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Tax Exemption Bill Introduced in New Jersey

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In a year in which there has been more activity than ever in state legislatures to either enact new sales and use tax exemptions on the retail sales of precious metals, coins and currency or to possibly repeal existing exemptions, there is another one to add to the list.

On Jan. 27, New Jersey Assemblyman Ronald S. Dancer introduced A5285 to establish a sales and use tax exemption on the retail sales of investment metal bullion and certain numismatic coins (see text at https://legiscan.com/NJ/text/A5285/id/2262981). The bill does not include any exemption for currency and only exempts legal tender coinage that sells for a unit price of $1,000 or more. It has been assigned to the Assembly’s Appropriations Committee.

As specified in the legislation, “investment metal bullion” means any elementary precious metal that has been put through a process of smelting or refining, including, but not limited to, gold, silver, platinum and palladium, and that is in such state or condition that its value depends upon its contents and not its form. "Investment metal bullion" shall not include any precious metal that has been assembled, fabricated, manufactured or processed in one or more specific and customary industrial, professional, aesthetic or artistic uses.

Further it specifies, "investment coin" means any numismatic coin manufactured of gold, silver, platinum, palladium or any other metal, including non-precious metals, and having a fair market value of not less than $1,000. "Investment coin" shall not include jewelry or works of art made of coins, nor shall it include commemorative medallions.

A national survey of coin dealers in 2016 found that states with a complete or partial sales and use tax exemption on precious metals bullion and coins enjoyed significantly higher sales tax collections from the hospitality industry. The reason for that is dealers prefer to take booths at trade shows in states with exemptions. Similarly, collectors seek to avoid the additional cost of paying sales taxes on precious metals bullion and coins, so also prefer to attend trade shows in states with sales tax exemptions.

A drawback of the New Jersey bill is that it does not extend the sales tax exemption to all legal tender coinage and currency, only to numismatic metal coins with a unit price of $1,000 or higher. Since the overwhelming bulk of coins changing hands at a trade show have unit prices less than $1,000, the narrowness of this exemption will have the effect of reducing the number of and the attendance at trade shows in that state.

Despite this limitation, New Jersey residents would enjoy a great benefit from enactment of the sales and use tax exemptions in A5285. As has happened in other states such as Virginia and Texas, it has been possible to later expand such exemptions.

Thus far in 2021, no other states with new exemption bills (Arkansas, Hawaii, Mississippi, and Tennessee) have passed them into law. Similarly, no bills to revoke existing exemptions have been enacted. As of right now, there are five states with no state sales taxes (Alaska, Delaware, Montana, New Hampshire and Oregon). Thirty-three other states have complete or partial sales tax exemptions on precious metals bullion, coins and currency.

New Jersey residents interested in supporting A5285 are encouraged to contact the Industry Council for Tangible Assets at (678) 430-3252 or at icta@ictaonline.org.

Patrick A. Heller was honored as a 2019 FUN Numismatic Ambassador. He is also the recipient of the American Numismatic Association 2018 Glenn Smedley Memorial Service Award, 2017 Exemplary Service Award, 2012 Harry Forman National Dealer of the Year Award, and 2008 Presidential Award. Over the years, he has also been honored by the Numismatic Literary Guild (including twice in 2020), Professional Numismatists Guild, Industry Council for Tangible Assets, and the Michigan State Numismatic Society. 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 http://www.libertycoinservice.com. Some of his radio commentaries titled “Things You ‘Know’ That JU.S.t 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 archives posted at http://www.1320wils.com).