Tax threat hangs over coin buyers
The Industry Council for Tangible Assets warns active hobbyists that the June 21 Supreme Court sales tax decision will have effects more far reaching than simply applying to Internet sales of coins and bullion.
The 5-4 ruling by the nine justices says states will now be able to collect sales taxes from retailers who have no physical presence within their borders, but who have sold things to their residents.
This reverses a 1992 decision that ruled the opposite way.
ICTA says with this new ruling, sales taxes can be collected by states not only on Internet sales but on all transactions no matter how they are arranged.
Where the buyer lives will now be the jurisdiction that can collect the sales tax from the retailer no matter where that retailer might be located.
ICTA concludes that “unless Congress acts, numerous sales taxes will become targets of state legislatures, not just internet sales. More importantly, sales taxes can be applied to anything of any kind or character, hypothetically including accounting and/or legal advice, stocks and bonds, commodities like natural gas and products moved through pipelines – an endless list.”
As bad as that might sound, it pays to keep ICTA’s accomplishments in mind.
Since its founding in 1986, it has done many things on behalf of numismatics.
These include winning sales tax exemptions on coin and bullion transactions in 37 states.
That leaves just 13 states where this Supreme Court ruling might lead to unpleasant surprises during coin and bullion transactions.
Texas coin dealer Mike Fuljenz also has issued a warning about the ruling and offers a suggestion as to how laws should be changed.
He points out that, “This ruling – if it is not carefully legislated – opens up the door to unintended consequences for taxation of goods and services never envisioned by the justices. If states tax a transaction based on a customer’s state of residence, imagine businesses in a popular tourist or business convention location being required to ask customers what state they hail from so they can collect taxes on behalf of their various home states.”
His suggestion for a win-win solution “is to tax customers based on where the business is rather than where the customer is, so that small businesses don’t need to learn the tax laws and detailed exemptions of 50 states and over 3,000 counties. No business wants to undergo tax audits in several states, which would also amount to taxation without representation and without city and state services.”
This article was originally printed in Numismatic News. >> Subscribe today.
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