The following is a July 24 press release from the Precious Metals
Association of North America:
Washington, D.C. – Now that discussions surrounding tax reform have
heightened in previous weeks, the Precious Metals Association of North
America (PMANA) offered testimony before the House Committee on Ways
and Means asking for a change in the Internal Revenue Code that would
bring fairness to precious metal bullion and coins investors, while
also creating smart investment opportunities for Americans.
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Since 1982, gains made on precious metals bullion have been taxed at
the ordinary income rate due to language defining such bullion as a
‘collectible.’ Congress has made numerous attempts to mitigate the
effects of this capital gains treatment on precious metals. The Tax
Reform Act of 1986 granted the American Eagle family of coins an
exemption from the ‘collectible’ definition and allowed them to be
included as equity investments in Individual Retirement Accounts. Over
a decade later, the Taxpayer Relief Act of 1997 created purity and
custody standards that, if met, would exempt bullion coins and bars
from the definition while also allowing them in IRAs. Furthermore,
precious metal bullion and coins are purposely designed and produced
in a way that excludes any assumption that they are rare or unique
collectibles. Instead, bullion and coins are mass produced only as
investments in their precious metal content.
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“Since 1986, Congress has taken significant steps to correct this
regulatory inconsistency,” said Scott Smith, president of PMANA.
“However, the ‘collectible’ definition remains for those investments
in precious metal bullion and coins that have not been exempt. These
investments are taxed at the ordinary income rate for collectibles
with a maximum rate of 28% — a rate 40% greater than the maximum
capital gains rate for equity investments. We want to work with
Congress to fix this inconsistency so that the government is not
picking winners and losers when it comes to investments in precious
metals,” Smith concluded.
Unlike collectible coins that are pursued by hobbyists, bullion
coins are precious metal investment vehicles that are traded at the
value of the commodity they contain. Since they are not rare, but
rather mass produced specifically for investing, their status as a
‘collectible’ for non-IRA investments is misaligned with their
function and form. That is why PMANA is asking Congress to amend the
Internal Revenue Code to treat gold, silver, platinum, and palladium
in either bullion or coin form, in the same manner as stocks, bonds,
and mutual funds for purposes of the capital gains rate for individuals.