North Carolina exempts rare coins, paper currency, and precious metals
- Sales Tax News
- Jul 27, 2017 | Gail Cole
North Carolina Governor Roy Cooper has signed legislation that creates a sales and use tax exemption for investment coins, investment metal bullion, and non-coin currency. The exemption takes effect retroactively and applies to transactions occurring on and after July 1, 2017.
House Bill 434 defines “investment coins” as “numismatic coins or other forms of money and legal tender manufactured of metal under the laws of the United States or any foreign nation with a fair market value greater than any statutory or nominal value of such coins.”
“Investment metal bullion” is defined in the bill as “any elementary precious metal that has been put through a process of smelting or refining and that is in such state or condition that its value depends upon its content and not upon its form.” Investment metal bullion does not include any fabricated precious metal “that has been processed or manufactured for one or more specific and customary industrial, professional, or artistic uses.”
Finally, “non-coin currency” is “forms of money and legal tender manufactured of a material other than metal under the laws of the United States or any foreign nation with a fair market value greater than any statutory or nominal value of such currency.” This includes paper currency.
Fiscal impact of the new exemption
Since the amount of tax revenue generated from sales of investment coins, investment bullion, and non-coin currency isn’t tracked in North Carolina, it’s impossible to accurately predict the full fiscal impact of the new exemption.
However, a survey by the Industry Council for Tangible Assets reveals that there are at least 117 professional numismatists (collector of coins, paper money, and related objects) in North Carolina. In past years, “annual sales of rare coins and precious metals bullion to in-state buyers averaged slightly over $100,000 annually per numismatist.” Adjusting for inflation, the bill’s fiscal note predicts the new exemption will decrease state sales tax revenue somewhere between $150,000 and $600,000 in the next fiscal year — most likely at the lower end of the spectrum. There will also be “a corresponding reduction in local government sales tax revenue.”
More than 30 states provide an exemption for bullion, coins, paper money, and/or precious metals. Laws are subject to change more than one might think. In the last year, for example, both Indiana and Ohio altered their tax treatment of these products. Learn more about taxable money here.