US Coins

Kentucky bullion sales to become tax exempt

Kentucky is enacting legislation exempting bullion coins from sales tax.

All images courtesy of United States Mint.

Kentucky plans to implement an exemption Aug. 1, 2024, on sales and use taxes for currency and bullion sales, to become the 44th state to enact a full or partial sales-tax exemption on the sales of coins, paper money, and precious-metal bullion.

“This is a significant moment for the entire numismatic community in Kentucky,” said Byrd Saylor III, leader of the local coin-dealer coalition and a member of the National Coin & Bullion Association, the trade name for the Industry Council for Tangible Assets. “The enactment of this sales-tax exemption reflects years of dedicated advocacy and collaboration among stakeholders.”

Key stakeholders in the campaign, besides Saylor, included Jeff Garrett of Mid-American Rare Coin Galleries in Lexington, Jonathan Kern of Jonathan K. Kern Coin Shop, also in Lexington, and Eddie Bruner of Glasgow Coin & Jewelry, who were instrumental in amplifying the message and garnering support for the initiative. “As a coalition, we remained steadfast in our commitment to this exemption, recognizing its potential to spur economic growth and support small businesses across Kentucky,” added Saylor.

What it means

According to NCBA Executive Director David Crenshaw, under the new law, “bullion” is defined as bars, ingots, or coins made of gold, silver, platinum, palladium, or a combination of these metals, with value based on metal content rather than form.

“Currency,” according to Crenshaw, includes coins or paper money made of specific metals or materials, used as legal tender, and sold based on their value as collectible items.

What transpired

When presented with House Bill 8, which included the exemption, Kentucky Andy Gov. Beshear issued a line-item veto for that item, citing his belief that individuals who own gold could afford to pay taxes and that currency and bullion should be treated as tangible goods subject to sales tax.

Beshear’s veto message failed to recognize that currency and bullion are legal tender and investment goods, which are subject to capital gains taxes when resold, making a sales tax on these items a form of double taxation that penalizes small investors, according to Crenshaw.

The legislature reconvened on April 12 to reconsider bills rejected by the governor.

When the House called for HB 8, Kentucky’s Speaker of the House David Meade cited the state constitution and previous attorney general opinions to establish that the veto was invalid.

The Kentucky constitution allows use of a line-item veto only for appropriations measures. As a result, the House forwent an override vote and sent the bill to Secretary of State Michael Adams for his signature, which carries the same weight as if the governor had signed it.

The legislation, initially embodied in Senate Bill 105: AN ACT relating to sales and use tax exemptions, was integrated into the revenue bill, HB 8, a move that garnered widespread support throughout the Kentucky legislature. This exemption encompasses sales of currency and bullion, providing relief to dealers and collectors alike.

Saylor expressed gratitude to State Sen. John Schickel and the other seven senators who introduced SB 105, acknowledging their pivotal role in advancing the legislation, as well as Sen. David Givens for championing the amendment to HB 8.

Saylor also extended appreciation to Representative Jason Petrie and his colleagues for their unwavering support in the Kentucky House of Representatives.

“We are thrilled to see Kentucky join the majority of states in recognizing the importance of providing tax relief for transactions involving coins, paper money, and precious-metal bullion,” said Crenshaw. “This exemption will not only benefit dealers and collectors but also foster a thriving numismatic market in the state.”

The passage of this legislation follows years of concerted effort, beginning in 2016. The work renewed in earnest in 2021 with stronger focus and increased collaboration among stakeholders, according to Crenshaw.

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