Tax Implications and Reporting Requirements for Bullion Transactions
Many of our customers at Scottsdale Mint invest in precious metals as a way to generate passive income, profiting from the sale or market activity of their bullion. However, like any income source, customers must be aware of the tax implications that come with their transactions. The IRS has two main scenarios under which precious metals dealers are legally required to report transactions: when a customer sells large quantities of specific bullion items, and when they make cash payments of $10,000 or more. Failure to comply can lead to fines, criminal charges, and even imprisonment for both the dealer and the customer. When reporting such transactions, precious metal dealers must complete specific IRS forms, including the 1099-B and the 8300.
1099-B Form
The 1099-B form is used to report profits made by non-corporate sellers, allowing the IRS to track individuals selling items as a source of income and prevent tax evasion. For precious metal transactions, Scottsdale Mint is required to file a 1099-B form when a customer sells us any product listed on the IRS’s Reportable Items List, based on predetermined quantities. The criteria for reporting sales of bars and rounds depend primarily on the metal’s purity and quantity, though the thresholds vary by type of metal.
For gold bars and rounds to be reportable, each item must have a purity of at least .995, with a total quantity of 1 kilo (32.15 troy ounces) or more. For silver, the items must have a purity of at least .999, with a minimum sales quantity of 1,000 troy ounces. For palladium and platinum, the reporting thresholds are 100 troy ounces and 25 troy ounces, respectively, with a required purity of .9995.
Reporting for coin sales is more straightforward, with specific coins subject to reporting, such as the 1 oz Gold Maple Leaf, 1 oz Gold Krugerrand, 1 oz Gold Mexican Onza, and any U.S. coin composed of 90% silver. Sales of 90% silver U.S. coins exceeding a face value of $1,000 or sales of over 25 of the aforementioned gold coins must be reported. Certain bullion products are exempt from reporting, including fractional gold coins, Gold and Silver American Eagles, foreign coins not listed by the IRS, and U.S. coins minted after the IRS list was created in the 1980s.
Form 8300
Under federal law, precious metal dealers must report cash payments of $10,000 or more in a single transaction. This requirement, established by the U.S. Treasury in the 1980s, is aimed at preventing money laundering and ensuring economic stability. To report these payments, dealers must file an 8300 form, providing transaction and customer details. Although customers can withhold some information, Scottsdale Mint is still obligated to submit the form.
In this context, “cash” includes traveler’s checks, cashier’s checks, money orders, and bank drafts for purchases of $10,000 or less, as well as payments made with U.S. or foreign currency. Personal checks, bank wires, credit/debit cards, PayPal, and ACH transfers do not count as cash and are not subject to this reporting requirement.
Capital Gains Tax When Selling Bullion
Selling precious metals can generate taxable income, with any profits from the sale of bullion subject to capital gains tax. “Capital gains” are profits made when an asset, such as precious metals, is sold at a higher price than it was purchased for. However, customers are only taxed on profits if they sell their bullion; any increase in value due to market changes without a sale does not trigger a taxable event.
Reportable Bullion Transactions with Scottsdale Mint
As a reputable manufacturer and dealer of precious metals, Scottsdale Mint complies with all IRS reporting guidelines for the sale and purchase of precious metal coins and bullion. While this information is provided to help our customers understand the tax implications of their transactions, we recommend consulting a tax professional for advice tailored to your specific situation.
Tax Reporting FAQs
Does Scottsdale Mint share my information?
Scottsdale Mint will only use your information in accordance with our Privacy Policy and Terms and Conditions.
What is a 1099-B?
A 1099-B form is used by precious metals dealers to report when a customer sells any products listed on the IRS’s Reportable Items List, based on specific quantities.
What qualifies as “cash”?
Cash refers to payments of $10,000 or less made with traveler’s checks, cashier’s checks, money orders, or bank drafts, as well as payments made with U.S. or foreign currency. Personal checks, bank wires, credit/debit cards, PayPal, and ACH transfers are not considered cash, regardless of the amount.
Why is this form necessary?
The 1099-B form ensures the IRS is informed of profits made by non-corporate sellers, preventing potential tax evasion by tracking individuals selling items as a source of income.
Which bullion products are exempt from a 1099-B?
Gold coins with fractional denominations, Gold and Silver American Eagles, and certain foreign and U.S. coins not listed by the IRS are exempt from 1099-B reporting. However, coins and bullion on the IRS Reportable Items List are subject to reporting if sold in the prescribed quantities.
Do I pay taxes when I sell precious metals?
If you profit from selling gold or silver, capital gains taxes apply. However, if the sale results in a loss or no profit, there are no capital gains taxes. State-specific tax policies may apply, so consult a tax advisor for guidance.
What is Form 8300?
Form 8300 is used to report cash payments of $10,000 or more to the IRS. Precious metals dealers must file this form for significant cash transactions.
When is Form 8300 required?
Dealers must file Form 8300 for any single transaction involving cash payments of $10,000 or more, or for multiple transactions within 24 hours that add up to this amount.
Do I have to pay sales tax on my purchase?
Sales tax may be applicable in certain states for specific products. Always consult with a tax advisor for detailed tax information related to your jurisdiction.
