What the IRS Needs To Know
To most gold and silver buyers, Privacy is of the utmost importance. Therefore it is essential to know that the US government requires TWO reporting obligations that bullion dealers have for customers buying and selling bullion.
When Selling Your Bullion
The Internal Revenue Service (IRS) has a particular form, Form 1099-B that applies to specific bullion sales. Below is a list of those transactions:
Why Are Certain Bullion Products Reportable?In the early 1980s, the IRS proposed regulations to require coin dealers to report purchases from non-corporate sellers. These rules apply to items “of sufficient quality” that could be used to fulfill commodity contracts on existing or approved changes.
These reporting requirements only apply if you sell at least the minimum quantity that is equal to the quantity of a commodity contract for the object within a short timeframe.
Which Products Are Exempt?ANY bullion product NOT on the Reportable Items list above (including the bullion coins you see in the following images) do not need a Form 1099-B to be filed, no matter how large the quantity.
Many exempt products, like American Silver Eagle coins, are not on the list because they were not in existence when the Reportable Items list was created.
When Buying Your Bullion
Form 8300 deals with reporting cash transactions over $10,000 on a single transaction or series of “related” transactions (any orders placed in a single 24 hour timespan).
“CASH” Is Defined As
- A cashier’s check, money order, bank draft, or traveler’s check having a face amount of $10,000 or less that is received in a designated reporting transaction.
- US and foreign coin and currency received in any transaction.
Cash does not include a check drawn on the payer’s own account, such as a personal check, bank wires, credit/debit card payments, PayPal payments, and ACH transfers regardless of the amount.
Reportable Or Not?
Customer visits a local coin shop and pays for $12,000 with a cashier’s check. Is it reportable?
NO. This is NOT reportable because a cashier’s check is only considered cash if it is $10,000 or less (because when they’re over $10,000, the issuing bank does the due diligence, not the dealer).
A customer visits a local coin shop and pays $8,000 cash for bullion. The customer comes back 3 hours later and pays $3,000 cash for more bullion. Is it reportable?
YES. The customer has now triggered a reporting requirement as these transactions are considered “related”.
A customer places two online orders within a 24 hour timespan. Customer mails two bank drafts, one for $5,000 and one for $6,000. Is it reportable?
YES. The customer has now triggered a reporting requirement as these transactions are considered “related” and the bank drafts, individually under $10,000, are considered cash, and in sum are now over $10,000.
When a Form 8300 reporting is triggered, the dealer is obligated to file the form, including the following customer info:
- Social Security Number
If the customer chooses not to provide this information or leave sections blank, the dealer STILL has to file the form.