By Industry Council for Tangible Assets
Below is a rundown on the latest sales tax collection updates following the landmark Wayfair Supreme Court Ruling last summer. The decision, allowing states and municipalities to collect taxes on interstate transactions of services and goods ( including those pertaining to the coin industry), is having ripple effects across the United States.
California — Using an existing “long arm” statute passed prior to the Wayfair decision, the State of California issued regulations for collection of sales taxes (minimum of 7.25%, or higher depending upon locality of the buyer) imposing collection by out of state sellers beginning April 1, 2019.
At the same time, new legislation was introduced to consider state tax collection and out-of-state seller registration based upon the Supreme Court decision. Assembly Bill 147 is a start and will be subject to substantial additions according to its author. Bill 147 defines a “retailer” subject to sales tax collection for sales to California as anyone who sells over $500,000 of defined property delivered to California in a calendar year. Much more will be added to the legislative efforts.
So far, the California bullion and numismatic exemptions have not been targeted, but there is no assurance of their continued status.
New York – New York issued its “online sales tax rules” that require remote sellers to register with the state, including bullion and numismatic sellers despite the exemptions.
There is a concern that registration could lead not only to initial filing fees and expenses but provide a target list for “exemption” repeals efforts.
Texas – Texas has filed legislation because of the Wayfair decision that would define a remote seller as “a person who makes more than two deals of taxable items during a twelve-month period.”
Although there have been no filings seeking the repeal of the Texas broad bullion and numismatic exemptions, the definition is troubling as is the legislation’s provisions allowing the comptroller to issue regulations which could include out of state dealer registrations despite exemptions.
States Targeting Numismatic Sales-Tax Exceptions
Nebraska – The legislation filed in Nebraska uses the removal of current sales tax exemptions on bullion and numismatic sales in order to provide a “pay for” of costs related to the legislation’s spending initiatives.
The bill appears to be low priority. However, the use of the repeal of the exemption as a “pay for” means that legislative staff has identified the exemption for repeal in order to fund a spending initiative and probably grossly exaggerate the value of such a repeal, ignorant of the low profit margin on bullion sales.
Washington – Legislation (Washington State SB5658) was filed to repeal the existing bullion exemption from sales tax collection.
Dan Duncan (Pinnacle Rarities, Olympia, Washington) and several dealers and interested parties are working with ICTA’s informational assistance to contact key legislators in the effort to prevent the legislation from becoming law.
New State Exemption Efforts
Arkansas – A group of coin-business owners led by Paul Mason (Mason’s Coin and Pawn, Hot Springs, Arkansas), Dan Hedges (Auroinc Industries, Little Rock), and Tom Poole (Northeast Arkansas Coin Co., Jonesboro) has engaged lobbyist Len Pitcock (Perimeter Group, Little Rock).
The lobbyist quickly secured a senator to sponsor and introduce a bill to exempt sales-tax on coins, currency, and precious-metals bullion. Senate Bill 389 is now in the Senate Revenue and Tax Committee where the bill will be heard early next month, including ICTA testimony.
Tennessee – The Tennessee Precious Metals, Coin & Currency Coalition led by COL Steven Ellsworth, ret. (Butternut Coins, Brentwood, Tennessee), has retained lobbyist Erica Vick (Bass, Berry & Sims PLC, Nashville).
Senate Bill 457 and House Bill 992 have been filed by key legislators and the outlook is very good for passage of this legislation. The text of these bills is a broad exemption of sales-tax on “all coins, currency and bullion” and covers both bullion related products and numismatic items.
Kansas – Dean Schmidt (Dean Schmidt Rare Coins, Atchison, Kansas) is leading an ongoing sales-tax exemption effort with a lobbyist. Senate Bill 13 includes a sales tax exemption provision for gold and silver coins and bullion and House Bill 2093 provides a sales tax exemption for sales of currency, certain coins and bullion.
Schmidt testified in support of both bills at their respective committee hearings. SB13 has been referred to the Select Committee on Federal Tax Code Implementation. The House Taxation Committee recommended that HB2093 be passed.
SB13 with multiple provisions stands a better chance than the HB2093 standalone bill to pass. Regardless, the consensus is very good for the passage of either bill.