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Gray areas in tax exemption law

Earlier this year, Ohio Governor Kasich signed into law Senate Bill 172. This law adds provision 54 in Section 1 to establish a sales and use tax exemption on the retail sales of “investment metal bullion” and “investment coins,” which becomes effective as of Jan. 1, 2017.


While I am neither a legislator nor an attorney, Ohio citizens need to understand what kinds of merchandise qualify for this sales and use tax exemption. I hope the following discussion sheds some light on the question.

As stated in the legislation, “Investment metal bullion” means any bullion described in section 408(m)(3)(B) of the Internal Revenue Code. A search of the Internal Revenue Code for that citation finds this language: “Any gold, silver, platinum, or palladium bullion of a fineness equal to or exceeding the minimum fineness that a contract market (as described in section 7 of the Commodity Exchange Act, 7 U.S.C. 7) requires for metals which may be delivered in satisfaction of a regulated futures contract.”

The Commodity Exchange Act citation states, “The board of trade shall make available to market authorities, market participants, and the public accurate information concerning . . . (B)(ii) the rules on specifications describing the operations of the contract markets.”

In other words, as I interpret this clause, whatever commodity exchanges specify for the minimum purity of bars now defines what next year can be purchased exempt from Ohio sales tax. So, checking the COMEX website, the minimum purities for bars traded on this exchange are .995 for gold, .999 for silver, .9995 for platinum and .9995 for palladium. Therefore, I don’t think any precious metals bars of lesser purity will qualify for the Ohio sales and use tax exemption starting next year.

As for “investment coins,” the Ohio law reads, “means any coin composed primarily of gold, silver, platinum, or palladium.” I am not legally qualified to define the word “primarily.” Also, as the bill was passing through the legislative process, I heard that for coins to qualify for the sales and use tax exemption, they would have to sell retail at a “bullion price.” I do not find this language in the law itself but could see the possibility that the Ohio tax officials could interpret “primarily” being composed of a precious metal as referring the price at which a coin with precious metal contents sells in relation to the value of the metal content.

Ohio tax officials probably have great latitude in defining what is or is not an “investment coin.” Should they look to the federal government for guidance as to what constitutes a “bullion-priced coin,” there are almost no hard and fast legal rules to apply. If you are an Ohio coin dealer, before the beginning of next year you may want to consult your legal counsel or the Ohio Department of Taxation for clarification of the definition of “investment coins.” If anyone obtains more specific information on this issue, I would appreciate receiving an email at so that I can pass along what I learn.

In fact, as I have to emphasize again, I am not a government official nor an attorney. Therefore, the foregoing is not intended to serve as regulatory or legal guidance. Ohio dealers would probably find it a worthwhile investment to discuss the extent of the forthcoming sales and use tax exemption with their tax or legal experts.

Patrick A. Heller was the American Numismatic Association 2012 Harry Forman Numismatic Dealer of the Year Award winner. He was also honored by the Numismatic Literary Guild in 2016 for the Best Dealer-Published Magazine/Newspaper and for Best Radio Report. He is the owner emeritus and communications officer of Liberty Coin Service in Lansing, Michigan and writes Liberty’s Outlook, a monthly newsletter on rare coins and precious metals subjects. Some of his radio commentaries titled “Things You ‘Know’ That Just Aren’t So, And Important News You Need To Know” can be heard at 8:45 AM Wednesday and Friday mornings on 1320-AM WILS in Lansing.

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