Kentucky Joins Majority of States with New Tax Exemption for Currency and Bullion
Friday, April 12, 2024
Section: States

The Bluegrass State has become the 44th state to enact a full or partial sales-tax exemption on the sales of coins, paper money, and precious-metal bullion. The exemption from sales and use tax for currency and bullion sales is set to take effect on August 1, 2024.

When presented with House Bill 8, which included the exemption, Governor Beshear issued a line-item veto for that item, citing his belief that individuals who own gold could afford to pay taxes and that currency and bullion should be treated as tangible goods subject to sales tax. His veto message failed to recognize that currency and bullion are legal tender and investment goods, which are subject to capital gains taxes when resold, making a sales tax on these items a form of double taxation that penalizes small investors.

The legislature reconvened on April 12 to reconsider bills rejected by the governor. When the House called for HB 8, the Speaker of the House cited the state constitution and previous attorney general opinions to establish that the veto was invalid. The Kentucky constitution only allows use of a line-item veto for appropriations measures. As a result, the House forwent an override vote and sent the bill to the secretary of state for signature, which carries the same weight as if the governor had signed it.

The legislation, initially embodied in Senate Bill 105: AN ACT relating to sales and use tax exemptions, was integrated into the revenue bill, HB 8, a move that garnered widespread support throughout the Kentucky legislature. This exemption encompasses sales of currency and bullion, providing relief to dealers and collectors alike.

Under the new law, “bullion” is defined as bars, ingots, or coins made of gold, silver, platinum, palladium, or a combination of these metals, with value based on metal content rather than form. “Currency” includes coins or paper money made of specific metals or materials, used as legal tender, and sold based on their value as collectible items.

“This is a significant moment for the entire numismatic community in Kentucky,” said Byrd Saylor III, leader of the local coin-dealer coalition and a member of the National Coin & Bullion Association (NCBA). “The enactment of this sales-tax exemption reflects years of dedicated advocacy and collaboration among stakeholders.”

Saylor expressed gratitude to Senator John Schickel and the other seven senators who introduced SB 105, acknowledging their pivotal role in advancing the legislation, as well as Senator David Givens for championing the amendment to HB 8. He also extended appreciation to Representative Jason Petrie and his colleagues for their unwavering support in the House of Representatives.

“We are thrilled to see Kentucky join the majority of states in recognizing the importance of providing tax relief for transactions involving coins, paper money, and precious-metal bullion,” said David Crenshaw, executive director of NCBA. “This exemption will not only benefit dealers and collectors but also foster a thriving numismatic market in the state.”

The passage of this legislation follows years of concerted effort, beginning in 2016. The work renewed in earnest in 2021 with stronger focus and increased collaboration among stakeholders. Advocates introduced bills in previous legislative sessions, each time working tirelessly to garner support and emphasize the economic benefits of the proposed exemption. Despite setbacks, the coalition persevered, continuing to engage lawmakers and highlight the economic significance of the proposed exemption.

Key stakeholders in the campaign, including Jeff Garrett of Mid-American Rare Coin Galleries, Jonathan Kern of Jonathan K. Kern Coin Shop, and Eddie Bruner of Glasgow Coin & Jewelry, were instrumental in amplifying the message and garnering support for the initiative. “As a coalition, we remained steadfast in our commitment to this exemption, recognizing its potential to spur economic growth and support small businesses across Kentucky,” added Saylor.

The successful enactment of the sales-tax exemption underscores the power of collaborative advocacy and grassroots mobilization in shaping legislative outcomes. Moving forward, stakeholders are committed to ensuring effective implementation and monitoring the impact of the exemption on the numismatic community.