Resisting Rollbacks Of Coin/Precious Metals Sales Tax Exemptions

Many state governments are struggling, especially with declines in federal government transfers or from state residents who previously held federal jobs or contracts that have ended. As a consequence, legislators in several states are looking for ways to increase tax collections. One means to do so is to review existing sales and use tax exemptions for possible elimination.

The intuitive general concept is that eliminating existing sales and use tax exemptions will result in higher state tax collections. For most items, that is true. However, the opposite is true with respect to precious metals bullion, coins, and currency.

How could eliminating a sales and use tax exemption on precious metals bullion, coins, and currency result in lower state government tax collections?

It turns out that coin and bullion dealers generate tax collections in multiple ways. First, there would be sales and use taxes collected on precious metals bullion, coins, and currency, if they were subject to such taxes. Second are sales of other merchandise that would be subject to sales taxes even if such a sales and use tax exemption existed. Among items that many coin and bullion dealers sell that would be subject to such taxes are jewelry, antiques, other collectibles, hobby supplies, and the like. Third, states that have such exemptions have greater per capita coin shows and higher attendance at these shows, which generates more sales taxable by the hospitality industry. Fourth, in-state workers spend part of their pay on items on which sales taxes are collected. In the 1990s, the Michigan Treasury did a study which calculated that 38.5 percent of payrolls were spent on items on which the state’s sales tax was collected.

When an existing precious metals bullion, coin, and currency sales tax exemption is repealed, in-state coin and bullion dealer sales decline substantially. Many close, lay off staff, or move out of state. In-state coin shows also decline. The net result is that while there may be a small increase in sales and use tax collections on sales of precious metals bullion, coins, and currency, it is more than offset by the reductions in taxes collected on sales of other merchandise, by the hospitality industry, and by lower spending on taxable merchandise from former in-state workers who lost their jobs.

This was documented in the four states that repealed or suspended such exemptions before 2025.  When Florida repealed its exemption in the 1990s, so many coin shows were cancelled or moved out of state that the Orange County Convention & Visitors Bureau estimated that the state’s hospitality industry suffered an annual decline of $60 million in sales. When Colorado repealed its exemption, an overwhelming number of legislators voted to put it back in place. The governor twice vetoed re-enacting the exemption, as the only way it could then be repealed in the future would require a vote by the citizens. After the governor’s second veto, the legislature voted to override that veto.

In 2005, Ohio repealed its exemption in the midst of a political scandal. The weekly Coin World reported that within six months, there were 100 Ohio dealerships that had closed, laid off staff, or moved out of state. Also, every major upcoming coin show had been cancelled.

In 2015, the states of Louisiana, Oklahoma, and Texas experienced huge declines in severance taxes collected from the oil and gas industry after major price drops. In response, Louisiana suspended almost 300 sales and use tax exemptions or tax credits for 27 months, beginning April 1, 2016. During the suspension, a State Senate committee held hearings on each of these exemptions and credits to decide whether to allow them to return at the end of the suspension, to modify them at the end of the suspension, or to end them permanently. When I testified before this committee that suspending this exemption would result in a decrease in tax collections, the committee chair objected. Yet, when he later learned that the decrease in tax collections was even worse than I forecast, this senator was one of three legislators who led the effort in 2017 to readopt a similar exemption (one of only four exemptions or credits that were brought back before the end of the suspension period).

Yes, all four of these states learned the hard way that repealing sales and use tax exemptions on retail sales of precious metals, bullion, coins, and currency resulted in a net decline in tax collections. All four reinstated the same or similar exemptions.

One factor that is evident to politicians and bureaucrats is that those who make major purchases of coins and bullion have multiple ways to acquire such items without having to pay sales and use taxes: 1) they can make purchases stored out of state such as in vaults in Delaware, 2) they can purchase shares of stock in gold, silver, platinum, or palladium exchange traded funds, 3) they can purchase shares of large precious metals ingots stored in the vaults of the Perth Mint in Australia, Royal Canadian Mint in Canada, or the Royal Mint in England, 4) they can establish self-directed Individual Retirement Accounts which assets are store out of state, or 5) they can purchase shares of stock in companies that mine precious metals. 

As demonstrated in Michigan, the size of sales tax discourages in-state customers from making in-state purchases. Before precious metals bullion and coins gained a sales and use tax exemption in this state in mid-1999, only about 1 percent of the in-state retail bullion and coin sales of the company I then owned were for transactions of $1,000 or higher. Yet, after the exemption was enacted, 94 percent of in-state retail bullion and coin sales came from transactions of $5,000 or higher, and such sales grew several times faster than our out-of-state sales or in-state wholesale sales.

Note that state government fiscal analyses of tax collections by coin and bullion dealers do not factor in how easy it is for affluent customers to make alternative purchases that are not subject to sales and use taxes. As a consequence, invariably all such fiscal analyses overstate by a magnitude or more how much tax collections might increase by eliminating such exemptions.

Despite such evidence, there have been multiple attempts over the years for different states to attempt to repeal sales and use tax exemptions on precious metals bullion, coins, and currency.  Almost all of them have been turned back. Last year, the Maryland legislature eliminated its existing coin and bullion exemption as of July 1, 2025, except for sales that might take place at the Baltimore Convention Center. Even this very narrow exemption might expire at the end of June 30, 2026. The state of Washington later eliminated its similar exemption and a significant exemption from that state’s Business & Occupations Tax effective January 1, 2026.

There are bills now in the legislatures in both states to reinstate these exemptions.  In Maryland, these bills are House Bill 500 and Senate Bill 309. In Washington, these bills are House Bill 2115 and Senate Bill 5894.  In both states, there are dealer coalitions developing support for passage.

Beyond trying to reinstate exemptions in these two states, there are bills pending in two other states to revoke existing exemptions. In Nebraska, at the request of that state’s governor, LB1244 would repeal the exemption by removing that section from the list of exemptions. In New York, last year’s failed effort to eliminate that state’s precious metals sales tax exemption has been resurrected this year as Assembly Bill A8511 and Senate Bill S7875. Dealers in both states are working to halt progress on these bills.

As more states become desperate to raise taxes, there will likely be more efforts to eliminate existing sales and use tax exemptions on precious metals bullion, coin, and currency sales.  Therefore, literally everyone across the country has an interest in helping Maryland and Washington reinstate their exemptions, and for Nebraska and New York to not eliminate theirs.  Success in any or all of these states will help protect exemptions elsewhere.

The National Coin & Bullion Association (for which I am the unpaid volunteer Industry Issues Advisor) is helping to coordinate the efforts in all of these states and is on the lookout for similar issues that may arise elsewhere. Collectors and dealers can all help with these efforts. Check the NCBA website at ncbassoc.org/membership.

Last time I asked— What was the first U.S. coin to depict the “W” mintmark, representing West Point, New York? The answer is the 1984-W $10 Olympics Commemorative Gold Eagle.

Here is this week’s question. Which U.S. Commemorative Half Dollar was struck at the San Francisco Mint but does not have the S mintmark? Come back next week for the answer.

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, the 2017 Exemplary Service Award, the 2012 Harry Forman National Dealer of the Year Award, and the 2008 Presidential Award. Over the years, he has also been honored by the Numismatic Literary Guild, Professional Numismatists Guild, National Coin & Bullion Association, 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. He now volunteers with the National Coin & Bullion Association as its Industry Issues Advisor.  Past newsletter issues can be viewed at www.libertycoinservice.com. Some of his radio commentaries, "Things You ‘Know’ That Just Aren’t So,” and “Important News You Need To Know,” can be heard at 8:45 a.m. Wednesday and Friday mornings on 1320-AM WILS in Lansing (which streams live and becomes part of the audio archives posted at www.1320wils.com).

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Progress in Expanding Coin And Bullion Sales Tax Exemptions

How Repealing Coin/Bullion Sales Tax Exemptions Lowers Government Tax Collections

Repealing Bullion/Coin Sales Tax Exemptions Harms Less Affluent People and State Governments