(Kitco News) - The Industry Council For Tangible Assets teamed up with a slew of other business organizations to put out a major fire this spring–controversial Form 1099 reporting requirements–but the group still has plenty of other raging brush fires to extinguish.

The trade association  for the rare coin, precious metals and tangible assets industry is fighting sales-tax efforts on a number of fronts. The group is also pushing for enforcement or measures to halt counterfeit Chinese coin sales in the U.S., is urging for appointment of a director of the U.S. Mint with the background necessary to help solve some of the problems with programs for precious-metals coins, and is working to ensure that “holding” laws do not interfere with the ability of investors to sell coins in a timely fashion.

Diane Peret, director of industry affairs for ICTA, outlined for Kitco News the main issues the organization is working on these days.

“One of the most important things ICTA does is keep our eyes open to see what’s coming down the pike,” she said. “We never know if today someone might propose legislation that would be damaging for our industry. So we always have to be on the lookout.”

The organization contracts for the services of a lobbyist, Jimmy Hayes, a former Louisiana Congressman and a coin collector himself.

A major victory for ICTA and other business groups this spring was the repeal of new Form 1099 reporting requirements that had been scheduled to go into effect in January. These would have required any entity paying out $600 a year to another party to file a Form 1099 with the International Revenue Service, which gold-coin dealers and other business said would have created onerous reporting requirements.

After months of political wrangling, Congress repealed legislation this spring and it was signed into law by President Obama in late April.

ICTA Remains Vigilant On Sales-Tax Issues

ICTA has taken a position against Streamline Sales Tax Plans that have been debated for years. Most states want to convince Congress to grant them authority to collect sales taxes across state lines.

Currently,  if say a Louisiana business sells and ships a product to New York, it has no responsibility to New York to collect its sales tax. Many states want to change this, especially with Internet sales.

“In this economy, every government entity is working harder than ever to try to increase revenues,” Peret said. No such legislation has been introduced, but ICTA senses there could be an increased push by states.

“We have to be ready to jump in at any time to help fight against it,” Piret said.

When the issue has been debated, there is often a call to remove any minimum or sales-tax caps by states, as well as any exemptions, she said. Currently, more than half of all states have an exemption on sales taxes on precious-metals products, she said.

“When you also remember that our products largely are investment products, and many are acceptable for IRAs and similar retirement plans, it would be totally inappropriate to tax those products,” she said.

ICTA also has been involved with fights in individual states that have tried to remove exemptions and thereby allow taxes on the sales of items such as gold coins. In the last two years, ICTA has won such battles in Pennsylvania and Maryland and is currently fighting another in Louisiana.

Lawmakers tend to assume their states are losing money by allowing sales-tax exemptions for various sectors, thus want to remove them, Piret said. So ICTA tries make legislators realize that sales taxes on gold coins would devastate dealers in their states, since customers would simply go online to buy coins from dealers in other states.

“When it comes to products such as coins and precious metals, you can buy from anywhere,” Piret said. In fact, some buyers don’t even take physical delivery and could have it stored with a custodian.

“Right now, I’m working in…Louisiana to try to save our exemption,” she said. “If we are not successful, that means dealers in this state would have to start applying a sales tax. Well, nobody in their right mind is going to buy American Eagles for their IRA and pay a 9% sales tax. That’s a penalty on your investment, so you’re going to buy it from another state.”

Efforts to repeal the exemptions in Pennsylvania and Maryland failed when sponsors of major coin shows said they would call them off in the event of a sales tax, since otherwise out-of-state vendors would not attend.

“Everybody in any state with an exemption should make sure somebody is watching to make sure they’re not trying to take it away,” Piret said. “Once you’ve lost it, if no one is watching, it will be almost impossible to get it back. We have to work very hard on keeping what we have.”

Chinese Counterfeit Coins Are Problem For U.S. Industry

For some time, counterfeit Numismatic coins have been coming into the U.S. from China. They are advertised as replicas, as allowed by U.S. law, with promotional photos showing wording such as “copy” stamped onto the products, Piret said. But when delivered, some coins do not have “copy” stamped onto them.

Many are of high quality and Piret has seen even experienced coin dealers fooled by them. “It’s a big protection problem for our industry,” she said.

Texas Congressmen Lamar Smith and Ron Paul are among those working with ICTA on the issue. The group is seeking stepped-up enforcement of the existing Hobby Protection Law and, if necessary, additional legislation. Piret pointed out that Canada dealt with the issue by not allowing online auction sites to sell any replicas of Canadian coins. Replicas are allowed in the U.S. only if marked as such, she said.

On  another issue, ICTA is urging for the U.S. Mint to have a permanent director, rather than a five-year political appointee. ICTA also wants somebody with a background to help them resolve some of the production and marketing problems that have occurred with precious-metals coins.

“The BEP (Bureau of Engraving and Printing, which handles paper money) has a permanent director,” Piret said. “We think the Mint should have one also…We need to have the Mint run as a business.”

Production delays or interruptions not only cost the U.S. Mint revenue but also hurt coin dealers, Piret said.  She cited instances when dealers spent considerable advertising in magazines ahead of the release of certain coins, based on information from the Mint, only to not have the coins available at the promised time after all.

“Both dealers and collectors alike are equally frustrated with the Mint,” Piret said.

ICTA is also continually on the lookout for states or municipalities that try to include precious metals in so-called “holding laws,” in which somebody who buys a used item must wait for a certain length of time before they can resell.

The intent of such laws is to combat the resale of stolen second-hand goods. However, sometimes laws would treat coin dealers like pawn brokers. “And we’re not,” Piret said.

“We want to be sure that in any holding laws, precious metals, coins and bars are exempted from these holding requirements,” she said. Otherwise, somebody might make a gold investment at say $1,550 an ounce and then effectively be blocked from selling for a certain length of time, with devastating consequences if the price of gold should fall in the meantime.

By Allen Sykora of Kitco News; asykora@kitco.com

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