One of the primary reasons people buy precious metals is for privacy. You buy with cash, sell for cash, and no one knows what you own. If “they” don’t know you own it, “they” can’t take it or tax it.
In my precious metals business, when I’m buying gold and silver bullion from a customer, I get asked this question all of the time: “Will this be reported to the IRS?” I’m sad to say, I’ve never been able to answer, “Yes”.
If I were able to do so, it would mean I made a HELL of a purchase!
The government has certain thresholds that must be met before a sale to a dealer must be reported by the dealer. They were originally put in place for commodity traders making large deals. The government wanted (and still wants) to know who got paid.
For most people, getting reported won’t be a problem. While they may own sufficient amounts of gold and silver to be reported, it won’t happen, as most folks won’t sell all of their precious metals in one sale. Or to one dealer.
Of course, any gains you make on your sales are self-reportable on your annual tax returns. Of course.
The most difficult thing for us is when someone asks questions when they’re buying, not selling.
We have signs posted in our store stating, “No Cash Purchases Over $10,000“. It’s not because we don’t want the business. It’s because we don’t want the paperwork.
The issue is, if I tell my customers that the reason I don’t do the $10k cash sales (because I’ll have to report them due to the large cash purchase), I’ve broken the law. I’ve technically engaged in “structuring” – helping someone to structure a transaction specifically to avoid reporting.
So, what we do as soon as the topic comes up, is we stop the conversation and give them a write-up off of the Internet that explains the whole process. It doesn’t offer suggestions, it simply explains what events trigger different reporting requirements. Our attorney’s have informed us that by providing freely available content from the Internet, and as long as we don’t offer any suggestions on how to buy from us, we’re OK.
It sucks, but it’s how the feds have things structured, so we have to deal with it.
I’ve heard it said that people use this reporting information to determine what types of gold and silver to buy in the first place. Urban legend, I’m sure…
That being said, remember that the feds can change the reporting laws at the drop of a hat.
Note: Considering buying gold or silver? Then consider buying, The Beginners Guide To Precious Metals. Don’t go into this uneducated.
Anyways, the good folks at JM Bullion have put together a great infographic on the subject. Seriously good information.
Please include attribution to JMBullion.com with this graphic.