By Scott Barman for the Gold & Silver PAC …..
Gold & Silver News From the Political Coordinator
The most talked about and most complicated bill to analyze has been H.R. 1, the Tax Cuts and Jobs Act. While a lot of information has been talked about in the media, there have been many groups behind the scenes trying to process the details in a manner that their constituents can understand.
On November 17, 2017, the Industry Council for Tangible Assets (ICTA) issued an alert warning that a provision on the House of Representatives’ tax plan has the potential to hurt the numismatic industry. The alert warned that a technical change in Section 1031 of the tax code (26 U.S.C. §1031(a)(1)) to change the definition of like-kind exchanges could affect some coin and currency dealers and their clients.
Since ICTA made that statement, there has been a discussion as to how much this could really affect the industry. Industry analysts have consulted experts from several perspectives only to come to the conclusion that it is uncertain how this will affect dealers.
There are two fundamental issues that come up while analyzing the potential effects of the bill. First, the change will cause a conflict with existing laws that govern the sales of bullion and bullion coins, such as American Eagle coins. These sales, known as leverage assets, are regulated by the Commodity Futures Trading Commission (CFTC) as required by a different law governing the sales of commodities (7 U.S.C. §23(b)(1)). Bullion dealers are already registered dealers of bulk commodities and know the regulations that they are required to file Form 1099-B with the IRS about their sales (as per 17 C.F.R. Title 31).
Since collector coins are not considered leverage assets, the proposed change in H.R. 1 may require coin dealers to report like-kind exchanges to the IRS. How that will be implemented has not been determined. When the IRS tries to interpret the law and the intent of congress in order to change or create forms, they will see the conflict. Sources report that when there is a conflict, the IRS analysts consult the information provided by the Joint Committee on Taxation and the Congressional Budget Office for an interpretation. If neither can provide an answer, the IRS will place more weight on the new law.
Rather than rely on an uncertain future, the industry would be better served if this change was not included in H.R. 1. Although versions of this bill have passed both the House and Senate, the bill can be updated by the Conference Committee appointed by the leadership to work out the differences. Even if your representative is not a member of the Conference Committee, you can contact them to express your opinion. They should be able to relay citizen concerns of the committee.
If you do not know your member of Congress, you can call the Capitol switchboard operator at (202) 224-3121. They can transfer you to the appropriate representative. If you are not sure what to say to the staffer who answers the phone, try the following:
Please tell the Representative/Senator that in H.R. 1, the new tax bill, Section 3303 of Title III/Section 13303 of Part IV may have the unintended consequences of hurting the numismatic industry. It will place an additional accounting burden on coin dealers who are mostly small businesses and will damage the industry. I cannot express in any stronger terms how this change in the tax law will hurt this sector of the small business economy. Thank you for passing this message along.
Please call and make your voice heard!
Canada is Dealing with a Counterfeit Problem
Canadian authorities were shocked into the reality of Chinese counterfeits when a gold bar that was allegedly stamped by the Royal Canadian Mint (RCM) was sold by an Ottawa branch of the Royal Bank of Canada (RBC).
An Ottawa man purchased the one-ounce gold bar from RBC to have custom jewelry made. The goldsmith who was to make the jewelry noticed that the bar was too hard to be gold and reported the finding to police.
The Royal Canadian Mint verified that they did not produce the bars and is working with the RBC to investigate. The RBC is reviewing its policies to prevent this from happening again.
In a statement, the RCM noted, “Attempts to re-sell counterfeit Royal Canadian Mint bullion products are rare and this is an isolated case.”
A source with knowledge of counterfeit investigations by the Royal Canadian Mounted Police (RCMP) notes that it is plausible that the RCM may not know about cases that law enforcement has handled since they do not report them to Mint officials. The RCMP works with the Bank of Canada when there are cases of counterfeiting currency.
The RCMP and other Canadian law enforcement organizations are aware of several attempts to import Chinese-made counterfeits. The Canada Border Services Agency and the Canada Post have worked together to prevent the shipment from entering the country. These agencies collect information from websites like Alibaba.com to know which packages must undergo additional scrutiny.
Canadian law allows Border Service agents to base individual searches on the profile of the person wishing to cross the border – including citizens carrying a Canadian passport. Because of the difficulty in shipping counterfeit goods to Canada, it is being suspected that these bars may have been carried either from China or through the United States.
Since United States law prevents Customs and Border Protection (CBP) from profiling travelers to determine who may be searched, it is easier to import these counterfeits into the United States to be carried into Canada. Canadian sources expressed frustration because treaties and international agreements prevent Canada Border Service officers from profiling United States passport holders without probable cause. However, Canada can refuse entry for any reason and escort the person to the CBP officer at that border crossing.
Canadian law enforcement has seen a rise in counterfeiting operations based in Vancouver, British Columbia. Sources note that the influx of Chinese nationals, who were welcomed into the city during the transfer of Hong Kong from the British, have endured socio-economic problems that some are trying to alleviate through crime including the import of counterfeit goods from China.
Canadian law enforcement is working with United States officials on suspected counterfeit distributors based in the Pacific Northwest specifically in Washington, Oregon, Idaho, and Montana.
When contacted, the RBC would not provide a comment. The RCM responded by sending a link to the statement published on their website. A Bank of Canada representative said it was bank policy not to discuss these issues.
Summary of Numismatic-Related Legislation
There has been no work on any of the numismatic-related bills that have been submitted. The Senate has worked on reducing the number of presidential nominees on the Executive Calendar. Currently, there are 100 nominations waiting to be acted on and David J. Ryder, nominated to be the Director of the U.S. Mint, is 70th on the calendar, up from 126th last month.
- PN1082: David J. Ryder – Department of the Treasury
- Date Received from President: October 5, 2017
- Summary: David J. Ryder, of New Jersey, to be Director of the Mint for a term of five years, vice Edmund C. Moy, resigned.
- Received in the Senate and referred to the Committee on Banking, Housing, and Urban Affairs: – Oct 5, 2017
- Committee on Banking, Housing, and Urban Affairs. Hearings held: – Oct 24, 2017
- Committee on Banking, Housing, and Urban Affairs. Ordered to be reported favorably: – Nov 1, 2017
- Reported by Senator Crapo, Committee on Banking, Housing, and Urban Affairs, without printed report: – Nov 1, 2017
- Placed on Senate Executive Calendar. Calendar No. 458. Subject to nominee’s commitment to respond to requests to appear and testify before any duly constituted committee of the Senate: – Nov 1, 2017
The Gold and Silver Political Action Committee wishes all our friends, supporters, and their families a safe and joyous holiday season and a Healthy and Happy New Year!
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If you have any questions or comments, please feel free to contact me at [email protected]. “Letters to the Editor” are appreciated and may appear in a future newsletter.
Scott Barman, Political Coordinator for the Gold & Silver PAC
Barry Stuppler, Chairman Gold & Silver Political Action Committee