Sales Tax Exemption Prospects in 2023

In 2022, the state of Tennessee was the only state to adopt an exemption from sales taxes on retail sales of precious metals bullion, coins and also currency. Beyond that, the state of Alabama extended the expiration date of its existing bullion/coin/currency sales tax exemption from 2023 to 2028. In addition, several state legislatures that had bills introduced to revoke existing exemptions all adjourned without taking action on any of them.

Currently, there are five states that have no state sales tax (Alaska, Delaware, Montana, New Hampshire and Oregon). There are an additional 36 states that have adopted complete or partial sales tax exemptions on the retail sales of bullion/coins/currency. The state of Nevada, by regulatory action, exempts precious metals bullion and coins that do not sell for more than 50 percent above face value. There are eight states, along with the District of Columbia, that still require sales taxes to be collected on retail sales of such products: Hawaii, Kentucky, Maine, Mississippi, New Jersey, New Mexico, Vermont and Wisconsin.

In 2022, there were sales tax exemption bills in the legislatures of Hawaii, Kentucky, Mississippi and New Jersey that did not become law.

Now that 2023 is here, there are some renewed efforts to obtain bullion/coin/currency exemptions in several states.

In Kentucky, a new sponsor is being determined to introduce the same bill as stalled there last time around. A significant House member who opposed action on the previous bill has now indicated he is open to supporting the effort, especially since Tennessee’s exemption now means Kentucky is completely surrounded by states that have exemptions. This year’s legislative session is relatively short, which means that success or failure at achieving this exemption should be known by spring.

In Mississippi, last year’s exemption bill passed the House with almost unanimous support. Then it died with no action in the Senate. This year, House Bill 508 has been reintroduced by the same sponsor to adopt an exemption on bullion/coins/currency. The sponsor expects it will again easily pass the House but has uncertain prospects in the Senate. House Bill 23 has also been introduced for a sales tax exemption on platinum, gold and silver ingots and for coins made of these metals sold at bullion-related prices, plus numismatic coins with a unit price under $1,000, plus all numismatic coins sold at a national, statewide or multi-county numismatic trade show. Further, there have been introduced in the Senate SB2019 and SB2708 that would each adopt a bullion/coin/currency sales tax exemption. Unfortunately, there has not yet been any coordination between the sponsors of these separate bills to work together.

There may be an effort in Nevada to start the process of gaining a legislative sales tax exemption on retail sales of at least bullion and coins, but such action might take multiple years to accomplish.

In New Jersey, the legislative session runs from 2022 to 2023. Last year, Assembly Bill A3007 want introduced to exempt gold, silver, platinum and palladium bullion products and investment coins made of any metal – including non-precious metals – which have a fair market value of $1,000 or more. The bill’s sponsor died in July 2022, but another legislator has volunteered to lead the effort to gain passage for this bill. The new sponsor is working to find a member of the Senate to sponsor the corresponding bill in that legislature. New Jersey is the only state among the 20 most populous in the country that does not yet have a complete or partial bullion/coin/currency sales tax exemption.

In a related issue, the state of Oregon imposes a Corporate Activity Tax, which is effectively a tax on sales made in that state. This is a tax on in-state wholesale and retail sales. The tax rate of 0.57 percent of the sale amount often exceeds the profit margin on some wholesale bullion sales. Even on low-profit margin retail sales, this tax is high enough that it discourages such sales in that state. Some Oregon dealers are working to see if there is a way to exempt bullion and coin sales from this tax.

As more states adopt sales tax exemptions on bullion/coin/currency sales, it has become easier to advocate such exemptions in states that do not yet have them.

Efforts to gain such sales tax exemptions have almost exclusively been funded by coin dealers within the respective states. However, the National Coin & Bullion Association (NCBA – the trade name adopted almost two years ago by the Industry Council for Tangible Assets) has amassed significant information in support of such efforts. This treasure trove of research has been freely provided to the coin dealers and their lobbyists working on such exemptions. You can reach NCBA at www.nationalcoinbullionassoc.org. Although my time on the NCBA board of directors is now over, I still volunteer for the organization as State Issues Advisor in writing supporting documents or traveling to meet with legislators and bureaucrats as an advocate for such sales tax exemptions.

Patrick A. Heller was honored as a 2019 FUN Numismatic Ambassador. He is also the recipient of the American Numismatic Association 2018 Glenn Smedley Memorial Service Award, 2017 Exemplary Service Award, 2012 Harry Forman National Dealer of the Year Award and 2008 Presidential Award. Over the years, he has also been honored by the Numismatic Literary Guild (including in 2021 for Best Investment Newsletter), Professional Numismatists Guild, Industry Council for Tangible Assets and the Michigan State Numismatic Society. He is the communications officer of Liberty Coin Service in Lansing, Michigan and writes Liberty’s Outlook, a monthly newsletter on rare coins and precious metals subjects. Past newsletter issues can be viewed at www.libertycoinservice.com. Some of his radio commentaries titled “Things You ‘Know’ That Just Aren’t So, And Important News You Need To Know” can be heard at 8:45 a.m. Wednesday and Friday mornings on 1320-AM WILS in Lansing (which streams live and becomes part of the audio archives posted at www.1320wils.com).