Precious Metals

Ohio sales tax exemption set in 2017

Cincinnati dealer Brad Karoleff is relieved that starting in 2017, gold, silver, platinum and palladium coins and bullion will be exempt from Ohio’s sales and use taxes.

Ohio will become the 34th state to have a complete or partial sales-tax exemption on the retail sales of precious metal numismatic and bullion items effective Jan. 1, 2017.

Governor John Kasich signed Senate Bill 172 on June 14, which provides for a sales tax exemption on investment coins and gold, silver, platinum and palladium bullion items. An investment coin is defined in the legislation as any coin composed primarily of gold, silver, platinum, or palladium. 

The sales tax exemption is the result of a multi-year effort led by the Ohio Precious Metals Association and its executive director, Jeff Longstreth. 

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Stow, Ohio, dealer David Miholer of Executive Coin Company said that the current exemption is the result of years of work. “Charlie Kepnes started the original effort nine years ago. ... I recall back then that Kepnes, Dick Frost, and I were pretty much laughed out of Columbus.”

In 2013, similar legislation passed Ohio’s House and Senate, but Gov. Kasich exercised his line-item veto power on June 30, 2013, removing the provision exempting investment-metal coins and bullion from Ohio sales tax. At the time he said, “There is no reason to provide preferential treatment to one class of items and not others that could possibly increase in value, such as art, sports cards, or antiques. Therefore, this veto is in the public interest.” 

Kasich spokesman Emmalee Kalmbach stressed that the legislation that Gov. Kasich vetoed in 2013 was different than what he approved in 2016. As she explained to the Toledo Blade newspaper, “The language was different. What he signed was narrower and more limited and very different from what he vetoed in House Bill 59. Also, what he signed today received wide support from the General Assembly.” 

The legislative history shows that the definition of bullion was narrowly construed to make sure that jewelry and watches would not be exempted.

Ohio tries again

The legislation was reintroduced in Ohio’s House on Feb. 3, 2015, and the Industry Council for Tangible Assets joined in organizing support for the bill. 

Miholer, Brad Karoleff of Cincinnati’s Coins+, Longstreth, ICTA treasurer Patrick Heller and ICTA executive director Kathy McFadden each testified at an April 14, 2015, public hearing before Ohio’s House Ways and Means Committee, explaining why taxing coins and bullion hurt Ohio’s coin dealers and kept major coin shows away from the state. 

In Ohio’s Senate an exemption for investment coins and bullion was introduced on May 27, 2015, and it was passed by both houses. 

Longstreth said, “Ohio now joins the 33 other states with a sales-tax exemption. I wish to thank everyone that helped make this exemption a reality. The ICTA partnership was invaluable to the successful conclusion of our efforts.”

McFadden added, “We’re taking a moment to celebrate the victory in Ohio, but that’s only one front in the fight to promote a robust coin industry. We have a lot of work to do throughout the country, and we need dealers to join with us in that fight.” 

Helping business in Ohio

Karoleff said that the new exemption will have a positive impact on his rare coin business. “Governor Kasich has given Ohio coin dealers the ability to compete with online sellers of gold and silver by signing the sales tax exemption bill. The governor has guaranteed that precious metal investment dollars will remain circulating in Ohio.” He concluded, “I am sure that the sales of gold and silver coins will significantly increase next year not only at my stores in Cincinnati, but throughout Ohio.”

Ohio had previously enjoyed an exemption on sales on investment metal bullion and investment coins that was enacted in 1989. 

In 2005 the tax was reinstated in a move that was widely seen as punishment for a scandal popularized as “Coingate.” 

It involved Toledo-area coin dealer Tom Noe, who was convicted of misappropriating funds from a $50 million rare coin fund that he managed for the Ohio Bureau of Workers’ Compensation. Noe was given an 18-year sentence in 2006 and ordered to pay back more than $13 million in restitution to the Bureau. 

A Fiscal Note and Local Impact Statement prepared on May 25 by the Ohio Legislative Service Commission estimates that the state may lose between $4.3 million and $5.7 million in sales and use tax in 2017 due to the new exemption. 

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