In a move that has already created a buzz in the precious metals community, the Governor of Mississippi ratified a new law on April 19th, 2023. The law explicitly provides tax exemptions on selling and using precious metal bullion, coins, and currency.
Under this law exemptions are provided for the sales of coins, currency, and bullion. As the law defines, bullion is any bar, ingot, or coin made partially or entirely of gold, silver, platinum, or palladium. This term applies to those used as a medium of exchange, security, or commodity by any state, the U.S Government, or a foreign country. The sales are based on the precious metal or collectible item’s intrinsic value rather than its representative value as an exchange medium.
In contrast, ‘coin or currency’ refers to any coin or currency made partially or entirely of gold, silver, other metals, or paper used solely as a medium of exchange, security, or commodity by any state, the U.S Government, or a foreign nation. The coin or currency’s sales are based on its intrinsic value as a precious metal or collectible item rather than its representative value as an exchange medium. It’s important to note that the term ‘coin or currency’ does not extend to coins or currency transformed into jewelry.
This law became effective on July 1, 2023. As a result, Mississippi will become the 42nd state to either have no sales tax or to have introduced full or partial tax exemptions on retail sales of precious metals, bullion, coins, and currency. Nevada also provides a partial sales tax exemption through regulations instead of legislation.
In the year 2023, similar exemptions have been introduced in various states. In Kentucky, a similar exemption was part of the revenue bill approved by the House. Unfortunately, the Senate did not retain this provision in its approved bill. The exemption was not reinstated during subsequent negotiations to reconcile the differences between the two approved versions. The legislative session in Kentucky for the year has ended.
In Alaska, House Bill 3 was introduced in January to exempt gold and silver coins or bullion from local borough sales and use taxes. Alaska does not impose state sales or use taxes, but some boroughs do. This bill’s future remains uncertain as it was referred to the House Finance Committee in February, which has yet to act.
In Maine, Legislative Document 1051 was introduced in March to exempt gold and silver coins and bullion from sales and use tax. After being assigned to the Joint Taxation Committee, the committee voted for a divided report on April 6. The prospects remain uncertain.
New Jersey introduced Senate Bill 1825 in 2022 to provide for a sales and use tax exemption on gold, silver, platinum, and palladium bullion products and investment coins (any coin with a selling price of $1,000 or more). In March 2023, Assembly Bill 5294, with identical language, was introduced. However, the future of these bills remains uncertain.
In Vermont, House Bill 295 was introduced in February. This bill proposes a partial sales and use tax exemption on sales of gold and silver bullion and coins exceeding $1,000. The first $1,000 of any transaction would still be subject to Vermont’s 6% statewide sales tax and an additional local tax of up to 1%. The bill’s prospects still need to be determined as it was sent to the House Ways and Means Committee.
In Wisconsin, identical bills, Assembly Bill 29 and Senate Bill 33 were introduced in February to establish a sales and use tax exemption on precious metals bullion and coins with a gold, silver, platinum, or palladium content of at least 35%. However, an overestimation in the fiscal estimate report regarding the impact of these exemptions has created a hurdle, making the prospects uncertain.
Government officials have often overestimated the sales and use taxes collected while considering these exemptions. They need more accurate information regarding the amount of sales tax collections from dealers in precious metals bullion, coins, and currency versus those from other businesses that sell antiques, jewelry, other collectibles, second-hand merchandise, and hobby supplies.
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