the fight against Minnesota's unjust coin dealer tax law.
Its a ridiculous overreach law and targeting a specific industry. Once the real and potential damages, loss of sales etc, are estimated the State will back off. And for a few bad apples? Unbelievable.
I looked on the MN dept of commerce website and this is posted. Are they not following what's posted on their website?
A really good question that I've asked myself many times. There are two primary reasons.
The first is that, at least until the recent Wayfair decision, it was easy to ship coins out of state to avoid sales tax, so states were unlikely to collect sales tax on any significant transaction. Better to exempt coins, make it more viable for in-state businesses to run B&M businesses, and perhaps collect more income taxes from coin dealers and their employees.
The second reason is that coins are something of a hybrid between a consumer and investor product, and no investor in his right mind would consider coins if sales tax were applicable. So taxing coins would, as above, further drive business out of state.
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Well. The last website I encountered this issue was with Heritage. My presumption is that they have a compliance or legal department who has made this decision to prevent direct sales to individuals in Minnesota based on something they are interpreting. I am also guessing they are not singling me out individually and likely applying this to anyone in Minnesota from buying direct from them. There must be some reason they are willing to forgo direct sales.
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Here is a layperson's summary of the legal issues in the lawsuit, I will also add this to the original post so people don't have to search to find it.
The lawsuit is a Civil Rights lawsuit, the state of Minnesota violated our Civil Rights by passing a law that violated our Constitutional rights. Being a Civil rights lawsuit is key to this moving forward, since winning a Civil Rights lawsuit means the State of Minnesota is responsible for the legal fees. That is why my lawyer is willing to take this case on contingency, although there are other expenses such as the PR rep and expert witnesses.
The Minnesota law violates three different constitutional principles. It violates the Dormant Commerce Clause, it is Void for Vagueness, and it is preempted by existing federal law.
The Dormant Commerce Clause: The Constitution gives the Federal government the responsibility to regulate the commerce between the states. The Dormant Commerce Clause, is the principle that a state cannot create laws that put an undue burden on interstate Commerce, or act as a tariff to protect their citizens from out of state competition. There are three different parts of this in our case, and a different balancing test is used for each of them.
The first Dormant Commerce Clause issue is that the impact on out of state commerce is so big that it outways any legitimate interest the state interest. In this section of the suit we explain what a huge impact the law has had on interstate commerce. The fact that a lot of dealers have refused to do business with MN customers, will be really strong evidence in our favor.
The second Dormant Commerce Clause issue is if a law directly discriminates against out of state competition, it is almost always struck down, it would have to be really narrowly tailored to address a legitimate state interest to survive. Part of the law exempts in state trade shows if you do 12 or less, but does not exempt out of state trade shows. This is a really bad error when the legislature wrote the law, they clearly didn't understand the Constitution when they did this.
The third Dormant Commerce Clause issue with the law is that a state is not allowed to regulate a transaction that happens totally outside of its boarders. This happens in a couple of ways with this law. If you are a Minnesota resident you have to register even if you only do transactions outside of the state. Say I (a MN resident) just did transactions at out of state trade shows, the law says I would have to register, but MN cannot regulate a transaction that happens totally outside of it's boards. Also, if you are an out of state dealer and sell to one MN Customer you need to register if your total sales and purchases (not just your MN sales) are over $25,000. Because of the way they do this, it creates a disincentive to transactions that are occurring totally outside of MN. Similarly there is a sliding scale on the surety bond, and your out of MN transaction counts towards that scale, so if you increase your sales that occurred outside of MN your bond requirement under the MN law goes up. So they are disincentivizing out of state transactions. The case law is really good for us on this, the courts will strike down a law if it has this type of affect on transactions, even if the law did not intend this affect.
The next Principle listed in my lawsuit is Void for Vagueness. If a law is written so poorly that a person cannot tell what they can or cannot do it is a violation of your Due Process rights. You have to have fair notice that what you are doing is illegal. This law is void for vagueness because of the poor way it is written, especially in some of the key terms that it fails to define. For example, it only regulates transactions with "consumer", but it does not define what that means. The dictionary defines "consumer" as someone that buys something for personal use. The law regulates buying and selling from a consumer, but with that definition how can you buy from a consumer? It also fails to define other key terms like "wholesale." The law is so poorly written it is just a mess.
The third and final principle is that it is preempted by existing federal legislation. This point might be the most interest to a numismatist, because it deals in part on the whole meaning of a legal tender coin. Federal law is supreme, so if a state law interferes with the objectives of a Federal law, it is void.
The MN law regulates coins that the Federal Government has defined as Legal Tender. The MN law makes no exception for coins traded at face value, so the state says that it could ban someone (refuse to give them a license) from spending a pre '64 quarter, and perhaps even copper cent. Also, the Federal government passed a Federal law, saying the mint needs to maximize the number of dealers that are available to sell their bullion coins. The MN law is a pretty clear impediment to this goal. The MN law also regulates purchase and sales in IRAs, and the Federal IRA law specifically authorizes precious metals investments.
Let me know if you have any questions about the this summary, I would be happy to clarify anything.
Join the fight against Minnesota's unjust coin dealer tax law.
Would those example be civil rights violations or civil liberties?
I'm not sure I am following your point. If you are a dealer and you sell to someone in MN, MN will regulate you. Also, the law change just changed the definition of MN customer, to say that you are regulated if you ship the coins to someone in MN. Now the MN DoC ignored this change. The website I am talking about is the enforcement actions.
In a case with a co-plaintiff, the MN DoC audited MN residents IRA accounts, the coins were purchased purchased from the co=plaintiff an out of the state dealer, and stored in an out of state facility, yet the MN DoC came after them anyway. It did not matter that it was not against the law, it is more expensive to fight it than it is to just pay the fine. The DoC knows this and takes advantage of this.
This is one problem with changing the law vs eliminating the law. If you change it the gov can just ignore the changes and if you fight it, it will cost you more in legal fees.
Join the fight against Minnesota's unjust coin dealer tax law.
Thank you @Tomthecoinguy
Good luck with your lawsuit and thanks for helping the numismatic community!
I guess I am not sure of the distinction.
Join the fight against Minnesota's unjust coin dealer tax law.
What an awful law. Glad to see someone is taking this on!! 👍👍👍
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I haven't been back to Minnesota since this law was passed. All residents of Minnesota must sign a waiver to deal with me, now. It's my law. Silly, but I must protect myself.
From a state that elected pro wrestler Jesse Ventura as their governor, what do you expect?
To the point of companies “choosing” to not deal with individuals from MN (or CA)...it’s a choice not to help or allow someone else break a law (regardless of how they feel about the law) ESPECIALLY once they are aware of it.
In this case, as has been shown, MN can go after pretty much anyone who’s come close to the fringes of this law and will just be paid off instead of fought in court.
If your business is selling, and a single state’s government could crash your business for having a fair transaction with one of their residents, the easiest and most correct move is usually to steer clear of the potential violation, even if it’s completely on the part of the potential client.
Another example : my company makes sure ALL sales tax is remitted to the state, even though the vendor (Not is) is ultimately liable. We will accrue and remit because our relationship with the government is that necessary and important. They want their money, not to hear how it’s not our job to get it for them.
How would a MN resident signing a waver help protect you for a MN DoC enforcement action? The customer really has no say in an enforcement action against a dealer.
Join the fight against Minnesota's unjust coin dealer tax law.