By CoinWeek News Staff ….
On Tuesday, June 14, former Republican Party presidential hopeful and current governor of Ohio John Kasich signed a bill that restores a tax exemption on the sale of precious metal bullion and “investment” coins that was repealed in the wake of the Coingate scandal in 2005.
The newly-resurrected exemption will go into effect January 1, 2017.
The Ohio State Legislature passed a similar exemption (part of House Bill 59) in 2013 but Gov. Kasich vetoed it. According to reporting by Jim Provance of The Toledo Blade, Kasich spokesperson Emmalee Kalmbach said that the two were “different bills”, and that the bill that Kasich signed on Tuesday was “narrower and more limited … different from what [Kasich] vetoed in House Bill 59”. Another important factor, according to Kalmbach, was the “wide support” of the General Assembly.
Kasich and his administration worked with state legislators to refine various aspects of Senate Bill 172, including the definitions of precious metal bullion and “investment coin”, in an attempt to close potential tax loopholes. “Investment” metal bullion is defined as any gold, silver, platinum or palladium metal “of a fineness equal to or exceeding the minimum fineness that a contract market (as described in section 7 of the Commodity Exchange Act, 7 U.S.C. 7) requires for metals which may be delivered in satisfaction of a regulated futures contract (26 U.S. Code § 408 (m)(3)(B))”. “Investment” coin is defined as “any coin composed primarily of gold, silver, platinum, or palladium”.
Ohio’s relationship with the collectible coin and precious metals bullion industry has been a complicated one since the malfeasance of Board of Regents member, Republican party official, rare coin fund manager and Toledo-area coin dealer Thomas W. Noe. Noe was one of the lobbyists behind the original bullion sales tax exemption.
In 2005, it was uncovered that Noe had shepherded $50 million worth of investment funds from the Ohio Bureau of Worker’s Compensation into two rare coin funds he operated – Capital Coins Ltd. I and II. He was ultimately convicted of stealing $13 million from those funds and ordered to pay fines, court costs and $13.7 million in restitution to the Bureau of Worker’s Compensation. Noe was also sentenced to 18 years in state prison, where he currently serves time despite repeated appeals and requests for leniency.
The ensuing political scandal in the Republican Party–nicknamed “Coingate”–reached to the highest office in the state, when then-governor Robert “Bob” Taft became the first Ohio governor ever to have been charged with a crime while serving in office. He pled no contest to ethics violations and was fined $4,000.
The omnibus House Bill 230 included provisions repealing Ohio’s tax exemption for investment-quality coins and bullion. It was signed into law in 2005.
Yet despite the need to guard state funds against moral hazard, many in the coin and precious metals industry were critical of the repeal and have worked at resuming the exemption ever since. A general boycott of the state by the industry has resulted in a lack of national coin shows and conventions in Ohio over the subsequent decade plus.
Now, it seems, the effort has finally paid off.
Senate Bill 172 was originally introduced on May 27, 2015 by senator Kris Jordan (R-Powell). It made it past the Senate Ways and Means Committee on December 9, 2015 and was introduced into the House five days later on December 14. The bill was referred to the House Ways and Means Committee on January 20 of this year and passed both houses of the Legislature on May 25.
SB172 passed in the Senate by a vote of 28 to two and in the House by a vote of 84 to 10.
Speaking to The Blade, state representative Mike Sheehy (D-Oregon) said: “The easiest thing to do would have been to point to Noe, but we’re punishing an entire industry for crimes committed during that administration. I know personally the little coin shop adjacent to my barber shop went out of business right after that [repeal]. They work on such small margins.”
Still, as quoted in Provance’s article, state representative Teresa Fedor (D-Toledo) said that she “brought [Coingate] up in caucus,” but that “there are so many new people … [it’s] like long-ago scandals don’t go very far when there’s high turnover in state office.”
The state anticipates a loss in revenue of about $5.5 million a year, with local tax revenues decreased by approximately $1.6 million per year relative to 2016 as a consequence of the sales tax exemption. In its previous advocacy for the return of such exemptions to the state tax code, however, the Industry Council for Tangible Assets (ICTA) has emphasized the economic benefits that would accrue to the state with the removal of sales taxes on bullion and investment-grade coins.
[The following is ICTA’s press release concerning SB 172. —CoinWeek]
Ohio Governor Kasich Signs Sales-Tax Exemption Legislation
OPMA-Led State Effort Pays Off After Three Years
On June 14, 2016, Ohio governor John Kasich signed into law SB 172, which provides for a sales-tax exemption on rare coins and precious-metals bullion. The new law will take effect on January 1, 2017. Ohio becomes the 34th state to have a complete or partial sales-tax exemption on the retail sales of rare coins, paper money, and precious-metals bullion.
The Ohio Precious Metals Association (OPMA), led by executive director Jeff Longstreth, has been engaged in efforts to obtain a sales-tax exemption for rare coins and precious-metals bullion since its founding in 2013.
“Charlie Kepnes started the original effort nine years ago,” said Ohio coin-business owner David Miholer (Executive Coin Company). “I recall back then that Kepnes, Dick Frost, and I were pretty much laughed out of Columbus.”
Representative Ron Maag introduced 2013 HB 26: Sales & Use Tax-Exempt Investment Metal Bullion & Coins on February 5, 2013. Ultimately, the Conference Committee added the measure to the biennial budget bill, which passed the House and the Senate.
Right: Ohio State representative Ron Maag (R-Lebanon)
Governor Kasich exercised his line-item veto power on June 30, 2013, removing the provision exempting investment-metal coins and bullion from Ohio sales tax. “There is no reason to provide preferential treatment to one class of items and not others that could possibly increase in value, such as art, sports cards, or antiques. Therefore, this veto is in the public interest,” stated the governor’s veto message.
On February 3, 2015, HB 26 was introduced again by Rep. Ron Maag and Rep. Christina Hagan.
The Industry Council for Tangible Assets (ICTA) also joined the OPMA initiative.
The bill received a public hearing from the House Ways and Means Committee on April 14, 2015. Ohio coin-business owners David Miholer (Executive Coin Company) and Brad Karoleff (Coins +), Jeff Longstreth, ICTA treasurer Patrick Heller, and ICTA executive director Kathy McFadden testified at this hearing.
Sen. Kris Jordan (R-Powell) introduced SB 172: Sales Tax-Exempt Investment Bullion and Coins on May 27, 2015. This bill worked its way through both houses, becoming successfully enrolled on June 8, 2016.
“The Ohio dealer and collector communities owe the Ohio Precious Metals Association a debt of gratitude for their perseverance and generosity,” said Brad Karoleff.
“Ohio now joins the 33 other states with a sales-tax exemption. I wish to thank everyone that helped make this exemption a reality. The ICTA partnership was invaluable to the successful conclusion of our efforts,” said Longstreth.
Obtaining the Ohio exemption was part of an ambitious agenda of legislative initiatives across the country to maintain or establish sales-tax exemptions that are crucial to preserving the viability of our industry and hobby. ICTA’s efforts are designed to demonstrate that states are better off financially when they allow sales-tax exemptions.
“We’re taking a moment to celebrate the victory in Ohio, but that’s only one front in the fight to promote a robust coin industry. We have a lot of work to do throughout the country, and we need dealers to join with us in that fight,” said ICTA executive director Kathy McFadden.
ICTA is the watchdog for the rare coins, paper money, and precious-metals bullion industry. For more information, visit ictaonline.org.
American Silver Eagles Currently Available on eBay