Do Gold Sellers Report to the IRS?
Gold dealers must report customer purchases of precious metals exceeding predetermined quantities, while customers must report profits from selling these metals on their taxes returns.
To avoid raising red flags with the IRS, both parties need to be aware when transactions may trigger reporting requirements. Here are a few scenarios likely to trigger dealer reporting obligations.
What is a dealer’s reporting obligation?
Dealers must file Form 1099-B when selling certain precious metals that appear on the IRS Reportable Items List, such as coins and bullion pieces. Sales subject to capital gains tax are monitored through this reporting requirement in order to reduce tax evasion by non-corporate sellers of precious metals; however, this reporting requirement only applies when cash – greenbacks – is exchanged. Traveler’s checks, cashier’s checks or money orders do not count as “cash,” unlike personal checks, wire transfers and credit/debit cards which do not qualify as payment from non-corporate sellers of precious metals.
Many buyers do not wish for their transactions to be reported to the IRS, and dishonest dealers often take advantage of this fact by falsely claiming their sales don’t fall under federal reporting requirements despite federal requirements for reporting. To avoid being taken advantage of, learn what types of sales require reporting as soon as possible and consult a tax professional about any specific situations arising.
What is a customer’s reporting obligation?
Typically, the IRS is especially interested in transactions where payment for physical precious metal bullion products was made in cash or amounts exceeding $10,000 – one reason many dealers shy away from accepting large payments in this form.
Gold is classified as a collectible asset and subject to tax at the same rates as stamps, antiques and art. Furthermore, as an investment vehicle it qualifies for capital gains tax when sold.
But when someone sells gold for profit, dealers are legally required to report this transaction on Form 1099-B with the IRS in order to reduce money laundering and tax evasion activities. Structured purchases that circumvent reporting are illegal and could incur significant fines; so it is wise to consult a tax professional prior to engaging in gold sales transactions.
What is a dealer’s non-reporting obligation?
Some individuals purchase precious metals anonymously for various reasons, ranging from privacy or identity theft concerns, to not wanting to pay capital gains taxes on their bullion sales transactions.
Bullion bars and rounds generally do not need to be reported to the IRS unless sold for over $10,000 cash, in which case dealers must fill out a Form 8300 with details about themselves such as name, address, citizenship status and social security number before providing it to them IRS.
Coin reporting criteria differs slightly. Numismatic and semi-numismatic coin sales with over 90% silver content require dealers to fill out and file Form 1099-B forms as part of their identification procedure, so as to detect and monitor potential money laundering activities; otherwise these forms are usually unnecessary.
What is a customer’s non-reporting obligation?
Gold buyers have many reasons for wanting to remain anonymous during the sale of their coins, but this cannot be accomplished through breaking federal tax laws. Precious metal dealers must report sales that meet IRS reporting criteria (i.e. significant cash payments of $10,000+). Reports like these help financial authorities identify money laundering schemes and track transactions involving precious metals.
Customers must also pay sales taxes in their state, which may apply to profits derived from selling coins and bullion bars.
If you want to buy and sell gold without being subject to IRS regulation, it’s best to work with a trusted dealer who adheres to IRS requirements. Any dealer claiming that there’s an easy way to dodge paying taxes should be avoided as they could likely be trying to take advantage of you; be wary of such claims!
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