Three states consider tax exemptions
February 8, 2018
Last fall, the state of North Carolina became the 36th state to have either no sales and use taxes at all (Alaska, Delaware, Montana, New Hampshire and Oregon), or a complete or partial sales tax exemption on the in-state retail sales of rare coins and precious metals bullion.
Further, North Carolina also exempted the retail sales of legal tender currency from sales and use taxes as did Indiana the year before, both joining a small number of other state doing so.
This year, there are efforts under way in three additional states to seek similar sales and use tax exemptions.
In Alabama, a new pair of bills, HB 19 and SB 156, were entered this year after last year’s effort to gain an exemption failed when the session adjourned.
The Alabama House bill has already passed favorably out of the House Ways and Means Education committee on Jan. 24 and has gone through its second reading in the full House chamber. It might be voted upon by the full House as early as this week.
The Alabama Senate bill passed out of the Senate committee with little opposition on Jan. 31 and has been sent to the entire Senate Chamber for a vote. The exemption would cover gold, silver, platinum and palladium bullion products of at least 90 percent purity and all legal tender coins and currency. For details of the legislation, refer to pages 39-40 of https://legiscan.com/AL/text/HB19/2018.
Whichever bill first passes both chambers and is signed by the governor would take effect on the first day of the third month after the effective date that it becomes law. The law does contain a five-year sunset provision, meaning that the exemption would expire unless it was renewed by the government. The exemptions in California and Virginia had or still have similar sunset provisions.
Hopes are high that the Alabama exemption will be enacted this year.
In Kansas, House Bill 2421 was introduced in May 2017 but lay dormant while the legislature wrangled over significant fiscal problems.
The current text of this bill is available at http://www.kslegislature.org/li/b2017_18/measures/documents/hb2421_00_0000.pdf (go to pages 36-7). It would exempt gold, silver, platinum and palladium bullion products plus all legal tender coins and currency.
The potential fiscal obstacles have now been resolved. Last week, the Kansas House Committee on Taxation heard testimony on the exemption bill from four Kansas dealers, Kathy McFadden, the executive director of the Industry Council for Tangible Assets (ICTA), and me.
The committee did not take a vote on the bill. The lobbyists hired by Kansas coin dealers are now polling committee members. If there is sufficient support among them, the committee chair will be asked to bring it up for a committee vote. From there it would advance to the full House. If successful in the House, it would advance to the Kansas Senate for a committee hearing and then vote of the full chamber. The effective date of the exemption would be after its publication in the statute book or possibly at the beginning of the next fiscal year on July 1.
In the committee hearing, the dealers presented a strong case of significant lost business to dealers in the states surrounding Kansas (Colorado, Missouri, Nebraska and Oklahoma), all of which already have rare coins and precious metals sales and use tax exemptions.
Information was also presented from ICTA’s national coin dealer survey in 2016 that determined it is virtually certain that state treasuries in states with complete or partial sales rare coins and precious metals sales and use tax exemptions actually collect higher sales taxes per capita than do states that do not exempt them from such taxes! In effect, these exemption bills could more properly be considered jobs creation and business development bills that do not require any net state government outlays.
The effort in Kansas may be more of an uphill challenge than in Alabama. Some tax cuts in recent years brought on a major fiscal crisis for the Kansas state government to such a degree that some legislators may automatically oppose any newly proposed tax credits, exemptions, or reductions. To help advance the effort in this state, Kansas residents can contact ICTA at email@example.com, or call 410-626-7005 for more information.
In Tennessee, HB 342 was introduced in February 2017 seeking a sales and use tax exemption on gold, silver, platinum and palladium bullion products and legal tender coins and currency. You can read the text at http://www.capitol.tn.gov/Bills/110/Bill/HB0342.pdf. The Senate bill was referred favorably with recommendation to its Finance, Ways and Means Committee by its subcommittee. The House Bill remains in its Finance, Ways and Means subcommittee because the state’s governor late last year directed the committee’s chairman, Rep. Charles Sargent, to not send him any sales and use tax exemption bills to sign. The information I have is that this state has a large budget surplus that the governor wanted to leave intact when he left office at the end of 2018.
The efforts in Tennessee have thus far been pursued without the support of professional lobbyists. ICTA and the state’s coin dealers are working to overcome the political obstacles. However, without a commitment of funds by the state’s coin dealers to pay for a lobbyist, the efforts may take longer. ICTA Chief Operating Officer David Crenshaw has made multiple trips to Nashville for meetings seeking to promote this bill. I visited there twice to testify before a subcommittee and meet with the head of the state’s fiscal agency and key legislators.
By the way, last week there were additional similar sales and use tax exemption bills introduced in the Tennessee legislature, HB 915 and SB 1893. This certainly indicates interest in the issue and may help garner enough support to achieve an exemption.
Incidentally, there has also been a separate push for Tennessee to establish a state-owned precious metals storage facility. Such a development would pretty much require that the state enact a precious metals sales tax exemption first. The state treasurer has expressed support for such a storage facility.
Once again, Tennessee coin business owners and collectors can contact ICTA by email at firstname.lastname@example.org for more information on how they may help in this exemption effort.
Over the past four years, new exemptions have been gained in Indiana, Minnesota, Nebraska, North Carolina, Ohio, Oklahoma and Virginia. A suspension of Louisiana’s exemption was eliminated and substantially restored ahead of schedule. The existing exemptions in Texas and Virginia were expanded. Clearly, the momentum is on adding more rare coins and precious metals state sales tax exemptions over time.
In most of the states with recent legislative success or where efforts are now under way, there were past efforts to gain rare coins and use tax sales tax exemptions that were not successful. The recent string of successes takes advantage of the significant data accumulated by ICTA to support such efforts. Further, the current strategy to meet with state fiscal agency, revenue and treasury personnel in advance of the introduction of the legislation to defuse potential opposition once the legislative process begins has made an enormous difference.
ICTA staff are working on enough other projects (such as promoting the Anti-Counterfeiting Task Force) that it is not possible to devote staff time to too many sales tax exemption efforts simultaneously. Dealers and collectors who may be in the other 11 states or in the District of Columbia that do not yet have any rare coins and precious metals sales tax exemptions (Arkansas, District of Columbia, Hawaii, Kentucky, Maine, Mississippi, New Jersey, New Mexico, Rhode Island, Vermont, West Virginia, and Wisconsin) may want to contact ICTA soon to arrange for an effort in 2019.