When Nancy Pelosi said we have to pass the bill before we can find out what’s in it, few had any idea that the Obama health care legislation would expand well beyond the health care industry.
According to an ABC news report, the new 1099 provisions in the health care bill, which will force business owners to declare all purchases over $600 on their yearly tax return, will also directly affect the sale of gold coins and bullion:
Section 9006 of the Patient Protection and Affordable Care Act will amend the Internal Revenue Code to expand the scope of Form 1099. Currently, 1099 forms are used to track and report the miscellaneous income associated with services rendered by independent contractors or self-employed individuals.
Starting Jan. 1, 2012, Form 1099s will become a means of reporting to the Internal Revenue Service the purchases of all goods and services by small businesses and self-employed people that exceed $600 during a calendar year. Precious metals such as coins and bullion fall into this category and coin dealers have been among those most rankled by the change.
So every time a member of the public sells more than $600 worth of gold to a dealer, Piret said, the transaction will have to be reported to the government by the buyer.
The new legislation works in both directions to track the buying and selling of gold.
Essentially, any transaction over $600 will be logged buy the dealer, whether you buy $600 or more worth of gold, or sell it back to the dealer.
Since the transaction will require a social security number (or federal employer identification number) to be logged at the time of sale or purchase, this new legislation gives the government the capability to track every single precious metals purchase (over $600)Â in the country.
While the legislation implies that taxation of such transactions to generate additional revenue is the goal, precious metals buyers, who generally like to remain anonymous, will most certainly see that the real issue in this instance is not taxation, but the ability to track who owns the gold.
When the US government ran into money problems in the 1930’s, Franklin Roosevelt confiscated all gold held in the hands of the public, and those who refused to give up their gold were either fined or imprisoned. Incidentally, the communists in Russia and eastern Europe did the same thing throughout the 20th century, but those penalties went a bit further than just imprisonment.
With a US dollar currency crisis and a US federal government debt crisis looming, many precious metals investors are concerned that similar government action may be instituted in the future.
Though it has been argued by many that confiscation in the US would not be necessary or feasible, the 1099 legislation certainly makes it easier to identify who has the gold.
Of course, those who purchase prior to January 1, 2012 will be “off the books,” until that time when they attempt to sell their gold to a registered dealer who will be required to log the transaction.
Historically, when the economic or political shit hits the fan, governments have always moved to seize precious metals from the citizenry. The Nazis did it in World War II. The US did it in the 1930’s. The Bolsheviks did it in 1917. Rome did it by removing 90% of the silver from their coinage.
It is conceivable that, because of global economic problems, governments like the US, China and EU may once again make a move to “repatriate” the gold belonging to their citizens. Even if this is avoided, the tracking capabilities that have been provided for in the Obama health care legislation now give the government the ability to know exactly who buys how much gold, as well as an easy tracking mechanism for taxing the transaction. Rather than confiscating your gold, they may simply tax your profits at 95% at the point of sale, virtually wiping out the very reasons for why an investor buys precious metals to begin with.
This is why we advocate a diversified strategy for gold investing and wealth preservation that includes not only the acquisition of bullion here at home, but if you have the capability, international storage of physical metals (i.e. Singapore, Australia via Perth Mint, Hong Kong, South America, etc.). Though you may lose some gold in the event of a confiscation or extreme taxation in one country, you may be able to retain some wealth internationally. We also recommend looking into the purchase of gold equity ETF’s like the Market Vectors Gold Miners (not commodity ETF’s like GLD) that give you direct shares of some of the top gold companies in the world.
And of course, for those without the ability to invest internationally, buy off the books while you still can and keep your gold out of sight of potentially prying eyes. Once the $600 reporting period begins, be sure to change dealers regularly, as the $600 is a yearly accrual based on the social security number or federal EIN.Â The other option after January 1, 2012, of course, is to keep your purchases and sales under $600. This can be achieved with fractional gold coins (though the price of gold may rise significantly taking these above the $600 threshold as well) or one ounce silver coins which trade for significantly less than gold.
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Read by 9,244 people Date: July 21st, 2010 Website:www.SHTFplan.com
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