As with other types of businesses, the vast majority of our transactions are conducted without any reporting requirement. However, businesses like ours are subject to the anti-money laundering provisions in the so-called “Patriot Act,” enacted in 2001.
Some dealers report more customer transactions than the law actually requires. At Money Metals Exchange, we follow the law and have examined it very closely to be sure of our obligations. In the normal course of business, we are not required to report your purchase of precious metals about 99.998% 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.
Likewise, we are required to report the SALE of your precious metals only in extremely rare circumstances: According to IRS regulations, only those items and quantities that can be used to fulfill a regulated Futures Contract (RFC) trigger the 1099B reporting requirement. Those items are currently as follows:
- Sales of 50 oz. platinum (purity requirement of .9995) in bar sizes of 10 oz. or larger trigger a 1099B.
- Sales of 100 oz. of palladium (purity requirement of .9995) in bar sizes of 10 oz. or larger trigger a 1099B.
- Sales of 100 oz. of gold (purity requirement of .995) in not less than one 100 oz. bar or three (3) one kilo bars (32.15 oz each) trigger a 1099B.
- Sales of 5,000 oz. of silver (purity requirement of .999) in not less than five 1,000 oz. bars trigger a 1099B.
Sales of silver bullion rounds, silver coins, one, five, 10, kilo, and 100 oz. silver bars, or any gold coins, rounds, or bars that are smaller than one kilo -- no matter how larger or small the sale may be -- do not trigger a Form 1099B filing requirement.
It should be noted, however, that individual taxpayers have their own reporting obligations as to their own tax returns. Because the IRS currently considers precious metals to be property, not money, it expects investors to accurately report any capital gains or losses measured in Federal Reserve note "dollars" when the bullion is sold. You are strongly urged to comply with all your legal requirements, including reporting all your income. Any capital gain or loss you incure is generally incorporated into your income tax obligation at the federal and state level. (But personal reporting is not required when the metals are purchased and not while the metal remains in your ownership.)