Special new tax for sales of gold coins!

[KBCraig]

Spending $600 a year or more with any individual means you have to file a 1099 and report it to the IRS.

http://abcnews.go.com/Business/gold-coin-dealers-decry-tax-law/story?id=11211611

[AntonLee]

you gotta love that video.  The 'victim" wanted to buy bullion but was talked into buying coins.  He lost money.  Well golly gee he's on a fixed income.

maybe he should have done a little fucking research before he spent his money

WE NEED A LAWWRRRRR to STOP THIS!

[Lloyd Danforth]

http://abcnews.go.com/Business/gold-coin-dealers-decry-tax-law/story?id=11211611

By RICH BLAKE
July 21, 2010

Those already outraged by the president's health care legislation now have a new bone of contention -- a scarcely noticed tack-on provision to the law that puts gold coin buyers and sellers under closer government scrutiny.

The issue is rising to the fore just as gold coin dealers are attracting attention over sales tactics.

Section 9006 of the Patient Protection and Affordable Care Act will amend the Internal Revenue Code to expand the scope of Form 1099. Currently, 1099 forms are used to track and report the miscellaneous income associated with services rendered by independent contractors or self-employed individuals.

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.

Taking an early and vociferous role in opposing the measure is the precious metal and coin industry, according to Diane Piret, industry affairs director for the Industry Council for Tangible Assets. The ICTA, based in Severna Park, Md., is a trade association representing an estimated 5,000 coin and bullion dealers in the United States.

"Coin dealers not only buy for their inventory from other dealers, but also with great frequency from the public," Piret said. "Most other types of businesses will have a limited number of suppliers from which they buy their goods and products for resale."

So every time a member of the public sells more than $600 worth of gold to a dealer, Piret said, the transaction will have to be reported to the government by the buyer.
PHOTO A new IRS rule that will start in 2012 will require sellers, buyers of gold coins to file IRS paperwork.
A stack of coins is shown in this file photo. A new IRS rule that will start in 2012 will require sellers, buyers of gold coins to file IRS paperwork.

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.
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The buying of actual gold, as opposed to futures or options tied to the price of gold, has been a particularly popular trend among Tea Party supporters and others who are fearful of Obama's economic policies, gold industry members such as Heller and Piret said. Conservative/libertarian commentators, such as Fox News Channel's Glenn Beck, routinely tout precious metal on the air as being a safe, shrewd investment in an environment in which the financial system -- and paper money backed by the rest of the world's faith in the U.S. government's credit -- is viewed as increasingly fragile.

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.
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."

The ICTA's Piret says identity theft is another concern because criminals may set up shops specifically to extract personal information that would accompany the filing out of a 1099.

The office of the National Taxpayer Advocate, a citizen's ombudsman within the IRS, issued a report June 30 that said the new rule "may present significant administrative challenges to taxpayers and the IRS."

[Lloyd Danforth]

Whoops! Didn't see Kevin's post.  Here's the article in Drudge.

[Pat McCotter]

This will hit all businesses.

Do you buy more than $600 from
Staples?
Sam's Club?
Tony's Hardware?
Joe's Welding Supply?

I envision the rise of brokers to deal with purchases by businesses. That way a business only has to report purchases from the brokerage; the brokerage deals with all of the individual purchases. Then the brokerages will deal only with a small number of suppliers. Anybody else care to write the novel for this?

A Google search reveals these stories.
Google - health care 1099

BusinessWeek - Health-Care Bill Surprise: 1099 Nightmare
AccountingWeb - Costly changes to 1099 reporting in health care law
CNN - Health care law's massive, hidden tax change

[Pat McCotter]

I knew I had seen this before: CATO reported about the coming 1099 blizzard in April,

Costly IRS Mandate Slipped into Health Bill
Posted by Chris Edwards

Most people know about the individual mandate in the new health care bill, but the bill contained another mandate that could be far more costly.

A few wording changes to the tax code's section 6041 regarding 1099 reporting were slipped into the 2000-page health legislation. The changes will force millions of businesses to issue hundreds of millions, perhaps billions, of additional IRS Form 1099s every year. It appears to be a costly, anti-business nightmare.

Under current law, businesses are required to issue 1099s in a limited set of situations, such as when paying outside consultants. The health care bill includes a vast expansion in this information reporting requirement in an attempt to raise revenue for an increasingly rapacious Congress.

In a recent summary, tax information firm RIA notes the types of transactions covered by the new 1099 rules:

    The 2010 Health Care Act adds "amounts in consideration for property" (Code Sec. 6041(a) as amended by 2010 Health Care Act §9006(b)(1)) and "gross proceeds" (Code Sec. 6041(a) as amended by 2010 Health Care Act §9006(b)(2)) to the pre-2010 Health Care Act categories of payments for which an information return to IRS will be required if the $600 aggregate payment threshold is met in a tax year for any one payee. Thus, Congress says that for payments made after 2011, the term "payments" includes gross proceeds paid in consideration for property or services.

Basically, businesses will have to issue 1099s whenever they do more than $600 of business with another entity in a year. For the $14 trillion U.S. economy, that's a hell of a lot of 1099s. When a business buys a $1,000 used car, it will have to gather information on the seller and mail 1099s to the seller and the IRS. When a small shop owner pays her rent, she will have to send a 1099 to the landlord and IRS. Recipients of the vast flood of these forms will have to match them with existing accounting records. There will be huge numbers of errors and mismatches, which will probably generate many costly battles with the IRS.

Tax CPA Chris Hesse of LeMaster Daniels tells me:

Under the health legislation, the IRS could be receiving billions of more documents. Under current law, businesses send Forms 1099 for payments of rent, interest, dividends, and non-employee services when such payments are to entities other than corporations. Under the new law, businesses will be required to send a 1099 to other businesses for virtually all purchases. And for the first time, 1099s are to be sent to corporations. This is a huge new imposition on American business, costing the private economy much more than any additional tax that the IRS might collect as a result.

There appears to have been little discussion before this damaging mandate was slipped into the health bill and rammed through Congress, but a few business groups did raise concerns. Here's what the Air Conditioner Contractors of America said:

The House bill would extend the Form 1099 filing requirement to ALL vendors (including corporate) to which they pay more than $600 annually for services or property. Consider all the payments a small business makes in the course of business, paying for things such as computers, software, office supplies, and fuel to services, including janitorial services, coffee services, and package delivery services.

In order to file all these 1099s, you'll need to collect the necessary information from all your service providers. In order to comply with the law, you would have to get a Taxpayer Information Number or TIN from the business. If the vendor does not supply you with a TIN, you are obligated to withhold on your payments.

Private transactions are the core of a market economy, and the source of America's growth and prosperity. Now the federal government is imposing a vast new web of red tape on perhaps billions of these growth-generating private exchanges.

For what purpose? So the spendthrift Congress can shake a few extra bucks out of private industry? The business sector is the generator of America's high living standards, but most federal legislators just see it as a kitty to be raided or a cow to be milked dry.

I'm stunned that there wasn't a broader debate before such a costly mandate was enacted. If it goes into effect, it will waste vast quantities of human effort in filling out forms, reworking computer systems, collecting and organizing data, and fighting the IRS. The struggling American economy can't afford anymore suffocating tax regulations. This mandate is a giant deadweight loss. It should be repealed.

[Pat McCotter]

Here from TheStreet:

"Speaking of 1099 reporting, the situation gets worse. Beginning in 2011, all credit card processing companies must report annual credit card transactions in excess of $20,000 and 200 transactions submitted to them for processing by any business on a new IRS form 1099-K.

I thought there would be overlap, but just as I fretted about this possibility, the IRS came up with a solution. So pay attention! If you pay for purchases with a credit or debit card, you are not required to issue a 1099. The credit card companies will do so. No overlap after all.

You are only required to issue 1099s for payments made via check or cash. So I won't have to ask Office Depot for its federal ID after all. Because the format of form 1099 will change, we will all have to purchase the upgraded version of QuickBooks or whatever software is used for accounting and 1099 preparation."

[Pat McCotter]

I wonder if the credit card companies had a hand in drafting that rule.

[Pat McCotter]

So, my plan to sell a gold coin - or a few silver coins - here and there as I need funds later in life will result in a 1099. It's a bullion coin issued by a government with a face value. How is that income?

[MaineShark]

Once they generate enough annoyance with the paperwork, they can offer to "simplify" things by doing a VAT.

Joe

[smiley]

A stupid requirement like this, requiring the submission of millions of extra forms, is very easy to subvert.

Just submit all your 1099s handwritten, in sloppy handwriting, overflowing outside the boxes on the form.

The IRS would need so much labor to process the forms... the requirement would quickly be relaxed.

[armlaw]

Any demand for compliance made by the Corporate Federal Government, MUST be in conformance with the PRA (Paper Reduction Act) and follow the specific provisions exhibited below. If the entity does NOT comply with 44 USC 3512, you may refuse to perform with this protection.

TITLE 44 > CHAPTER 35 > SUBCHAPTER I > § 3512[/b]
Prev | Next
§ 3512. Public protection
How Current is This?
(a) Notwithstanding any other provision of law, no person shall be subject to any penalty for failing to comply with a collection of information that is subject to this subchapter if—
(1) the collection of information does not display a valid control number assigned by the Director in accordance with this subchapter; or
(2) the agency fails to inform the person who is to respond to the collection of information that such person is not required to respond to the collection of information unless it displays a valid control number.
The protection provided by this section may be raised in the form of a complete defense, bar, or otherwise at any time during the administrative process or judicial action applicable thereto.

[smiley]

(a) Notwithstanding any other provision of law, no person shall be subject to any penalty for failing to comply with a collection of information that is subject to this subchapter if—

Well, that "Notwithstanding any other provision of law" pretty much leaves the door wide open for penalties specified in other sections of the US Code.  However, most of the IRS's penalties are specified by regulation, not law, so the PRA may in fact be a viable defense.  Does anybody know?  Do 1099s have valid PRA control numbers on them?

[Dan Steward]

IRS thinks they're so clever. An inept clique of swaggering morons is more like it.

Every boneheaded or vile function they or any other agency of the Legion of Doom perform, will just eventually make vast numbers of once straight laced and law abiding people leave their abusers in droves. Free from the clutches of their shameless torturers, they will gladly join the barter society, if nothing else than to be able to not let themselves be destroyed.

I really don't feel that it is an exaggeration to say that when you find your very life in peril by having to live under such destructive fiat, that you will find a way to live and likely even thrive, if it is presented to you. Few people can be so stupid as to continue the hopelessly unrequited love and absurd fawning gestures towards the state that they *know* is bent on creating their ruin.

[Pat McCotter]

Free from the clutches of their shameless torturers, they will gladly join the barter society, if nothing else than to be able to not let themselves be destroyed.

I guess we haven't read the IRS web pages about barter incone and how and when to report it.
IRS Bartering Tax Center Duct tape recommended.