Ready for state tax attacks?,

August 23, 2018

Pat Heller

For businesses in general, including those who purchase and sell rare coins and precious metals to earn income, complying with government regulation and taxation can be intimidating and financially costly. This is one reason that trade associations exist – they are able to identify and pass along important news on a timely basis on these subjects where the costs are divided among the membership.

Right now, more than ever, the Industry Council for Tangible Assets (ICTA) can provide rare coins and precious metals dealers with guidance on the impact of the recent U.S. Supreme Court decision in the South Dakota v Mayfair case. Although this guidance should be checked with a legal or tax professional, the information in this white paper is available to ICTA members (and only to ICTA members) at no cost in addition to that of ICTA membership dues.

Trying to gain all of this information from other sources would almost certainly cost many times the price of ICTA membership. On this basis, ignoring all the other benefits of being an ICTA member, becoming an ICTA member could save you significant out-of-pocket expenses in complying with the sales and use tax laws and regulations in every state that imposes them. That makes ICTA membership a real bargain.

This white paper lays out a variety of legal and regulatory minefields that could impact every coin and precious metals dealer, no matter whether they only do wholesale business, only make sales in one state, or do such a small volume of business as to possibly fall under regulatory thresholds.

To give you some examples of why a coin dealer needs the benefits from paying for an ICTA membership, here are some sample traps awaiting any business:

Can you name the three states with current legislative or regulatory requirements that out-of-state businesses with no location in the state, no employees or representatives in the state, and no inventory stored in the state would still be subject to registering with that state treasury, collect that state’s sales taxes, and pay the collected taxes to that state treasury if the business makes more than $10,000 in wholesale and retail sales annually to residents and businesses in that state?

Can you identify which states have the authority to send you a notice of taxes due without first having to audit your business to find out if you were even subject to having to collect or pay such taxes? Do you know what to do if this occurs?

Do you know which states may expand their tax collection efforts against your business for goods and services you previously thought were exempt from sales and use taxes?

Can you identify the time frame that each state has or is in the process of implementing on requirements for out-of-state businesses to register to collect sales and use taxes?

Does your business have the financial resources to pursue possibly multi-year court cases in one or more states outside of your home state?

Do you know which states will not accept an out-of-state resale certificate to exempt your purchases from paying sales tax for wholesale purchases from businesses in that state?

While this white paper does not have all the details to answer every question above, ICTA may be far ahead of most national trade associations at gathering such information for its membership. The staff and volunteer dealers are in the process of adding more data to provide to members.

Currently, only about 3-7 percent of all coin dealers nationwide are already ICTA members. That relatively small membership does not provide ICTA with sufficient resources to serve coin and precious metals dealers as quickly and comprehensively as it could. The organization would be in position to do far more on this and other issues that affect coin dealers if it had broader industry support.

Basic ICTA membership costs $300 per year, though the Copper membership level of $500 per year provides significantly more member benefits. ICTA also has a current discount offer for former members who have let their memberships lapse. While that is not anywhere close to free, if you are a dealer you will find the benefits you receive to be worth many times the cost of membership.

Go to their website at www.ictaonline.org and click on the membership button, then the Join Today button.

Note: I have served ICTA since 2002 on its board of directors and as treasurer. However, this column is not an official ICTA communication and has not been reviewed and approved in advance by ICTA staff or other officers. It is my personal opinion.

The columns I prepare for Numismatic News or www.numismaticnews.net are not prepared as representative of ICTA or in my capacity as the chair of a committee for the American Numismatic Association or the Michigan State Numismatic Society and should not be construed as official communications or statements of positions from any of these organizations. The responsibility for errors in my articles belongs to me.