This article was originally printed in Numismatic News.
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Like many others, I was somewhat surprised by the 1099 reporting requirements inserted into the recent health care legislation. Obviously, this is a huge issue within the coin collecting community. That said, it only makes sense that the Industry Council on Tangible Assets is now making efforts to lobby for the elimination of these burdensome requirements, specifically, by their support of H.R. 5141.
While I do not wish to dissuade the ICTA from their efforts, I am far from sanguine about their chances of rolling back the reporting requirements.
I did a little informal poll of my own among a number of acquaintances, none of whom are involved in the coin or precious metals trade. Even among small business owners, while there was some irritation about the new regulations, they did not view it as a show-stopper for their business.
Generally, the message I got was that they viewed it as little more than additional paperwork that their accountant would take care of in short order.
At the other extreme, were those who said the legislation addressed what they felt was massive tax evasion within the coin and precious metals industry. Whether this is true or not hardly matters, the perception is there and sometimes perceptions are more important than reality.
In no small measure, I suspect some of this perception is generated by the fact that many, many, people have had their savings negatively impacted by the recent financial crisis, only to watch those who invested in precious metals rake in enormous profits. There is little chance that these voters will be dissuaded from viewing things this way unless they, too, become investors in rare coins and precious metals.
That said, I find it extremely unlikely that the reporting requirements will be abandoned entirely. The requirements may well be modified to make the paperwork less unmanageable, but in some form or another, I expect that reporting requirements are probably here to stay. That’s not to say I like the idea, but rather, that there comes a point when acceptance is the only answer, that fighting the inevitable only becomes counterproductive.
So what is my point? My point is that the ICTA would better serve their membership by accepting that some form of reporting requirement is inevitable in the very near future. To the extent that the requirements can and should be implemented in an efficient manner, the ICTA should support changes to the existing law while accepting the inevitable.
Further, I am of the opinion that the ICTA would be providing a far greater service to their membership by focusing their lobbying efforts on tax reform. Specifically, – and I am sure everyone, including investors, hobbyists, and dealers alike will agree – the tax code should be changed to treat coins and bullion as any other investment that is taxed at the capital gains rate. That taxes are assessed at a much higher rate on coins and bullion than on gains from other investment alternatives is unfair.
And this becomes a far easier to defend position than trying to protect what many people view as tax evasion.
Additionally, as it stands now, there is an unmistakable incentive to evade taxes on gains simply because of the discriminatory nature of the tax code.
If that can be fixed, not only would the government benefit by additional tax collection, but so would the entire industry by making precious metals and rare coins more attractive to investors.
This Viewpoint was written by a reader who wishes to remain anonymous.
Viewpoint is a forum for the expression of opinion on a variety of numismatic subjects. The opinions expressed here are not necessarily those of Numismatic News. To have your opinion considered for Viewpoint, write to David C. Harper, Editor, Numismatic News, 700 E. State St., Iola, WI 54990. Send e-mail to email@example.com.