| New 1099 Reporting
"Word is out about the 1099 reporting requirements that were buried in Obama’s health care legislation. If they go into effect, starting in 2012 precious metals dealers will have to report to the IRS on 1099s all purchases of $600 or more from clients in a single year.
These regulations will create a paperwork nightmare for precious metals dealers, greatly increasing our costs of doing business. As is the case in all businesses, higher costs are ultimately reflected in the prices of the products that businesses sell.
But more ominous than higher prices, sellers will have to provide identification to dealers, such as driver’s licenses and social security numbers. If that information is not adequately secured by the purchasing dealers, sellers could become victims of identity theft, which is a major crime today.
Further, the new 1099 reporting could endanger the personal safety of precious metals investors. Again, if the records are not properly secured and fall into the wrong hands, that information could cause criminals to conclude that the sellers have other precious metals in their homes."
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.
"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.
The new legislation works in both directions to track the buying and selling of gold.
Essentially, any transaction over $600 will be logged buy the dealer, whether you buy $600 or more worth of gold, or sell it back to the dealer.
The article then proceeds to give some reasons to be concerned beyond the possibilty of taxation.
Since the transaction will require a social security number (or federal employer identification number) to be logged at the time of sale or purchase, this new legislation gives the government the capability to track every single precious metals purchase (over $600) in the country.
While the legislation implies that taxation of such transactions to generate additional revenue is the goal, precious metals buyers, who generally like to remain anonymous, will most certainly see that the real issue in this instance is not taxation, but the ability to track who owns the gold.
When the US government ran into money problems in the 1930’s, Franklin Roosevelt confiscated all gold held in the hands of the public, and those who refused to give up their gold were either fined or imprisoned. Incidentally, the communists in Russia and eastern Europe did the same thing throughout the 20th century, but those penalties went a bit further than just imprisonment.
With a US dollar currency crisis and a US federal government debt crisis looming, many precious metals investors are concerned that similar government action may be instituted in the future." |
