Longboat Retirement Solutions LLC

U.S. GOVERNMENT REPORTING REQUIREMENTS FOR COIN AND BULLION DEALERS February 22, 2013

Filed under: Investing Globally,Precious Metals — larsfforsberg @ 2:55 pm
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From Global Wealth Protection of January 22, 2013:

There is much confusion and disinformation about the extent to which coin dealers are required to obtain customer information to keep on file and use in submitting reports to the Internal Revenue Service (IRS) or other government agencies.

In some cases the confusion may be used to steer customers away from lower-margin bullion sales and towards the higher-margin coin sales, even though such items may be less suitable for the customer’s purposes.

I’ll attempt to summarize some of the reporting topics herein, but for more helpful information, you can visit the Industry Council for Tangible Assets’ (ICTA) website.

The three main circumstances where dealers may be required to do extra paperwork or submit reports for compliance with governmental regulations are (1) the receipt of “cash” payments of large enough amounts in one or more related transactions where the dealer must comply with cash reporting regulations; (2) a minimal amount of extra in-house paperwork for purchases or sales above a threshold dollar amount where the affected coin dealer (which includes almost every dealer who handles any bullion-related transactions) must comply with anti-money laundering regulations; and (3) purchases from non-corporate sellers of a limited list of precious metal coins and ingots in large enough quantities that the dealer needs to submit the IRS Form 1099-B.

Cash reporting regulations: There are two elements in the cash reporting regulations. The first and most basic rule is that when someone makes cash payments totaling more than $10,000 in a single or in related transactions, dealers receiving such payments are required to submit Form 8300 Report of Cash Payments Over $10,000 Received in a Trade or Business. Among the tricky parts is that cash includes more than just the Federal Reserve Notes in your wallet. It also includes traveler’s checks, money orders, and bank instruments like cashier’s checks of individual amount of $10,000 or less (bank-originated instruments in excess of $10,000 need not be reported by a dealer because the issuing institution had to already report it to the IRS). Another tricky part has to do with related transactions. If a married couple were to come in to make purchases within a short time frame, paying “cash” (as defined in the IRS regulations), and totaling more than $10,000, the dealer is required to add these transactions together to submit Form 8300 to the IRS. Related transactions can also include multiple transactions by the same person and two or more transactions by people with other family relationships, or even friends or co-workers.

The second part of cash reporting regulations has to do “suspicious activities”. While many financial institutions are required to submit Suspicious Activity Reports (SARs), coin dealers are not yet required to do so. However, coin dealers are encouraged to voluntarily file such reports if any of a variety of situations arises (see http://www.fincen.gov for more information), and it may be prudent for the dealer to do so.

The SAR is submitted to the Treasury Department’s Financial Crimes Enforcement Network on FinCEN Form 109 Suspicious Activity Report by Money Service Businesses. When the government receives a SAR, it is not just filed. Instead, it is effectively a criminal complaint that starts an investigation of the customer. It absolutely would bring on a greater degree of scrutiny of a customer’s financial activities.

Anti-money laundering (AML) regulations: Section 352 of the USA Patriot Act of 2001, for which regulations were adopted during 2002, requires coin dealers to be on the lookout for possible terrorist activities. Any coin dealer who does more than a nominal amount of purchases and sales of “bullion-related” coins and ingots (including most US $20 and $10 gold coins) with the public over the course of a 12 month period is subject to complying with these regulations. This means that the dealer is required to have a formal anti-money laundering compliance program, a designated compliance officer, annual training of all employees who deal with customers, and an annual audit of the dealer’s compliance with the program.

I suspect that there are many coin dealers who have not established their compliance programs, erroneously thinking that they do not meet the threshold amounts of “bullion” transactions. But, once a dealer meets the threshold quantities for becoming subject to these regulations, it pretty much means that the dealer is permanently required to comply with these regulations.

In complying with anti-money laundering regulations, dealers may be required to obtain the name of all customers engaging in cash transactions above a threshold dollar amount, no matter whether they’re buying or selling. I understand that the AML compliance programs of most dealers have a threshold of $3,000 above which they must obtain this customer information. Some dealers will have a higher threshold for reporting due to their higher average purchase and greater volume of transactions.

Dealers do not file any additional forms with any government agency under AML regulations. However, dealers are required to have the information available should an IRS agent come to their premises to check for transactions above the threshold amounts.

IRS Form 1099-B reporting regulations: The IRS proposed regulations in the early 1980s to require coin dealers to report certain purchases from non-corporate sellers. It took nine years for the IRS to finally pin down reporting thresholds. During this time, significant lobbying by ICTA succeeded in eliminating reporting requirements for small transactions (see IRS Revenue Procedure 92-103).

The final regulations come from the perspective of requiring brokers to report stock and commodity transactions, where the broker facilitates a transaction between a seller and buyer but does not take title to the assets. The IRS expanded the definition of a broker to include coin dealers, even those buying and selling from their own inventory and not acting as a broker. However, in establishing regulations from this angle, the result for coin and bullion dealers was that the reporting requirements covered extremely few items, and then only in sizable quantities; only items (of sufficient quantity) that could be potentially deliverable to fulfill commodity contracts on existing or approved exchanges.

Here are the only items listed by the IRS in Rev. Proc. 92-103 as requiring submission for IRS Form 1099-B, and the minimum threshold quantities that must be sold in single or related transactions before the form must be filed:

Item
Minimum Fineness
Minimum Reportable Amount
Gold Bars
0.995
Bars totaling 1 kilogram (32.15 troy oz.) +
Silver Bars
0.999
Bars totaling 1,000 troy oz. or more
Platinum Bars
0.9995
Bars totaling 25 troy oz. or more
Palladium Bars
0.9995
Bars totaling 100 troy oz. or more
1 oz. Gold Maple Leaf 25 1-oz. coins
1 oz. Gold Krugerrand 25 1-oz. coins
1 oz. Gold Mexican Onza 25 1-oz. coins
US 90% Silver Coins Coins totaling $1,000 face value or more

If an item is not on this list, sales of it does not need a Form 1099-B to be filed, no matter how large the quantity!

There is some ambiguity in the regulations whether the ingots are required to be the actual minimum size required for delivery against a commodity contract or whether a mixture of smaller size ingots that total more than the minimum ounces required for a contract are also sufficient to call for submission of Form 1099-B. ICTA has advocated the conservative position of recommending that coin dealers report any mixture of smaller ingots that, combined, meets or exceeds the minimum contract size.

The result of defining reportable transactions so narrowly is that relatively few 1099-B forms ever need to be submitted. If someone sells to a dealer 20 Krugerrands, 10 Gold Maple Leafs, $500.00 face value of US 90% Silver Coin, and 700 ounces of pure Silver Ingots, the dealer does not need to submit any paperwork to the IRS. The IRS still wants to see the transaction on the seller’s tax return, but it is the seller’s responsibility to collect and report this information.

There are many bullion-priced products available that are not reportable on Form 1099-B. Beware of a coin dealer who tries to steer a customer away from all bullion coins and ingots and into numismatic coins because “you can avoid government reports when you sell” is either dishonest, incompetent, or both.

Financial privacy from the US government has largely disappeared. While it troubles me to think that our freedoms and privacy are evaporating, that is pretty much the environment we face today. At least precious metals buyers are not subject to more invasive reporting requirements as imposed in other countries.

Buying these commodities in another country is generally legal but some dealers may be required to obtain your ID as reporting requirements may apply to local citizens but not with foreigners. So, verifying your ID will help to eliminate you as one subject to local taxation.

 

Bondpocalypse February 13, 2013

Filed under: Corporate Malfeasance,Economics,Investing Globally — larsfforsberg @ 10:10 pm
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…and another fraud begins.

 

Why You Don’t Give The Government Your Guns….or Your Money February 10, 2013

 

To me, this is the simplest and most eloquent argument against gun control.  I think that a person can read deeper into this.  When the government controls you financially, money becomes a weapon.  When you are required to buy what only they offer, where does that leave you?  You should focus on increasing your liberty, not handing it to the government for short-term superficial gain.  Consider the consequences.

 

Don’t Worry, The Government Will Save You February 5, 2013

Filed under: Corporate Malfeasance,Economics — larsfforsberg @ 6:33 pm
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BY:  Lars Forsberg

The next “fiscal cliff” will once again dominate the news with dramatic political showdowns and last minute deals.  It will pit the pit the Republicans against the Democrats…..the “we are for the hard working middle class” vs. “we are for the hard working middle class.”

Wait a second.  They both say the same thing, don’t they?  But don’t they vote different?  No.  Isn’t the one party for the rich people, while the other is helping the poor?  No.  Doesn’t the one party get all of their money from the big corporations, while the other party gets their money from good people like you and me?  No, they both get their money from the same corporations, the same lobbyists, and the same banks and they both use our money to get re-elected.

Now hold on a second, do you mean to tell me that that nice guy up there, with the great haircut and expensive suit, is just telling me what I want to hear?….so that he gets my vote in the next election cycle?  Of course you know this already.  You know that the politicians will say whatever is hot in the polling data at the time of whatever speech to whatever crowd they are speaking to.  In the end the lobbyists, the big corporations, the politician, and the media win.  You lose.

The next fiscal crisis will be no different.  The only thing that changes is what really happens behind the scenes.  Who will they steal the money from, and who will they give it to?

How much money did you donate (willingly, not tax money) to which candidate?  None?  Oh….you have no voice; your opinion does not matter; go away.  You live where?  Oh, so and so already has a lock on that state, you don’t matter.  Good by.

The question is: Who will they take the money from and to whom will it go?

Currently the hot debate is the deficit, so there will be a lot of hoopla surrounding this issue.  How will they tackle the debt ceiling?

How about raiding retirement accounts?  There is roughly $18 Trillion in retirement savings in the US.  Hmmm.  Interesting proposition.  What would we need to get the American public to voluntarily give there private retirement savings to the government to manage?

How about another stock market crash?  This would kill many birds with one stone.  Those in the know could once again short the market, and make tons of money; then of course purchase stocks at rock bottom prices after the crash.  The people would once again scorn Wall Street (deservedly, but it will be misguided); and demand that the government (who we said before are in bed with Wall Street) do something to make our retirement accounts safe from these darn Wall Street guys!  At this point, the government can swoop in and save the day.  Yay government!  Congress could force pension managers to purchase “secure” government bonds, so that we don’t have these ups and downs.  Hurray!  Of course, this means loaning a bankrupt beurocracy your hard earned and saved money.

Hold on.  Can they do that?  Yes, it’s been done many times throughout history.  Would they do that?  I hope not, but who knows?  I would not put it past them.  They only need to sell it to the vast majority of Americans who have no idea what the real intentions of the political class consist of.  Those intentions are clear to anyone who is watching: gaining more power, by any means necessary.

If you have not yet considered it, now may be the time.

Washington is seriously thinking about taking possession and control of your retirement and your future; shouldn’t you?