There have been various misleading online claims suggesting that gold and silver purchases don’t need to be reported to the IRS, however this is simply not accurate.
Precious metal dealers are legally required to report customer sales when certain thresholds have been reached, including selling pieces on the IRS Reportable Items List (excluding gold American Eagle coins) such as gold bullion bars and rounds as well as many government issued precious metal coins.
What is a reportable transaction?
When selling gold coins, it is vital to find a buyer with whom you feel confident and who offers you the highest offer possible. Research local pawnshops, jewelry stores and coin dealers through personal referrals as well as Yelp reviews or Google.
Reportable transactions are transactions identified as having the potential for tax avoidance or evasion by the Internal Revenue Service (IRS). There are five categories of reportable transactions identified by the IRS as potentially tax avoidance or evasion: confidential transactions, those with contractual protection clauses attached, loss transactions, transactions of interest transactions and listed transactions. Taxpayers or tax practitioners engaging in any of these types of transactions must disclose them by filing federal Form 8886 Reportable Transaction Disclosure Statement while material advisors must file Form 8918 Material Advisor Disclosure Statement as soon as possible after engaging in these types of transactions.
No matter if you are dealing with a reliable dealer or dubious pawnshop, keeping your precious metals stored safely will lower theft risks and make transport easier if necessary. Online services offer services which offer coin sales that provide all of the paperwork processing.
What are the reporting requirements for coin dealers?
Many individuals believe they can avoid reporting their purchases of bullion to Uncle Sam by choosing specific bullion items, but this is not true: reporting requirements for precious metals have nothing to do with capital gains tax but are instead related to anti-money laundering laws of each government agency.
Regulations require dealers to report sales of specific bullion products when certain key numbers and thresholds are reached within a set time period. For instance, if a dealer sells 25 Krugerrands within 24 hours they must report it on Form 1099B; however if customers purchase 30 Krugerrands over time and then sell all at once it won’t need to be reported because Federal Regulations stipulate a 24-hour reporting window for such transactions.
NCBA has tirelessly worked over time to bring the rare coin & precious metals industry into compliance with reporting requirements for cash transactions involving precious metals. We provide our members with a Cash Reporting Information Kit and our experienced staff is on hand to help with individual cash reporting situations.
What are the reporting requirements for customers?
Investors looking to buy gold coins without alerting the IRS often opt for low premium bullion products that are exempt from reporting requirements when sold resold; however, capital gains tax may still apply in cases of profiteering sales.
Precious metal dealers are legally required to report all cash payments over $10,000 that exceed $10K to help the IRS monitor important commodity exchanges in the country and thwart money laundering schemes.
ICTA has published guidelines based on negotiations with the IRS about which transactions should be reported, but these do not constitute rulings or interpretation by them. For instance, customers selling their dealer 25 Krugerrands or Mexican Gold Onzas all at once will trigger IRS reporting; whereas, purchasing and immediately selling back ten 100 ounce silver bars does not trigger reportable sales according to federal Form 8300’s General Instructions.
What are the reporting requirements for Palladium and Platinum bullion?
Purchase of gold coin or bullion bars valued over $10,000 paid for with paper currency (cash or cashier’s check) is subject to reporting requirements, so most reputable high volume bullion dealers use payment policies specifically tailored for such sales to prevent orders which could trigger reporting requirements from occurring.
When selling a precious metal coin or bullion bar, any profit generated will be taxed as capital gains by the Internal Revenue Service as it classifies such collectibles like gold as collectibles similar to art or antiques.
When buying and selling precious metal coins and bars regularly, it is wise to consult a tax professional. They can assist with devising an effective strategy to minimize your tax liabilities such as 1031 exchange. This allows you to transfer assets into new investment properties without incurring taxes upon selling them; however, for maximum savings it should be used alongside overall tax planning strategies.