As a silver investor, you may be concerned about whether you must tell the government that you have a large collection of silver bullion. Some investors are worried about the prospect of a government confiscation of their wealth. Others are worried about whether this information might be accessed by others once it is reported to the government, increasing the risk involved with storing their silver at their home.
There is a lot of disinformation circulating regarding the reporting requirements when buying or selling silver rounds. The regulations can be complex, adding to the confusion. Within the United States, there are unique reporting requirements for silver rounds, as well as other types of physical silver bullion, that do not apply to other investment types. These requirements differ based on the size of the transaction, the type of silver involved, and the payment method used.
Large Cash Payments
In most cases, it is not necessary to tell the government that you have bought silver rounds, bars, or coins. However, if you are paying cash – or with a travelers check, money order, or cashier’s check, which is considered to be a cash-like instrument – and buying a large quantity of silver rounds, the seller may need to report the transaction. This regulation applies to purchases of more than $10,000, whether that amount is reached in a single transaction or several related transactions over time. The seller will need to submit IRS Form 8300, “Report of Cash Payments Over $10,000 Received in a Trade or Business.”
This regulation is an effort to prevent money laundering, and applies to all large cash payments, not just those involving silver bullion. If you wish to avoid this requirement, use another payment method, or avoid purchasing more than $10,000 in silver from any one dealer. Investors who wish to avoid the cash purchase reporting requirements are usually able to do so by careful selection of an investment strategy. If this is important to you, it is critical to understand the government reporting requirements before you begin buying silver rounds.
Other IRS regulations govern the sale of silver bullion. The sale price – minus the initial cost of purchasing the silver – is considered to be a capital gain. As such, it is subject to capital gains tax. The seller must report this sale on Form 1040 Schedule D. If you sell your silver rounds to a professional precious metal dealer, they may be required to file IRS Form 1099-B, depending on the size of the transaction. Regardless of whether this form is filed, you as the seller are required to report the income when you file your taxes, and pay taxes on the profits.
There is no legal way to avoid this reporting requirement, though it is important to remember that it is the sale – not the initial purchase – of the silver which must be reported. If you are interested in ways to lower your tax liability for your silver investment, talk to a tax advisor about whether there may be strategies such as silver IRA investment available to you. Though sales of silver held in an IRA must still be reported, the tax liability may be altered.