JM Bullion respects the privacy of our customers and never discloses any of their purchases to the government. We are, however, under legal obligation to report any cash payments we receive for purchases that exceed $10,000 dollars. This policy also applies to payments we receive within 24 hours of each other whose combined total exceeds $10,000. Precious metal dealers who fail to file such transaction reports are subject to penalty fines, criminal charges and even the possibility of imprisonment.
When filing these cash payment reports, we are required to fill out a 8300 form with the details of the transaction. These details include some customer information, including name, address, license and social security number. Please rest assured that this information remains strictly confidential between JM Bullion and the IRS and that no third parties will have access to this information. Furthermore, even if the customer refrains from providing some or all of this information, JM Bullion is still be required to send this form.
With regards to precious metal purchases, the term “cash” refers to the following methods of payment when their transaction total is less than $10,000: cashier’s checks, money orders, bank drafts and traveler’s checks. The term “cash” also applies to any US or foreign currency that is received during a transaction.
However, it is important to note that any transaction made with the previously mentioned forms of payment, which exceed $10,000 will not be subject to reporting to the IRS. So, for instance, if a customer were to visit a local coin shop and paid for a $12,000 purchase with a cashier’s check, this purchase would not be reported since the cashier’s check exceeds the $10,000 criteria as such reports would be the bank’s responsibility. Payments rendered using personal checks, bank wires, credit/debit cards, PayPal and ACH transfers are also exempt from reporting regardless of the purchase amount.
As previously mentioned, precious metal purchases are also considered reportable when they are made within a span of 24 hours. This series of purchases are registered as “related transactions.” For example, if a customer were to visit a local coin shop and pay for a $8,000 purchase in cash, only to return 3 hours later and make another $3,000 purchase in cash, the coin dealer would have to report these purchases since these were related transactions. Similarly, if a customer were to make two separate online purchases of $5,000 and $6,000 by bank drafts within a 24 hour time frame, these purchases would also be classified as related transaction and be subject to reporting.
Please be advised that some dishonest coin dealers and customers may attempt to circumvent this policy by intentionally spacing out a series of payments over the course of several days, making sure that individual payments do not meet the reporting criteria. This breach of law is referred to as “illegal structuring,” and is considered a form of money laundering. Most banks are aware of this practice and are likely to take notice of customers who repeatedly make precious metal payments with more than one check. In these situations, the bank will not only close your account, but report these payments to the IRS, resulting in criminal charges against both the customer and the coin dealer.
Policies regarding the reporting of precious metals were first developed by the National Treasury in the 1980’s as a means of monitoring commodity exchanges within the United States. When large cash purchases of precious metals go unreported, dealers and investors who should be taxed for their sales and purchases are overlooked. Keeping track of these transactions enables the IRS to prevent any potential money laundering schemes, which could hurt the US economy.
For additional information on this topic, please see our Reportable Bullion Transactions Infographic.
Please note that the information presented in this article is merely a general guide and should not be mistaken for tax advice. Customers in search of specific information regarding the reporting and taxation of their precious metals should seek professional assistance. For more detailed information please visit IRS.gov.