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

This article was originally printed in Numismatic News.
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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.

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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.



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Comments
On June 29, 2010 said
Only corporations are affected.  Individuals are not included in the definition for "person".  See case law below

>>>>>
for purposes of this section the term ?person? includes any corporation that is not an organization exempt from tax under section 501(a).
<<<<<

   ?Expressio unius est exclusio alterius.?  A maxim of statutory interpretation meaning that the expression of one thing is the exclusion of another.  Burgin v. Forbes, 293 Ky. 456, 169 S.W.2d 321, 325; Newblock v. Bowles, 170 Okl. 487, 40 P.2d 1097, 1100.  Mention of one thing implies exclusion of another.  When certain persons or things are specified in a law, contract, or will, an intention to exclude all others from its operation may be inferred.  Under this maxim, if statute specifies one exception to a general rule or assumes to specify the effects of a certain provision, other exceptions or effects are excluded.?    [Black?s Law Dictionary, Sixth Edition, p. 581]

   "When a statute includes an explicit definition, we must follow that definition, even if it varies from that term's ordinary meaning.?  Meese v. Keene, 481 U.S. 465, 484-485 (1987) ("It is axiomatic that the statutory definition of the term excludes unstated meanings of that term"); Colautti v. Franklin, 439 U.S. at 392-393, n. 10 ("As a rule, `a definition which declares what a term "means" . . . excludes any meaning that is not stated'"); Western Union Telegraph Co. v. Lenroot, 323 U.S. 490, 502 (1945); Fox v. Standard Oil Co. of N.J., 294 U.S. 87, 95-96 (1935) (Cardozo, J.); see also 2A N. Singer, Sutherland on Statutes and Statutory Construction § 47.07, p. 152, and n. 10 (5th ed. 1992) (collecting cases). That is to say, the statute, read "as a whole," post at 998 [530 U.S. 943] (THOMAS, J., dissenting), leads the reader to a definition. That definition does not include the Attorney General's restriction -- "the child up to the head." Its words, "substantial portion," indicate the contrary."   [Stenberg v. Carhart, 530 U.S. 914 (2000)]

On June 29, 2010 Mel Wacks said
OMG! What a disaster this would be if anyone selling rare coins, gold bullion, etc. to a dealer knew that a 1099 form would be sent to the IRS. So auction sales would be reported and how about ebay sales (coins and everything else) over $600.
On June 29, 2010 john said
I do not think this legislation specifically notes 'individuals.'  All I have seen written mentioned business and vendors.  An important clarification which needs to be determined.

There is also a repeal to this section in the works.
On June 30, 2010 Deane Gilmour said
Quietly and sneaking bills through in the middle of the night. The Socialsit agenda do total Slavery to the State is taking over. It is the old DEMONacrat plank of their party that all monies belong to the Government and only lent to the citizen. The hedge against inflation and the devaluing of the US dollar will no longer work when this law goes into effect. Just as the FACIST now totally in power are disemboweling the Constitutional right of citizens to bear arms against runaway abusive government, they are taking away the right to prosper more than the Facist allow the individual citrizen to hold monies or valuables of any nature unless the citizen is authorized by that same Facist government. Welcome to "The Change", the ObamaNation, the enslavemnet of the last bastion of freedom in the entire Universe. Never to been seen again by mankind.
On July 1, 2010 randy perkins said
title 26 IRC...Tax....1099 only is for government connected activities, such as federal taxable monies involved.Read the code,read the definitions.understand who is liable and who is not. article is wrong and very misleading to a private person who is not a federal subject to taxation.The tax code is not that hard to research.The big lie will die if people had enough sense to read it.
On July 2, 2010 Finn said
This is exactly how a black market is created.

It's painful to read about this but ultimately it will bring about a barter system through a series of unintended consequences.
On July 2, 2010 Homer J. said
http://www.govtrack.us/congress/amendment.xpd?session=111&amdt=s2699

This was a republican sponsored amendment. Please get your facts str8.
On July 8, 2010 Richard Bennett said
This new proposal H.R. 5141 seems to be in contradiction of the patriot act The patriot act specifically says "$1,000.00" of face value on coins?.
Another question is the $600.00 face value or sales value?.
On July 8, 2010 Countrymom said
This is frustrating. We purchase silver every month and I do NOT want anyone to know about it, especially the government. We do it as an investment, not as a business transaction of any kind. They have no right to regulate in any way how I spend my money or to keep tabs on what I purchase with it.
On July 9, 2010 Phil Brown said
While coins and bullion are specifically mentioned, how about jewelry (24K), which I have understood to be excluded from the collectables category for personal income tax?
On August 7, 2010 David Schexnaydre said
I abhor this law, too, but just wanted to point out what I believe to be a discrepancy in your article.  When you conclude, "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."  Actually, in my reading of the statutory provisions, it appears that only the person/corporation "making payment" is the one obligated to issue a 1099.  So, while it is correct that in any dealer-to-dealer transaction above $600 a 1099 will be issued, only one dealer is required to issue the 1099 and that is the one purchasing the coins, not selling them. (P.S. I am a lawyer, but not a tax lawyer.  I just researched this because I am increasingly wary of this particular Congress and Administration and did not want to rely upon news reports of what the law says.)  
On January 2, 2011 JP said
What everyone seems to be missing is that by issuing 1099s that YOU can be tracked as an owner of gold in case the government wants to confiscate it. Thats the issue here (Thanks FDR!)
On June 29, 2011 Mike said
What coins? Oh these? These are jewelry.

Something to add? Notice an error? Comment on this article.
 



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