On 1099-Tax Reporting Requirements For Half Ounce Gold Transactions

Tyler Durden's picture

A week ago we published a guest post from David Galland of Casey's Daily Dispatch in which Galland presented his view on what the consequences of the upcoming introduction of a 1099-filing requirement for gold transactions over $600 would be. "Can’t a person just keep their gold purchases under $600? With the price
of gold heading higher, that will increasingly require buying
smaller-denomination bullion coins – which typically carry a higher
premium. More importantly, a large body of case law gives the government
license to charge people for “structuring” – i.e., taking active
measures to get around a particular law. Thus, two $500 gold purchases
could be construed as active evasion and carry additional penalties." The topic is suddenly red hot once again, this time with ABC finally getting on the bandwagon

Starting Jan. 1, 2012, Form 1099s will become a means of reporting to the Internal Revenue Service the purchases of all goods and services by small businesses and self-employed people that exceed $600 during a calendar year. Precious metals such as coins and bullion fall into this category and coin dealers have been among those most rankled by the change.

This provision, intended to mine what the IRS deems a vast reservoir of uncollected income tax, was included in the health care legislation ostensibly as a way to pay for it. The tax code tweak is expected to raise $17 billion over the next 10 years, according to the Joint Committee on Taxation.

Pat Heller, who owns Liberty Coin Service in Lansing, Mich., deals with around 1,000 customers every week. Many are individuals looking to protect wealth in an uncertain economy, he said, while others are dealers like him.

With spot market prices for gold at nearly $1,200 an ounce, Heller estimates that he'll be filling out between 10,000 and 20,000 tax forms per year after the new law takes effect.

"I'll have to hire two full-time people just to track all this stuff, which cuts into my profitability," he said.

An issue that combines gold coins, the Obama health care law and the IRS is bound to stir passions. Indeed, trading in gold coins and bars has surged since the financial crisis unfolded and Obama took office, metal dealers said.

The sudden interest into gold tax reporting requirement is occurring as gold selling companies are increasingly being put under a regulatory microscope:

The recently revealed investigation by California  authorities into consumer complaints against Goldline International, which has used Beck as a pitchman, and Superior Gold Group (which has not) has put a spotlight on what one liberal leaning politician, Rep. Anthony Weiner, D-N.Y., calls the "unholy alliance" between gold coin sellers, such as Goldline, and conservative talk personalities, such as Beck.

Beck, who through his spokesman, Matt Hiltzik, declined to comment for this story, and Goldline marketers portray gold coins as a better alternative to owning bullion in the event that the U.S. government ever decides, as it did under FDR in 1933, to make it illegal for private citizens to own physical gold. At that time, the U.S. dollar was still pegged to the price of gold; the gold standard was abandoned during the Nixon administration.

Several legal responses have already been drafted in opposition to the proposed "healthcare" law:

Rep. Daniel Lungren, R-Calif., has introduced legislation to repeal the section of the health care bill that would trigger the new tax reporting requirement because he says it's a burden on small businesses.

"Large corporations have whole divisions to handle such transaction paperwork but for a small business, which doesn't have the manpower, this is yet another brick on their back," Lungren said in a statement e-mailed to ABCNews.com. "Everyone agrees that small businesses are job creators and the engine which drives the American economy. I am dumfounded that this Administration is doing all it can to make it more difficult for businesses to succeed rather than doing all it can to help them grow."

Yet while the escalating surveillance over the gold market can not infuse one with confidence that gold transactions will not be increasingly regulated in the future, as David Galland pointed out last week, the implications are more substantial than just in regulating the gold market:

The implications of this move transcend just the precious metals.
Rather, this is a deliberate step in the direction of implementing a VAT
– once the government has everyone reporting essentially every
transaction, taking the next step is a snap..

And for those that may have missed it, here is David's previous conclusion:

I hold out little hope that any of these attempts at repeal will succeed. The Democrats know this is their Maginot Line. If Obamacare unwinds, then their already dismal chances of holding power after the November elections become dark, indeed. Further, the latest polls show that the health care legislation is gaining popularity and is now approaching a majority. As time passes and November approaches, I think the legislation’s popularity will grow as more and more people decide they want something approaching “free” medical, a want that becomes ever more acute as the economy struggles and unemployment continues to rise.

In other words, deep political trenches are being dug on the battlefield of nationalized health care – and the Democrats hold the political high ground, making a retreat unlikely.

Back on the specific issue of setting the stage for a VAT, even politicians on the Republicrat side of the aisle are talking about the need for a national sales tax. Get ready for it, it’s coming.

Meanwhile, if you are a physical-gold investor in these United States and would like to prepare… a few thoughts:

  1. Use dips in the gold price to top
    off your portfolio before the 2012 implementation date.
  2. Document
    your purchases so that, should you ever be dragged in to explain the
    source of funds you used to buy your gold in a subsequent sale, once the
    regulation is in place, you have a ready answer.
  3. Consider
    opening a safe deposit box at a reputable Canadian bank, then make
    occasional gold buying/storage trips up north. I suspect that the
    availability of Canadian safe deposit boxes will become scarce well
    before 2012 rolls around.

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cougar_w's picture

You can run but you cannot hide.

Next stop for this train is Surveillance Station.

swamp's picture

This must include ETF's too.

ETF's buy and sell (supposedly) physical holdings that are not delivered, but bought and sold none the less.




willien1derland's picture

That is an excellent point Swamp - so that would be the brokerage firm's responsibility to create the 1099, correct?

dnarby's picture

One more time:

Gold is MONEY.

Money goes where it is treated best.

If they try and punitively tax gold, it will flee the country.

Trying to control gold this way is a no-go.

Europe has already figured this out.

Cognitive Dissonance's picture

"More importantly, a large body of case law gives the government license to charge people for “structuring” – i.e., taking active measures to get around a particular law."

Well it looks like I have nothing to worry about because I don't structure my coins.

I stack them.

Cognitive Dissonance's picture

Gully Foyle

I think I've finally figured out why you cut and paste long articles under your ID with little to no commentary. Because it's becoming clearer by the day that you're nearly incoherent and you're attempting to cover it up by using the well crafted words of others. For some reason you've taken a shine to me and you just can't avoid insulting me in some manner as often as you can. Sad really.

And others have noticed this bizarre behaviour as well. For example, the other day you did the same thing to me and this was the reply Marla and Me left for you, which of course you completely ignored. Grow up Gully and stop acting like a scorned 13 year old girl. And take that training bra off your head. It isn't funny.


by Marla And Me
Thu, 07/15/2010 - 15:18


Honestly Gully, you're starting to sound like a scorned 13-year old girl.  CogDis politely asked that you refrain from copying and pasting long entire articles in the comments and instead summarize them and provide some insight.  Now every time he posts something you start with the Ad Hominems about the story of his wife and child.  You have provided many great links to various discussions, but Cog Dis does have a point.  Grow up and toughen up a bit.

Marla And Me's picture

Hey CD,

Thought you might like Martin Armstrong's latest missive on the collective conscience:



And Yes, Gully, please give it a rest.  It's getting old.

Cognitive Dissonance's picture

Thanks for the link.

I'm impressed that Armstrong could write about a subject so much better than I could with 80% less words. Christ, I'd be on chapter 3 by now. :>)

I liked Armstrongs point of view on the subject. It's always instructive to read other people's thoughts on a subject you think you know well. As long as I can elbow my ego to the side, I hope to continue to learn about myself and those around me.

swamp's picture

Fewer, not less.

If you're going to pretend you're a cut above the average AP reporter, then learn the difference.

Cognitive Dissonance's picture

Not pretending and never claimed to be. Some people like what I write, some people hate it. Sounds like you're a hater.

willien1derland's picture

CD - I have read many of your posts & have learned a great deal - thank you for all your efforts & insights as they are greatly appreciated - Please add me to the list of 'Some people' - All the best!

nwskii's picture

we half to pass the bill before we can see whats in it

DosZap's picture


Does that give you a clue?.

That the Congress(Dems), even Pelosi, and Reid, really, had very little idea what is in the Bills...............the Congress did not put them together..........no part of the Legislative body really did(save Pelosi, and Reid) but JUST to a degree.(This is but ONE reason why the Bills HAD TO BE IMPLEMENTED quickly), and no time given for reading, much less dissection/ digestion...............I liken it to RAPE.

AR15AU's picture

I have pulled out of the banking system all together. The grey market is a wonderful thing.

Bam_Man's picture


They want us all to be prisoners for life in this financial hell they have created.

We'll just have to see about that.


scatterbrains's picture

yo my man don't think for a minute ebay and craigs are "grey" but I'm sure you know better and it need'nt be said.

Bam_Man's picture

Ain't selling/bartering mine until after the collapse anyway.

There won't be an IRS to worry about at that point.

Bam_Man's picture

I am ex-SF, own plenty of firearms and am always carrying.

Anyone who wants to steal from me is welcome to try. Including you. No, especially you.

Gully Foyle's picture


Then you should understand just how human you are.

Why pretend to be Superman?


Kegfreak's picture

People like Bam-Man and other veterans like myself have a pretty decent grasp on how  "human" we are.  The superman thing went out the window in 04 for me personally.  Took one RPG over my head and exploding 50 ft behind me to realize how "human" we all are.  All he is saying is don't think you can come take our shit.  Try and get close enough to burn my house down, I can put a 4 inch group with iron sights at 500 meters.  If you get by that, I got three dogs, led by one pissed off german shepard that will rip your throat out just to please me.


I'm not superman, just prepared for you and your ilk.



The Alarmist's picture

Gee, I thought lame-boy was telling us he is formerly from San Francisco.  If he were really a former Operator, he would have called himself an Operator.

Kegfreak's picture

Wow dick, I didn't know you were so interested in my history.  Joined Marines in 2001.  Moved to Bay Area in 2006 when I was honorably discharged.  Quit job there in 2009 when plant I was working announced it was closing and moved to Yuma AZ to work on a base which I hate.  I moved here because I have a house here. 

I'm not an "operator" and never said I was.  I don't have to make shit up.  I was a lowly pouge who was in the wrong place at the wrong time with not enough stripes to not get "voulenteered" to play war.  All I wanted was to fix aircraft, but I joined the Marines and knew what that meant.  Believe it or not, I have done stuff during my time on earth that I have not posted on this web site, but thanks for caring.


Rusty Shorts's picture

 - after extensive range time at Camp Lejeune, I call BULLSHIT on your 4 inch groups at 500 meters.

harveywalbinger's picture

Perp alert!  There's a few perps on this site I suspect are compensated to do their best to control the discussion to keep it as favorable as possible to TPTB.  

Calling you out bitchez

Gully Foyle = paid hack

Don't feed the trolls folks.  Just junk 'em & their posts will magically disappear...

aerojet's picture

OpSec, dude, now he knows you're an Internet commando, lol.  I wouldn't expect a real SF type to tell anyone, especially those on an Internet message forum, what their background is.  That leads me to believe you're not ex-SF, or maybe just the bottom of the barrel.  Anyways, guns or no, you aren't going to hold out very long against 5-10 attackers who will also bring guns to the fight.



Kegfreak's picture

For the record, I was never sf, not even a grunt.  I just got the whole "every Marine's a rifleman" thing jammed on me.

DosZap's picture


"Fuck your guns I'll burn your house down."

For that you have to get real  CLOSE................FEEL LUCKY?.

Do you feel lucky at 500-1000yds, or a mile?..........best know who your trying to steal from, and burn down, and their survellance capacity,and proficency...........  *:>(

resipsaloquacious's picture

If I read this correctly, if you purchase the gold as an individual -- not via your business as an asset -- and you should be able to avoid the black helicopters and their gold taking mercenaries.


Mikebrah's picture

Wrong.  The person selling you the coin is most likely a small business, LLC, etc.  They have to report it, therefore you would be on record as the purchaser.  If the file a 1099 saying they sold you gold, and you don't file a 1099 saying you bought gold then there is a discrepancy for the IRS to investigate.

resipsaloquacious's picture

The language cited in the post states "purchases by small businesses [etc.]", not sales.   Where are you getting your facts about the "selling" of gold to individuals being recorded?

BrianOFlanagan's picture

you are entirely correct Resi.  But people don't want to hear facts - just want to believe every conspiracy theory thrown about by professional scaremongers.  You start mentioning facts and they junk you.


resipsaloquacious's picture

Yea. I am new around here.  I like the financial/economic view of the site, but some of the commenters are hilarious, in the unintentional way.  It's like they get a little turned on by the idea of a total collapse of society, merely so they can say "I told you so."  The equivalent of Bible thumping end-timers.

aerojet's picture

Which is precisely why it won't happen.  You'll lead a life of grinding poverty and unhappiness in which a collapse would be a welcome relief.  But there won't ever be any collapse, because living hells don't work that way.

Internet Tough Guy's picture

You have it backwards. If a dealer purchases a coin from you, he pays you. This triggers the 1099. This is explained in the article.

DosZap's picture


Been this way long as I can remember.................only difference is the dealers paperwork load, and small increment purchases can no longer be UNDER the Radar.(if $600.00)

Plus they know who HAS it...........or had it..LOL

resipsaloquacious's picture

But this is nothing new.  It is a taxable event, regardless of whether it is a precious metal or a baseball card collection.  The only difference now is the $$ amount at which a report must be made.  To imply that this is legislation with the heinous purpose of the seizure of PM's is absurd. 


Internet Tough Guy's picture

Coin dealers have not been required to send 1099s before. This is new.

You are the only one implying anything about seizure. This is about increased taxation, as stated.

resipsaloquacious's picture

Let me clarify.  I did mean to imply you were talking about Govt seizure, but people commenting in this thread.

Previously, Coin dealers did not have to report taxable events over a certain amount of $$.  They were previously exempt?  Really? 

DiverCity's picture

Yes, really.  Do you consider it appropriate, natural or normal for such reporting to take place?  A somewhat analogous governmental burden is that financial institutions must file SAR's on transactions in cash of $10,000.00 or more based on the policy that drug dealers and other so-called malevolent types deal in such transactions as a way to launder ill-gotten gains.  The $600.00 threshold is absolutely new and a clear prelude to a VAT as well as a means to track transactions in PM's, among other tangibles, for the purpose of taxing capital gain.  Again, why would it occur to you that coin dealers would have previously been required so to report?

swamp's picture

Hey dumbo, if you, as an individual sell to a business, you get the 1099, because the business bought. Get it?

The Alarmist's picture

Unless they really changed the law, the shop will not issue a 1099 for selling you gold, but the onus will be on you to issue a 1099 for each person to whom you pay more than $600 per year.  That means that selling multiple coins in multiple transactions simply aggregates until the end of the year, and you issue a 1099. Doom on the IRS to try to enforce this.

The shop will issue a 1099 to you if it purchases (pays you) more than $600 in any year. This will be easily enforceable on the poor shopowner, whio will have to document every penny of income.

Is it a dress rehearsal for a VAT? You bet.  In Belgium, a patron is legally required to carry a restaurant receipt off premises so that the evil owner cannot scoop it up and destroy it and thereby pocket the VAT and evade the income taxes.  1099s for everybody is just uncle sugar's clumsy, ham-handed way to avoid having to go through all the register tapes and books manually by making all the big stuff go through a machine readable or electronic format.





DosZap's picture


Unless your paying cash,to a small dealer..........and small increments.

Your getting a recipt for what you purchase (or better be).

Also, unless I understand this incorrectly,it will be for buyers the same, as far as reporting,you will get a 1099R, when and only when you sell.

Then you list on Taxes, and show your cost, loss, or profit basis( the only added issue for indiviuals, is making sure you have a recipt).

When your Dealer sends the 1099R in, it's (as far as IRS rules go), the same as you recieved this as INCOME, and you must re-justify where you got the funds.

FU in & OUT.

resipsaloquacious's picture

See my above comment.  I am not defending the new law, but to couch the law, as this post does, as specifically focused on .5 oz and greater gold transactions is fear-mongering.