Anti-Money Laundering (AML) Regulations
Since January 1, 2006, Section 352 of the USA PATRIOT Act has specifically targeted precious-metals dealers. Additional AML regulations were added in 2020 as part of the National Defense Appropriation Act . NCBA has worked with the US Department of the Treasury to help it develop reasonable compliance regulations that will satisfy its anti-terrorism requirements without being overly burdensome for rare-coin and precious-metals dealers. This involves not only educating the Treasury on the particular needs of our industry, but also developing excellent Treasury contacts to help clarify specific points of the PATRIOT Act and other aspects of the cash-reporting and AML laws that impact our industry. (In our work with the Treasury and other government agencies, we sometimes obtain critical clarifications that are available only through NCBA. Even an IRS examiner may not have these documents.)
Proper and timely compliance with the AML laws and regulations is extremely important. Ignorance of the law is not a defense and can result in calamitous financial penalties and even prison terms.
In 1986, NCBA achieved an exemption from reporting for numismatic items on IRS Form 1099b. In 1992, NCBA successfully completed negotiations with the IRS that, for the first time, established reasonable reporting requirements on certain bullion-related products. The original regulation required dealers to report sales of as little as one silver dime.
Capital Gains Tax for Rare Coins and Precious Metals
NCBA has supported the World Gold Council’s efforts toward federal legislation that would qualify gains from precious-metals investments for the lower capital gains tax rate. NCBA will continue to push for this and for legislation that would also qualify rare-coin investments for the capital gains rate.
Cash-Reporting (Anti-Money Laundering Regulations)
Since 1991, NCBA has provided information to dealers and their professional tax advisors on compliance with these very important regulations, and on filing IRS/FinCEN form 8300. NCBA identified the best experts to assist dealers in compliance with Section 352 of the USA PATRIOT Act and has sponsored educational seminars for dealers. Many professionals have described NCBA’s Cash Reporting Information Kit as the most comprehensive compliance information available for the rare-coin / precious-metals industry. Our Cash Reporting Information Kits are available to members for a nominal fee. In addition, NCBA’s expert staff is available to assist members with specific cash-reporting questions and situations. As NCBA members know, failure to comply can result in huge fines and even imprisonment.
Chinese Counterfeit Coins
NCBA is working with the US House of Representatives Committee on the Judiciary to stop the influx of high-grade counterfeit coins manufactured in China. NCBA was the one who originally brought this issue to the attention of relevant congressional committees and members of congress, and it continues to work to solve this serious problem.
FAA/TSA/DHS Airline Security Regulations
NCBA continues to communicate regularly with the Federal Aviation Administration (FAA), the Transportation Security Administration (TSA), and the Department of Homeland Security (DHS) to assure that our members are able to transport the coins, precious metals, and currency necessary for participation in shows and conventions. We’ve worked with TSA to educate airport screeners about this type of merchandise.
Federal Trade Commission
An industry group of literary experts approached the Federal Trade Commission (FTC) regarding three consumer alerts it had published on the FTC's website about investing in precious metals. Working through NCBA, this group has completed editing one of these alerts to ensure clarity, accuracy, and helpfulness to consumers. NCBA will continue to work with the FTC on materials published on its website.
NCBA monitors congress and federal agencies for changes in delivery requirements for physical precious metals, and for any other CFTC provisions that might adversely affect rare-coin and precious-metals dealers. As part of the Dodd-Frank Financial Reform Act passed in 2010, the CFTC attempted to decrease the time-tested 28-day delivery window for physical precious metals to as little as two days—an impossible standard for our industry to meet. NCBA successfully fought off the change.
FTC Telemarketing Sales Rule
At a special conference in 1995, NCBA worked with FTC staff and others to revise this burdensome proposed regulation and to create an acceptable final rule. As originally written, the FTC Telemarketing Sales Rule would have made it impossible for precious-metals and rare-coin dealers to do business over the telephone, but our compromise allowed businesses to continue to conduct telephone sales, with proper and consistent procedures designed to protect consumers. NCBA has prepared an information kit to help dealers comply with the rule.
NCBA members can call (678) 430-3252 to get help on daily transactions as they are happening. Although NCBA staff members are not legal or tax advisors, we usually can help determine whether cash-reporting and/or broker-reporting regulations apply. NCBA has often assisted members’ accountants or attorneys on the specifics of these regulations.
Interstate Collection of Sales and Use Taxes
For several years the states have been working together to create a “simplified” sales tax plan (SSTP). Under an SSTP, the US Congress would grant states the power to force out-of-state merchants to collect and remit sales taxes for each state. Proponents of this plan claim Internet businesses have an unfair advantage over brick-and-mortar businesses and would like the plan to affect all mail, phone, and Internet sales. In addition, a provision in this plan calls for elimination of any sales-tax exemption that has a minimum or maximum (many sales-tax exemptions on precious metals and coins have a minimum-transaction threshold). This plan has substantial support in congress, and NCBA is working to help defeat it. This is a very large issue with the potential to change the way US merchants have conducted business for more than 200 years. Preserving our existing sales-tax exemptions is critical.
Precious Metals Accepted in IRAs
In 1981 (before NCBA existed), all precious-metals bullion and rare coins were arbitrarily removed by congress as qualified investments for IRAs and other individually directed retirement accounts. Only US American Eagle coins were deemed acceptable investments. NCBA worked with CERT on legislation that in 1997 restored precious metals (bullion) as an acceptable investment for individually directed retirement plans.
Restoring Rare Coins in IRAs
NCBA worked with the Coalition for Equitable Regulation and Taxation to have rare coins restored as qualified investments in IRAs and similar self-directed retirement plans.
Safe Harbor for Trade Shows
NCBA achieved a 15-day “safe harbor from sales tax” nexus in California for those dealers and vendors whose only presence in the state was at conventions and shows. As long as coin dealers do not exceed this 15-day threshold, they are allowed to attend shows such as ANA conventions and the Long Beach Expo without the burden of collecting and remitting sales tax at their home-state location on all sales (mail, phone, Internet) to California residents. This precedent-setting bill has provided a model for other states’ sales-tax nexus definitions.
NCBA has helped achieve states’ exemptions from sales taxes on numismatic and precious-metals items. Over 40 states now exempt these products (five states have no sales tax at all). NCBA continues to work with dealers and collectors for more exemptions.
NCBA also presented an amicus brief to the US Supreme Court in support of Quill in the Quill v. North Dakota case. The Quill Corp. prevailed. This was an important decision that prevented the states from forcing out-of-state dealers to collect and remit other states’ sales and use taxes. We are monitoring states’ continuing efforts to force out-of-state dealers to collect sales taxes across state lines, especially on sales conducted via the Internet. NCBA will join coalitions of organizations and businesses opposing any such federal or state legislation.
VAT (National Sales Tax)
The United States is the only major power that does not yet levy a value-added tax (VAT) or similar national tax (called the “goods and services tax” in Canada). NCBA is constantly on guard against efforts to impose this kind of tax in the United States, as it would be disastrous for the rare-coins and precious-metals industry.