The Ins and Outs of Government Reporting
Americans once walked down the street with gold and silver jingling in their pockets and thought nothing of it. Today, precious metal coins are so marginalized some customers wonder if they might one day be prosecuted if authorities find out they are holding some.
It’s no wonder. For nearly 4 decades between Roosevelt and Nixon, gold bullion ownership was illegal. Anyone wishing to pick up some gold had to skulk around, keeping their transactions hidden.
Today, there are absolutely no restrictions on the types or quantities of bullion coins, rounds, and bars an investor can own. There haven’t been since 1974. But people still worry.
And even if most understand owning metal is perfectly legal (and understand the imperative of buying this financial insurance), they don’t want transaction details reported to Uncle Sam. They have plenty of reason to mistrust what officials might do with the information down the road.
Fortunately, the overwhelming majority of transactions are conducted without reporting. Transactions would be 100% private but for anti-money laundering provisions in the deceptively named “Patriot Act,” enacted in 2001.
Unfortunately, some squeamish dealers report more customer transactions than the law actually requires. At Money Metals Exchange, we have examined the law very closely and therefore do not report the purchase of metals about 99.997% of the time, with one extremely rare exception. For a disclosure requirement to be triggered, BOTH of the following conditions have to be met:
- The transaction is (or related transactions are) larger than $10,000 in size, AND
- Payment is made using actual cash (i.e. Federal Reserve notes and U.S. coins) or with two or more cash instruments (defined as money orders, cashier's checks, or traveler's checks) which, individually, are $10,000 or less but when totaled together equal more than $10,000. Personal checks, debits, bank wires, and credit card payments are NOT considered cash or cash instruments, and, therefore, purchases using them do not trigger disclosure by a dealer regardless of their amount(s).
The IRS disclosure document involved is called Form 8300, and it's applicable to all cash transactions in the broad U.S. economy meeting the above conditions – not just precious metals transactions. To date, Money Metals Exchange has completed over 300,000 transactions, and we have been required by law to file Form 8300 fewer than ten times.
Likewise, we must report the SALE of your precious metals only in extremely rare circumstances: Of all retail silver products, only pre-1965 "junk" silver coins are arguably subject to reporting on IRS Form 1099B, but only in quantities of $10,000 face value or more – more than $125,000 of current silver value. Sales of silver bullion rounds, 10-ounce bars, and 100-ounce bars do not trigger a Form 1099B filing requirement.
Sales of gold bars that are each smaller than one kilogram (32.15 ounces) absolutely do not trigger a 1099B – nor do sales of U.S.-minted gold coins such as the American Eagle. However, sales of certain one-ounce foreign-minted gold coins (Krugerrands, Maples, and Mexican Onzas only) currently require a 1099B when a customer sells 25 ounces or more.
And finally, sales of platinum bars larger than 25 ounces and palladium bars larger than 100 ounces trigger a 1099B.
It should be noted that individual taxpayers have their own reporting obligations as to their personal tax returns. Because the IRS considers precious metals to be property, not money, it expects investors to accurately report any capital gains or losses measured in dollars when bullion is sold. Personal reporting is not required when the metals are purchased, and not while the metal remains in your safe.
Money Metals is dedicated to maintaining the confidentiality of customer gold and silver transactions. We report only what is absolutely required and do our best to make sure clients are aware of those requirements.
After all, investors should buy metals with confidence; transactions with us are legal, secure, and discreet. There is no reason to feel dishonest for protecting yourself by owning honest money.