Do Coin Dealers Report Sales to the IRS?

When selling precious metals, many individuals wonder if the coin dealer will report the transaction to the Internal Revenue Service (IRS). Dealers have specific reporting obligations, but these requirements are not triggered by every sale. The rules that dictate when a report is necessary depend on the type of item sold and the method of payment used.

Broker Reporting for Specific Bullion Sales

Coin dealers are sometimes classified as “brokers” under IRS regulations and must report certain sales made by their customers on Form 1099-B, “Proceeds From Broker and Barter Exchange Transactions.” This filing is mandated only when a customer sells specific types of bullion in quantities that meet or exceed established minimums within a 24-hour period.

The requirements are specific to the commodity sold. A Form 1099-B is required for sales of:

• Gold bars of at least one kilogram (32.15 troy ounces) with a minimum fineness of .995.
• Silver bars of at least 1,000 troy ounces with a minimum fineness of .999.
• Platinum bars of at least 25 troy ounces with a minimum fineness of .9995.
• Palladium bars of at least 100 troy ounces with a minimum fineness of .9995.

Certain bullion coins are also subject to these reporting rules. A sale of 25 or more one-ounce gold coins from sources like South African Krugerrands, Canadian Maple Leafs, or Mexican Onzas will trigger a report. Additionally, the sale of U.S. coins composed of 90% silver must be reported if the total face value of the coins sold is $1,000 or more.

Sales of popular bullion coins like the American Gold Eagle and American Silver Eagle do not require a Form 1099-B, regardless of the quantity sold. The same is true for most numismatic, rare, or collectible coins.

Cash Transaction Reporting

Coin dealers must also follow federal regulations concerning large cash payments. Any business that receives more than $10,000 in cash in a single transaction or a series of related transactions is required to file a report. This rule applies to any business, not just coin dealers, and is intended to identify potential illegal activity.

For this requirement, “cash” includes physical U.S. and foreign currency. It also encompasses cash equivalents like cashier’s checks, money orders, bank drafts, and traveler’s checks, particularly when used with physical currency to exceed the $10,000 threshold.

Transactions are considered related if they occur within a 24-hour period. They can also be deemed related if they span more than 24 hours if the dealer knows they are part of a single course of conduct. For example, if a customer pays $6,000 in cash in the morning and another $6,000 in the afternoon for the same purchase, it is treated as a single $12,000 transaction.

When a transaction meets these criteria, the dealer must file Form 8300, “Report of Cash Payments Over $10,000 Received in a Trade or Business,” with the IRS within 15 days. The dealer must also provide a written statement to the customer by January 31 of the following year, informing them that a report was filed.

Seller’s Independent Tax Obligation

A dealer’s reporting obligation is separate from a seller’s personal responsibility to pay taxes. Regardless of whether a dealer files a report, all profits from selling precious metals are potentially taxable and must be reported on your tax return.

For tax purposes, coins and bullion are classified as “collectibles,” which are a type of capital asset. When you sell a capital asset, the difference between your sale price and your “basis” (what you originally paid for it, including any associated fees) is a capital gain or loss. A capital gain must be reported as income.

These transactions are detailed on Form 8949, “Sales and Other Dispositions of Capital Assets,” and the totals are then transferred to Schedule D, “Capital Gains and Losses,” which accompanies your Form 1040.

Gains from collectibles held for more than one year are subject to a special long-term capital gains tax rate. Unlike gains from stocks or bonds, long-term gains on collectibles are taxed at a maximum rate of 28%. If your ordinary income tax rate is lower than 28%, you will pay that lower rate; otherwise, the 28% maximum applies.