President Barack Obama’s healthcare reform legislation reportedly contains an added provision that would tax gold coin and bullion transactions.
The tax comes in an obscure section of the tax code that deals with purchases by self-employed people and small businesses, ABC News reports.
Starting Jan. 1, 2012, small businesses and self-employed people will have to issue 1099 forms, which are used to track and report the miscellaneous income associated with services rendered by independent contractors or self-employed individuals, for every vendor with whom they do more than $600 business in a calendar year.
The new regulation is designed to gain more tax dollars to finance some of the healthcare bill’s other provisions.
According to ABC News, dealers in gold coins and bullion are among those most rankled by the change. Unlike businesses with a comparatively small number of vendors, coin dealers frequently buy from members of the general public as well as from other dealers.
Pat Heller, who owns Liberty Coin Service in Lansing, Mich., deals with around 1,000 customers every week and estimates that he will be filling out between 10,000 and 20,000 tax forms per year after the new law takes effect.
"I'll have to hire two full-time people just to track all this stuff, which cuts into my profitability," Heller told ABC.
California congressman Daniel Lungren has introduced legislation to repeal the section of the healthcare bill that would trigger the new tax-reporting requirement because compliance would unduly burden small businesses.
Even though gold has outperformed all other core assets during the last 10 years, economist Nouriel Roubini, chairman of RGE Monitor, is advising against buying gold now. Spot market prices for gold are at nearly $1,200 an ounce.
"The concerns propelling the price of gold specifically are very real and should not be ignored,” Roubini wrote in a note to investors. “But is now the time for investors to jump the gold bandwagon? We wouldn’t encourage it."
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