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Existing Coin/Bullion Sales Tax Exemptions Under Attack

Right now, five states do not impose any state sales taxes (Alaska, Delaware, Montana, New Hampshire, Oregon) and 32 have complete or partial sales tax exemptions on the in-state retail sales of precious metals bullion and rare coins.


On July 1, West Virginia’s sales tax exemption on precious metals bullion and rare coins go into effect. It is possible that, before the end of 2019, there may be another state that adopts such a sales tax exemption. When West Virginia’s exemption is effective, that will leave only the states of Arkansas, Hawaii, Kansas, Kentucky, Maine, Mississippi, Nevada, New Jersey, New Mexico, Tennessee, Vermont, and Wisconsin and the District of Columbia that assess sales taxes on all retail sales of precious metals bullion and rare coins.

However, a disturbing trend is emerging as a consequence of the U.S. Supreme Court’s decision in June 2018 in South Dakota v. Wayfair. State governments may be able to require a greater number of out-of-state sellers to begin collecting sales tax on transactions beyond those businesses that already do. To accomplish this, state legislatures and treasury departments are enacting legislation and establishing regulations with varying thresholds above which out-of-state retailers would be required to register to collect sales taxes.

The acts of adopting legislation and regulations that impact out-of-state retailers is also leading state governments to review their existing sales tax exemptions and tax credits, with an eye toward finding additional sources of increased tax collections.

Already in 2019, the states of Nebraska, Ohio, and Washington have proposed eliminating existing sales tax exemptions on retail sales of precious metals bullion and retail sales. In these instances, the proposed change was part of a larger plan to restructure taxes that assumes the elimination of this exemption would result in a net increase in sales tax collections. (Note: as I write this, the exemptions are still in effect in these states.)

If doing only a static analysis, the prospect of collecting higher sales taxes appears to be a no-brainer. If a state imposes sales tax on merchandise that was previously exempt from the tax, then there will be higher tax collections on such products.

However, a static analysis is flawed. When tax laws change, people alter their financial behavior. Therefore, a dynamic analysis would present a better picture of the combined impact on all tax collections. When I led the effort that resulted in the 1999 adoption of a precious metals bullion and rare coins sales tax exemption in Michigan, I projected that the Michigan Treasury would realize higher tax collections despite forsaking the sales tax collections on bullion and coin sales. Later, I documented that the Michigan Treasury not only collected more sales taxes and other taxes as a result of the exemption, the results were greater than I projected.

In 2016, the Industry Council for Tangible Assets (ICTA), with my assistance, conducted a national coin dealer survey that confirmed that sales tax exemptions on precious metals bullion and rare coins resulted in higher tax collections!

How is it possible that when a state government gives up an existing amount of tax collections, the result could be higher total tax receipts?

With respect to precious metals bullion and rare coins, here is the answer.

  1. Virtually all coin dealers sell other merchandise besides bullion and coins. They may sell jewelry, antiques, a variety of other collectibles, and hobby supplies. The ICTA survey found that the in-state retail sales of coins and bullion in states with sales tax exemptions were about 10 times the dollar volume per dealer than for dealers in states where bullion and coin sales are subject to sales tax. As dealers experience this growth in their in-state bullion and coin sales, they also sell a greater quantity of other products on which sales taxes are collected.
  2. When volume increases for coin dealers, that encourages some other existing businesses to expand into this market and for other people to open new coin dealerships. This also results in higher sales of merchandise other than precious metals bullion and rare coins. In the ICTA survey, the increase in such sales tax collections on sales of other merchandise from existing and new coin dealers replaced about 2/3 of the lost sales tax collections on bullion and coins.
  3. As in-state coin dealers enjoy more sales volume, they hire more employees. In Michigan, for instance, industry employment more than doubled after 1999. The Michigan Treasury did a research study in the 1990s concluding that 38.5% of Michigan payrolls were spent on merchandise on which Michigan sales tax was collected. The increased industry payrolls thus generated increased sales tax collections that almost certainly exceeded 100% of the sales tax collections lost from the exemption. As a bonus, those states that also had an income tax ended up collecting more of those taxes as payrolls increased.
  4. The hospitality industry, including hotels and restaurants, collects more sales taxes when they have higher sales volume. The trend for a number of years has been for more and larger coin shows to be held in states with exemptions and fewer shows with smaller attendance in states without exemptions. Organizations such as the American Numismatic Association and Central States Numismatic Society have policies to hold future conventions only in states that have adopted sales tax exemptions for precious metals bullion and rare coins. Therefore, adopting such a sales tax exemption results in higher sales tax collections by the hospitality industry.

As a result of these factors, a state government that adopts a sales tax exemption on precious metals bullion and rare coins ends up collecting higher total sales taxes. As a bonus, depending on a state’s tax structure, it will also collect more individual income taxes and business taxes from the industry and also generates more of these tax collections for the hospitality industry.

The problem is that legislators do not understand the dynamics of how a tax exemption could actually result in higher tax collections. The staff at the state government fiscal agencies and treasury and revenue department may understand conceptually how this may happen, but they mostly don’t have access to “acceptable methodology” to make a dynamic tax analysis. They may use the State Tax Analysis Modeling Program (STAMP®) software but would need to input accurate date to get a valid result. Therefore, state governments could easily consider eliminating a precious metals bullion and rare coins sales tax exemption because of inaccurate or incomplete data and analyses.

By the way, the four states that have repealed precious metals bullion and rare coins sales tax exemptions in the past (Colorado, Florida, Louisiana—twice, and Ohio) have later re-enacted the same or similar exemptions. A major reason the exemptions were restored is that the state government discovered after the fact that revoking the exemption resulted in lower total sales tax collections and declines in other tax receipts as well. In Florida, for example, so many coin shows closed or moved to other states that the decline in sales taxes collected by the hospitality industry exceeded the gain in new sales taxes on precious metals bullion and rare coins sales.

Sadly, out of ignorance of how the dynamics of the precious metals bullion and rare coins industry functions, there is a good prospect that other state governments may soon consider revoking their sales tax exemptions. In order to devote resources to protecting existing exemptions, ICTA staff were unable to devote as much time to supporting efforts in other states seeking to gain such exemptions.

The more states that do not impose sales taxes on the retail sales of precious metals bullion and rare coins, the easier it is to gain exemptions in other states (and help protect those in states that already have exemptions). Since many coin dealers now face the prospect of having to register to collect sales taxes in multiple other states, they have a stronger incentive than ever to join ICTA and help expand the organization’s efforts. If you are a dealer who is not a current ICTA member, you owe it to your future livelihood to go to and join now. (Full disclosure: I have been the treasurer and a member of the board of directors of ICTA since 2002.)

Patrick A. Heller was the American Numismatic Association 2018 Glenn Smedley Memorial Service Award, 2017 Exemplary Service Award 2012 Harry Forman Dealer of the Year Award, and 2008 Presidential Award winner. He was also honored by the Numismatic Literary Guild in 2017 and 2016 for the Best Dealer-Published Magazine/Newspaper and for Best Radio Report. He is the communications officer of Liberty Coin Service in Lansing, Michigan and writes Liberty’s Outlook, a monthly newsletter on rare coins and precious metals subjects. Past newsletter issues can be viewed at 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 (which streams live and becomes part of the audio and text archives posted at