IRS Warns Against Keeping IRA Funds In Gold At Home

Tyler Durden's picture

Submitted by Ben Lee via TheTrustAdvisor.com,

Commentary on the Wall Street Journal article by Laura Saunders

The Internal Revenue Service isn’t too keen on the recent advertisements suggesting retirement savers store their tax-free individual retirement account funds in gold at their house or in safety-deposit boxes, the Wall Street Journal writes.

Storing Gold at Home: Legal, But with Caveats

The statement from the IRS comes in response to a number of ads online and on the radio, such as one from Hartford Gold Group, suggesting investors can avoid stock market turbulence by investing IRA accounts in gold coins and bullion they can store where they like, including their home, according to the Journal.

 

But the law on such practices is cloudy, the publication writes.

 

For example, IRA assets can’t be stored in collectibles such as antiques, gems, artworks or wine, according to the Journal. On the other hand, it’s legal to keep IRA investments in coins and bullion-quality bars in metals such as gold, silver and platinum, the publication writes.

 

But few IRA investment providers offer the option — Vanguard and Charles Schwab don’t allows their clients to invest IRAs in physical metals, according to the Journal.

 

The IRS may be taking issue with just how difficult and expensive investing in physical gold could end up for the investor. Fidelity, which allows IRA investing in some coins and bullion, charges up to 2.9% to buy and 2% to sell the assets, and a further 0.125% quarterly storage fee, the publication writes.

 

And keeping the gold at home is not an option: out of tax compliance considerations, Fidelity requires physical metals to be stored at a qualified facility and doesn’t let IRA investors take the gold out or even view it without notification from the IRA custodian, the Journal writes.

 

Proponents of store-at-home gold say that IRA owners can legally keep their gold in a safe-deposit box or at home if they are the owners and managers of a limited-liability company that uses the funds from the IRA to obtain the gold, according to the publication.

 

Some attorney says this structure would allow investors to store coins owned by the LLC at home — but for bullion, they would still have to store it in an LLC-owned safety-deposit box, the Journal writes.

 

Home storage can get pricy, too: one professional whose company provides paperwork for at-home storage of IRA gold charges $400 to $1,200 to set up such an LLC, according to the publication.

 

And because the issue of LLC ownership by IRA has no legal precedent, companies advertising home storage of IRA gold are careful to note that they don’t provide legal advice, the Journal writes.

*  *  *

Amid the increasingly mainstream "war on cash" and 'hoarding' across the globe, the timing of the IRS' warning about keeping gold in your IRA seems highly coincidental at best and more than worrisome at least as the "different this time" confiscation methods shift attitudes from concerns to actions...

The government blatantly stole wealth from the American people before.

Many worry the U.S. government might confiscate gold again if it becomes desperate enough. I don’t think those fears are unfounded. The U.S. government’s abysmal financial situation is only getting worse.

But would it really do a 1933-style grab again?

I don’t think it will. However, there is another growing threat to your gold.

More Likely Than Outright Confiscation

Today, only a tiny fraction of the U.S. population owns gold. Heck, I’d bet most Americans have never even seen a gold coin, much less appreciate its value.

This wasn’t the case in 1933, when the U.S. was still on a variation of the gold standard. That’s why the government probably won’t repeat the 1933 rip-off. It’s simply not worth the effort.

If the government wants to confiscate wealth, it’s far more likely to go for the easy option… steadily debasing the currency by printing money. It’s a stealthy way to confiscate from savers.

That doesn’t mean gold owners are in the clear.

I think the government will try a new scam: taxing windfall profits on gold. This would make it much easier for the government to accomplish something similar to its 1933 heist.

There’s precedence for it, too. In 1980, Congress passed the Crude Oil Windfall Profit Tax Act, which taxed up to 70% of “windfall profits” of domestic oil producers.

What the heck is a windfall profit anyway?

As far as I can tell, it’s whatever politicians decide it is. It’s completely arbitrary. There are no objective measures to define it.

In short, a windfall profit is simply a profit politicians don’t like. The whole concept is a scam—a word trick to camouflage and sanitize legalized theft.

If the price of gold explodes, I wouldn’t be surprised if Congress passes a Fair Share Gold Windfall Profit Tax Act levying a tax of 80%, 90%, or more on gold profits.

 

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Volaille de Bresse's picture

You own gold? VOTE Trump!

 

The old Cankles witch will sign anything to legally spoil you of your yellow shiny stuff.

Here2Go's picture

IRS = Scuba Steve

 

jhoo knew?

NidStyles's picture

"Come for my gold, stay with a sucking chest wound."

Chupacabra-322's picture

@ Nid,

Any Attempt to confiscate / Steal my Gold and you will die an agonizing death. That is all. Carry on.

hedgeless_horseman's picture

 

I know we were told there would be no math, but if I have to pay a % capital gains tax on gold's appreciation, do I get to write off 100% of my corresponding USD losses?

knukles's picture

Hah ha ha ha   
     sigh

Like trying to deduct loan interest on muni bond margin.

Nobodys Home's picture

Like... "Trying to push a string"?

SafelyGraze's picture

with all the expense involved to store and secure the metal, it makes you kinda wonder if only there were some sort of way that the metal-owners could somehow pool their storage efforts so that the cost would be defrayed by spreading it among the metalowners who store in a common, secure facility.

if it has never been tried before, it might make sense for certain persons to attempt it.

Supafly's picture

The most common secure facility is one about which nobody knows.  Pay for it in cash, bring it home and don't tell anybody.

MagicHandPuppet's picture

Exactly.  I spent a good amount of time looking into this IRA LLC owned gold thing.  I discovered that people going this route are simply doing it all wrong.  What's the point of owning the most perfect, private asset when it's no longer private and under the clear jurisdiction and control of the federal goobermint and political whims?

I've thought a lot about the possibility of crippling "wind fall" taxes as well.  This will make selling any large quantities for cash at once very difficult... possibly incentivising you to go and find a real cash bargain on some privately owner real estate though ;)

bleu's picture

Yikes. Can't get away from the Long Arm of Government.
https://goo.gl/tiZwod

RaceToTheBottom's picture

That was how they got centralised storage to begin with.  They gave you a paper summary each month.  Then the WS started lending it out, and the FEDsters allowed it cause Gold backing was causing them trouble.....

And here we are...

 

Expect the war against physical to accelerate.

 

Citxmech's picture

The key to understanding IRS rules:

If you get fucked - the IRS can do it (and probably already is).

If it fucks the IRS - you will be dragged out of your house in irons and will be looking at federal time.

Cliff Claven Cheers's picture

I call bullshit on the IRS to tax windfall profits on gold. Gold is money and how the hell do you tax money. Fthem the constitution defines /dollar as:

Original U.S. Constitution

Art. I Sec. 8 Cl. 5
[Congress shall have Power ... ] To coin Money, regulate the Value thereof, and of foreign Coin, ...;
Art. I Sec. 10 Cl. 1
[No State shall ...] make any Thing but gold and silver Coin a Tender in Payment of Debts; ...

Note that there is no such prohibition against Congress, or any delegated power to make anything legal tender. Congress was originally understood to have no power to make anything legal tender outside of federal territories, under Art. I Sec. 8 Cl. 17 and Art. IV Sec. 3 Cl. 2, but in 1868 a Supreme Court packed by Pres. Ulysses S. Grant, in the Legal Tender Cases, allowed Congress to make paper currency issued by the U.S. Treasury, backed by gold, legal tender on state territory, a precedent that remains controversial to this day, when courts allow paper currency not backed by anything to be considered "legal tender".
Seventh Amendment

The only money amount in the Constitution or its amendments is in the Seventh Amendment:

In Suits at common law, where the value in controversy shall exceed twenty dollars, the right of trial by jury shall be preserved, and no fact tried by a jury, shall be otherwise re-examined in any Court of the United States, than according to the rules of the common law.

****In 1789 the "dollar" was a coin, the Spanish taler, containing 371.25 grains of pure silver, or 416 grains of silver of standard (coin grade) purity.*****

A troy ounce, the standard measurement unit for precious metals, is 480 grains, so a "dollar" contains 0.7734 troy ounce of pure silver, and 20 such coins would weigh 17.3333 troy ounces and contain 15.46875 troy ounces of pure silver. One can use the Oanda Currency Converter below to find out what the current value of that amount of bulk silver would be in federal reserve notes. For example, on June 15, 2000, it would be about $87.71 in federal reserve notes. However, keep in mind that the world trading price for gold or silver is the bulk, wholesale price, for ingots, in minimum quantities of 400 troy ounces, and the trading is generally only a tranfer of title and not a physical delivery of the ingots, for which an additional transport charge may be made. As single coins it would have about twice that bulk value, so the constitutional threshold under the Eighth Amendment would be closer to $176 in federal reserve notes. That would be the minimum "value in controversy" that would preserve the right to trial by jury in a civil case.

http://www.constitution.org/cs_money.htm

MagicHandPuppet's picture

Oh oh oh... you cited some "laws"... that's cute.

Dr. Dooms-a-lot's picture

I call bullshit. The ruling class wipes their ass with the constitution.

tarsubil's picture

In the old days, they had things like that. They were called "banks". Then the jews took over.

jackstraw001's picture

My gold is safely stored on the bottom of the lake after the tragic boating accident.

blargg's picture

The storage facility could even issue pieces of paper that indicate holding of a piece of metal, which could be picked up at any time. Then people could just exchange these pieces of paper. What could go wrong?

ndevr2prsavere's picture

Like trying to shove a wet noodle up a wildcats ass

Hulk's picture

We should actually be forcing that issue NOW ...

Haus-Targaryen's picture

If it came to that, I would imagine your AG and AU gains would dwarf any cash you have on hand. 

847328_3527's picture

The IRS has increased taxes and just about everyting else it can do to grab your hard-earned money. Yet for years it has not raised the $3,000 carry forward passive losses against active income. So, for example, if you lost $60,000 in the stawk market you can take that loss against gains in the stawk market and/or up to $3,000 against your active income [if I understand my accountant correctly].

That sucks.

I have discussed this with my Congress people many times, but like most present politicians, they don't give a shit about what their constituents want.

Beowulf55's picture

 

 

YOU STILL WASTE TIME WITH YOUR CONGRESS CRIMINALS?

 

WAKE UP AND SMELL THE NITROCELLULOSE!

Nobodys Home's picture

If you have a good accountant :)

Nobodys Home's picture

Had a business..lived in a town w/an irs processing center..friends worked there..found an accountant that did returns for about 60% of the irs people. Saved thousands every year! Who's going to audit the guy that does their tax returns!

DontGive's picture

Mixing IRA's (empires product) and LLC's is a bad idea.

This route has no track record.

TeaClipper's picture

Why did they pull your Soros article so quick?

Nobodys Home's picture

I've got chest seals and decompression needles right here. Your call.

Join or die.

Cognitive Dissonance's picture

Always remember the Golden Rule. He who makes the 'official' rules, and backs them up with 'official' guns, can change the rules when it suits the 'officials'.

There are no constitutional protections when it comes to the IRS. You are guilty until you prove your innocence in their courts under their rules of evidence and procedures.

They can determine you are guilty, take money from your accounts or at least impound it, then force you to fight them for recovery. In many cases you will spend tens of thousands of dollars fighting for the 'right' to beg them for your money back.

Bullionaire's picture

I never get tired of posting this:

"The Treasury Department was surprisingly candid in that correspondence, asserting the U.S. Government's authority, in declared emergencies, to confiscate precious metals and to restrict ownership of mining shares -- and to confiscate and restrict EVERY OTHER FINANCIAL ASSET AS WELL. So perhaps precious metals investors shouldn't feel too paranoid."

http://gata.org/node/5606

sleigher's picture

Well if that's the case, it's a damn good thing I recently converted ALL of my precious metals to US Dollars and sent all of it to the IRS to pay future taxes.  Boy am I happy I will never have to deal with that headache.  whew...

Countrybunkererd's picture

as a side note, in a negative interest rate world, will you be charged for the holding fees over that timeframe of the taxes you paid for in advance?

What a truly screwed up concept they are forcing upon the world.  No rules other than the certainty of death and taxes.

Nobodys Home's picture

That's pretty much been the rule for a long time.

DIgnified's picture

I just stay broke so they can't take shit. That'll show 'em. 

Chupacabra-322's picture

Fighting the Criminal Fraud entity called THE UNITED STATES, CORP. INC.

Kirk2NCC1701's picture

Yes, is this a great country, or what?

Really makes you want to enlist, bleed and die for it, doesn't it?

It also makes you want to do your utmost to maintain and support TPTB, doesn't it?

Cognitive Dissonance's picture

I, for one, welcome my alien overlords.

BarkingCat's picture

Maybe living under Islam is not so bad.

 

Nobodys Home's picture

Seditionist! We will now chop off your typing fingers for doubting Mohammed's prophesy! There is no maybe. Only Allah!

August's picture

Hopefully, no one who knows the score would lift a finger in defense of the United States Government.

The USG of course wants you to believe that it "your freedom" and "your community" that you might be called upon to defend;  if you're really stupid enough to believe that, be my guest....

s2man's picture

Shit,  my congress critter just said the Blackhawks at the nearby Air force base are to"protect country and community".   What,  my community needs troop-carring blackhawks to protect me,  in the center of the continent?  

I almost didn't post this,  but they already know who/where I am.

Nobodys Home's picture

Yah but! but....income tax is voluntary!

Hal n back's picture

if the IRS comes after you, you plead that there was no intent to cause a problem. In the spirit of thing, you would be prepared to pay a 28% tax on any gains.

Cognitive Dissonance's picture

I've gone several rounds with the IRS. The drill is simple. Yes sir, no sir, thank you sir, may I have another sir.

Oh, and BYOL...bring your own lubricant.

Nobodys Home's picture

Last time I dealt with them...they sent me a letter....didn't want to open it....opened it.....they said...You missed a deduction and they were giving me more money! Im not kidding!

...well not giving me more....taking less