The Art of Collecting
Steve Roach, Coin World’s editor-at-large, has been deeply involved with numismatics for more than 20 years, starting as a young coin collector in Michigan. Two years spent as a coin grader, nearly three years at a major coin wholesaler and a stint as a paintings specialist at an international auction house have given Steve a rich understanding of the hobby, its market and the unique personalities and exceptional objects that make collecting meaningful. He joined Coin World in 2006 as a columnist, and has served as associate editor and editor-in-chief. He received his bachelor of arts degree from the University of Michigan, a juris doctorate from the Ohio State University and is a Certified Member of the International Society of Appraisers.
A success in Virginia, but state tax issues continue to threaten hobby
Shifting state tax laws as they relate to the retail sales of coins and bullion continue to cause headaches for our hobby.
Dealers, collectors and numismatic organizations including the Industry Council for Tangible Assets should be applauded for their efforts to bring attention to this area and make changes at the state legislature level.
For example, Virginia recently passed a bill that provides a sales and use tax exemption that includes gold, silver, and platinum purchases totaling more than $1,000.
This could not have happened without the work of many dealers, including David Lawrence Rare Coins’ John Feigenbaum and ICTA. The groundwork for this exemption took hundreds of hours of effort and many months. The law becomes effective on July 1, 2015, and it makes Virginia as the 32nd state to have an exemption, according to ICTA.
Yet, the exemption could have been wider. Virginia’s governor Terry McAuliffe did not elect to expand the exemption to all legal-tender coins (regardless of their metal content) and paper money.
So, the effort will continue in Virginia as it does in other states.
Sales and use taxes have a real impact on dealers and collectors.
Pennsylvania’s proposed $78.6 billion 2015–16 budget includes various ways to address a $2.3 billion budget deficit, including raising the state sales tax from 6 percent to 6.6 percent and removing an exemption on investment metal bullion and rare coins.
The budget notes: “An unknown number of individuals and businesses engaged in the purchase and sale of investment bullion and coins benefit from this tax expenditure.”
However, while the state doesn’t know the number of individuals impacted, it has a firm handle on the money it’s lost, and what it stands to gain with the additional taxation.
The state estimates that the coin and bullion exemption during 2013–14 cost the state $9.3 million and forecasts the potential revenue for taxing coins and bullion for 2015–16 as $12.2 million. This number increases to $14 million in the next budget cycle before concluding at $21.1 million in 2019–20.
That steady rise in forecasted tax revenue assumes that numismatic business will stay in the state.
However, when state sales tax laws become unpredictable or punitive to coin dealers, dealers often move.
Several large dealers that I’ve chatted with in Pennsylvania are considering moving to more tax-friendly climates such as Florida or Texas.
Should the exemption be lifted and coins be subject to state sales tax, this will surely put a chill on the 2018 American Numismatic Association World’s Fair of Money, scheduled for downtown Philadelphia. While ANA officials have expressed concern, the sales tax threat is becoming more real with each passing year.