Coin Dealers Watch Congress over 1099 Rules
Source: Kitco, Allen Sykora (12/9/10)
"Transactions will require a substantial increased in paperwork."
If not, the topic will be one of the most closely watched legislative issues for those in the coin and precious-metals business when a new ¬Congress convenes in 2011.
Business advocates are hopeful that the rules will be scrapped before they go into effect in 2012, especially since Republicans and Democrats seemingly have bridged the gap on getting rid of them. Senators in both parties tried to push through amendments for a full repeal last month, although they failed to garner the needed 67-vote super majority.
The debate is over Section 9006 of the Patient Protection and Affordable Care Act, the health-care law passed in 2010. Starting in 2012, entities must file a Form 1099 with the Internal Revenue Service whenever they make transactions paying out $600 to another party. The measure does not create a new tax, but instead establishes a paperwork trail to force those who should be paying taxes to do so, if they aren't already. The rules are opposed by a wide range of business groups who say it creates a paperwork burden.
Precious metals may be one of the most heavily impacted sectors since the $600 threshold is less than half of the current price for one ounce of gold, meaning a substantial percentage of transactions will require increased paperwork.
Ed Fritz, president and CEO of Centerville Coin & Jewelry Connection in the Dayton, Ohio area, estimated his business of 14 employees would have to file some 3,000 to 4,000 extra forms per year. "We'll probably have to reprogram the computers in order to be more vigilant in tracking," he told Kitco News. He estimated that operating costs could rise by perhaps 5%.