Silver buyers reporting issues with sales tax and order cancellations with Walmart

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When Walmart began selling precious metals through their website marketplace last year, it became a convenient way for stackers to add some silver to their order of other household goods.

As the popularity of buying precious metals online grows, many buyers have experienced issues with being charged sales tax in states where metals aren’t taxed. Some buyers turn to social media for advice on how to deal with customer service when resolving sales tax issues.

Sales tax on precious metals is contentious issue, which is a complicated patchwork of outdated state laws that have created issues that online retailers must contend with since South Dakota v. Wayfair decision in 2018.

Since that landmark decision from the Supreme Court, large online marketplace retailers like Walmart and eBay are required to collect state and local sales taxes and remit those to their respective government agencies.

Gold and Silver Legal Tender

Already, 11 US states have taken steps to officially recognize gold and silver as legal tender. More states have pending legislation that either eliminates sales tax on precious metals or recognizes it as currency.

The United States was founded on sound money principles. The founding fathers included in the Constitution the rules that states must follow when issuing legal tender.

“no state shall make any thing but gold and silver coin a tender in payment of debts”

Texas was the first state to establish its own bullion depository, and there is pending legislation that aims to create the first state-issued gold-backed crypto-currency that will be redeemable to physical gold.

While the Federal Reserve continues to battle with inflation and interest rates, Republican lawmakers have introduced new legislation titled “The CBDC Anti-Surveillance State Act” to ban a CBDC in the United States.

In a press release, Senator Ted Cruz said “The Biden administration salivates at the thought of infringing on our freedom and intruding on the privacy of citizens to surveil their personal spending habits, which is why Congress must clarify that the Federal Reserve has no authority to implement a CBDC.”

Dedollarization and the Return to a Gold Standard

The BRICS member nations have been making progress with developing a gold-backed common currency for trade. It’s already been reported that last year, roughly 20% of the world’s oil trade was done in non-dollar currencies, a record high since the introduction of the petrodollar in the 1970s.

China stockpiled more than 225 tones of gold during 2023. According to central bank holdings data, China’s central bank is now holding 2,235.39 tons in gold reserves, almost on par with Russia’s holdings of 2,332.74 tons.

Additionally, other BRICS countries are quickly accumulating more gold. Five additional countries have announced they are joining BRICS, Egypt, Ethiopia, Iran, Saudi Arabia and the United Arab Emirates. While dozens of others have expressed interest.

Sales Tax When Buying Silver and Gold

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The notion of being charged sales tax when investing in precious metals is a contentious issue to some. It also represents a line in the sand between some legislators and investors. Despite the long history of gold and silver being recognized as money, many states continue to tax their citizens for the privilege of owning these metals.

Some states have no sales tax, a couple others have provisions specific to precious metals, others impose varying levels of taxation. Taxing the exchange of money, which includes gold and silver, has been a topic of debate for many years.

The recognition of gold and silver as money dates back to ancient civilizations. These metals have been used as a medium of exchange for centuries.

The private ownership of gold became outlawed in 1933. Under government orders, millions of circulating gold coins were seized from citizens and melted down. Jewelry and numismatic coins were exempt from the ban. Any person caught hoarding gold was investigated, prosecuted and imprisoned.

During the prohibition years, coin collecting was viewed by many simply as a hobby. Some savvy investors used coin collecting as a way to discretely hold and hoard gold.

Many of the coins, although valuable for the intrinsic nature of the precious metal content, were viewed as merely collectibles. Many states allow for the taxation of numismatic collectibles.

During this time coin collecting quickly grew in popularity with many investors turning their attention to numismatics that were generally exempt from the ban. Whitman’s Blue Book was first published in 1942, followed by the Red Book in 1946.

Pre-1933 gold coins play a huge role for collectors and investors alike. These historic coins are from a period of time when the US economy was backed by gold.

For today’s investors, the premiums on pre-1933 US Mint gold coins have fallen significantly in recent years. In some situations, premiums for NGC and PCGS graded collectible double eagle coins can be lower than raw specimens. With cycles of numismatic premiums rising and falling over time these coins represent a solid long-term investment that could potentially bring numismatic returns.

Also during this time several countries began minting restrike gold coins. They are basically modern “reproductions” produced by the official government mint to the same standards as when the gold standard was agreed upon.

At the time, restrike gold coins were recognized as collectibles even though they had no numismatic value. It was a clandestine way for many gold investors to transact real money during the several decades when the ban on private gold ownership was place.

Many state laws regarding precious metals were written prior to 1974, during the times when ownership, buying as a hedge, or investing in gold was still illegal. The numismatic items that were bought and sold were viewed by the states as collectibles, thus taxable under most regimes.

Currently, six states have no sales tax on any purchases: Alaska, Delaware, Montana, New Hampshire, Oregon and Wyoming. While Nevada, South Dakota and Washington have laws or rules that exempt sales tax on precious metals purchases. Utah and Arizona have recently passed legislation that exempts precious metals from state capital gains taxes.

There is a growing recognition among state legislatures to exempt gold and silver purchases from sales tax due to its worldwide recognition as money. Lawmakers are recognizing the fact that gold and silver are relevant as a store of value and a hedge against fiat inflation.

The belief that precious metals transactions should not be subject to taxation is growing among state legislatures because they are now viewed as investment and not a consumer good.

While some states have recognized the historical and economic value of precious metals and are working to eliminate sales tax on them, other states still impose varying levels of tax on such purchases.

It is important for investors to be aware of the specific tax laws in their state when considering buying precious metals. Even in states that require taxation of previous metals it is possible to find a friendly local coin store or pawn shop that will gladly accept cash for silver.

The rules related to charging sales tax on precious metals are complex and vary across the 50 states and even amongst localities.

While trends towards eliminating or reducing sales tax on precious metals are growing, more states are beginning to recognize the importance of metals as real money and the value it brings in diversifying portfolios, protecting against economic uncertainties and being a stable asset.

There are many arguments against the taxation of the exchange of money into a store of value.

  1. Double taxation: When precious metals are purchased with money that has already been taxed, it is essentially double taxation to also tax the exchange of those metals. This can make investing in precious metals less attractive, and may discourage investors from diversifying their portfolios.
  2. Decreased competitiveness: If one state taxes the exchange of precious metals and another does not, it puts the taxed state at a competitive disadvantage. Investors may choose to purchase metals in a non-taxed state to avoid the extra cost, resulting in lost revenue for the state that taxes the exchange.
  3. Economic impact: Taxing the exchange of precious metals can have a negative impact on local economies. Investors may choose to take their money elsewhere, and local precious metals dealers may suffer from decreased business. This can lead to job loss and a decrease in tax revenue for the state.
  4. Encourages black market activity: High taxes on precious metals can encourage black market activity, where transactions take place off the books and taxes are not paid. This can lead to lost revenue for the state and can make it difficult for law enforcement to track the flow of money.

In the US, gold played a significant role in the economy when the country was on some form of the gold standard until 1971. During this period, the US dollar was backed by gold, which meant that the government had to hold enough gold to cover a large percentage of the value of all the dollars in circulation throughout the world.

However, the tax-free states in the US recognize the value of precious metals and the role they play in a diversified investment portfolio.

More states are recognizing the historic nature of precious metals as a form of currency and therefore, should not be subject to sales taxes. Mississippi became the latest state to remove sales tax on silver and gold allowing citizens to protect their savings against the devaluation of the dollar.

Removing Taxes on Silver Purchases

In addition to the tax-free states, several states have recently taken steps to remove or reduce sales tax on precious metals purchases.

For example, Mississippi, Kentucky, Maine, Wisconsin, Vermont, Minnesota, Alaska, Tennessee, Maine, and Idaho have all passed laws that either exempt precious metals from sales tax or reduce the tax rate.

These legislative actions reflect the growing recognition of the value of precious metals as a safe-haven asset and store of value.

These states have recognized the importance of precious metals as a store of value and have taken steps to remove barriers to their ownership. These states have made it easier for investors to protect their wealth with these assets.

Several states have recently introduced legislation to remove or change sales tax laws regarding precious metals.

For example, Mississippi, Kentucky, Maine, Wisconsin, Vermont, Minnesota, Alaska, and Tennessee have all either eliminated or reduced sales tax on precious metals in recent years.

Idaho and Maine are also considering gold reserve laws, which will allow the state to hold gold as a reserve asset.

Texas, often taking a leadership role in guiding other states, has introduced gold-backed digital currency law as an alternative to the anticipated Federal Reserve CBDC.

The state of Texas also operates a first-of-it’s kind bullion depository which allows for the segregated storage of precious metals for both individual and institutional investors in a secure and guarded facility.

More States Vote to Remove Sales Tax from Precious Metals

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silver coins on the table

Last year legislators in Ohio and Arkansas voted to end sales tax on precious metals. Reports are emerging from across the country that more states are considering legislation to remove retail sales tax on investments like gold and silver.

According to Kitco, “This year Kentucky, Mississippi, Hawaii, New Jersey and Tennessee are all considering removing sales taxes on gold and silver purchases as well.”

Which is good news for gold and silver stackers in those states.

Sales tax on precious metals continues to be a contentious issue. State and local sales taxes are generally considered to be “consumption” taxes, like a VAT or IVA which are typically levied on consumable goods.

There are a variety of organizations that are pushing for tax code reforms that would help end some of the confusion people have regarding precious metals as a store of value.

Which dealers are charging sales tax on bullion?

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As a result of the Supreme Court ruling last year in South Dakota v. Wayfair Inc some online bullion dealers have begun charging sales tax on purchases. Many buyers had previously switched to buying bullion online in states that charge sales tax in order to keep the cost of investing in silver and gold bullion down.

Over the past few months several major dealers revamped the checkout process on their website’s to include sales tax for states that require it.

Among those dealers has been two of the largest, APMEX and JM Bullion. Both dealers have published pages on their respective website’s related to sales tax and which states they are required to collect sales tax for on bullion purchases.

Even with these guides there is still a lot of confusion about sales tax with regard to gold and silver bullion, gold and silver coins, and other numismatic and bullion related items. Each state has it’s own unique definitions of how each are categorized and how they determine if sales tax should be charged on purchases.

Some dealers have also begun charging sales tax on bullion related items purchased through their eBay Stores. This has been leading many buyers to alternative dealers that have not begun charging sales tax, as well as seeking out alternate online platforms and communities for trading precious metals and other local sources.

Bullion Dealers Begin Charging Sales Tax for Online Orders

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As a result of the Supreme Court decision in June 2018 many online bullion retailers have begun to collect sales tax on orders being shipped to states that view bullion as a taxable item.

State Sales Tax on Silver and Gold bullion varies throughout the country. Some states see bullion as a collectible susceptible to tax, while others view it as an investment or cash alternative that is non-taxable.

Online bullion dealers such as APMEX and JM Bullion have already begun charging sales tax on some orders placed through their websites and eBay stores.

Below is a list states and whether or not they charge sales tax on Coins, Paper Money, and/or Precious Metals.  Tax laws are constantly changing. The information below should be used as a guide. Confirm with the online precious metals, bullion or coin dealer prior to purchase to find out if they collect sales tax in your particular locale.

Alabama
The State charges 4% on everything. Many local County & City add additional taxes between 4-5%.

Alaska
No state sales tax, though local governments may still tax.

Arizona
No sales tax collected on precious metals or coins.

Arkansas
Sales tax is collected on precious metals.

California
Precious metals and coin purchases are exempt if the amount is over $1,500.

Colorado
Sales Tax precious metals, bullion and coins varies by city.  There is no state sales tax..

Connecticut
Coins that are collectable are exempt from state sales tax. Precious metals purchases under $1,000 are charged sales tax.

Delaware
No sales tax precious metals and coins.

District of Colombia
Sales tax is collected precious metals and coins.

Florida
No sales tax on U.S. coins.  Precious metals purchases greater than $500 are taxed.

Georgia
No sales tax on coins or precious metals.

Hawaii
Coins and precious metals purchases are charged excise tax.

Idaho
No sales tax on bullion or coin purchases.

Illinois
No sales tax on precious metals or coins.

Indiana
No sales tax on coins or bullion.

Iowa
No sales tax bullion or coins.

Kansas
Coin and precious metals purchases are subject to sales tax in Kansas.

Kentucky
Coin and precious metals purchases are subject to sales tax in Kentucky.

Louisiana
Coin and bullion purchases over $1,000 are exempt from sales tax.

Maine
Sales tax is collected on all bullion and coin purchases.

Maryland
Collectible coins and bullion are exempt on purchases over $1000.

Massachusetts
Coin and precious metals are exempt on purchases over $1000.

Michigan
No sales tax bullion or coins.

Minnesota
Coin and precious metals purchases are subject to sales tax in Minnesota.

Mississippi
Coin and precious metals purchases are subject to sales tax in Kentucky.

Missouri
No sales tax bullion or coins.

Montana
No sales tax bullion or coins by the state.  Some communities charge a  3% provisional tax.

Nebraska
No sales tax bullion or coins.

Nevada
Sales tax is collected on coins that sell for more than 50% of Face Value. Private Mint Bars and Rounds are exempt.

New Hampshire
No sales tax bullion or coins.

New Jersey
Coin and precious metals purchases are subject to sales tax in New Jersey.

New Mexico
Coin and precious metals purchases are subject to sales tax in New Mexico.

New York
Coin and precious metals purchases are subject to sales tax in New York. Bullion purchases over $1,000 are exempt

North Carolina
Coin and precious metals purchases are subject to sales tax in North Carolina

North Dakota
No sales tax bullion or coins.

Ohio
Sales tax exempt on the sale of precious metal bullion and investment coins that are composed mainly of gold, silver, platinum, or palladium.

Oklahoma
State and local sales taxes can apply to precious metals and coin sales.

Oregon
No sales tax bullion or coins.

Pennsylvania
No sales tax bullion or coins.

Rhode Island
No sales tax bullion or coins.

South Carolina
No sales tax bullion or coins.

South Dakota
No sales tax bullion or coins.

Tennessee
No sales tax bullion or coins.

Texas
No sales tax bullion or coins.

Utah
No sales tax bullion or coins.

Vermont
No sales tax bullion or coins.

Virginia
No sales tax bullion or coins.

Washington State
No sales tax bullion or coins.

West Virginia
Coin and precious metals purchases are subject to sales tax in West Virginia.

Wisconsin
Coin and precious metals purchases are subject to sales tax in Wisconsin.

Wyoming
Precious metals purchases are subject to sales tax in Wyoming.

As with all tax related matters it is best to consult a qualified tax professional. Check with each dealer prior to purchase to determine if they will be charging sales taxes on your purchases.