Important Tax Reporting Requirements for Bullion Transactions
As a leader in the precious metals and numismatic coins industries, Pure is dedicated to ensuring that we remain compliant with all IRS reporting requirements, and as such it is our policy to file IRS Form 1099-B for all reportable transactions.
In order to stay compliant with IRS requirements, precious metals dealers must report certain transactions of specific precious metal bullion. The goal of these requirements is to limit possible money laundering transactions from going unnoticed. However, the ambiguity of these guidelines has been a big topic of discussion over the years and has often caused over-reporting.
Quick Summary of Requirements
Only certain precious metal products must be reported. These include certain gold bullion, silver bullion, platinum bullion, and palladium bullion items. The table below contains a simplified answer for the IRS reportable guidelines, but for more details and supporting documentation, see Breaking Down The Requirements later in this post.
Broker Reportable Items List
For a transaction involving the sale of a precious metal, brokers are required to file IRS Form 1099-B for any transaction from the same customer (or related customers, if the broker has reason to believe they are related) within the same 24-hour period which, in aggregate, meet or exceed the minimum reportable requirements below.
Reportable Item | Reportable Bar Sizes | Minimum Fineness | Minimum Reportable Amount |
100 troy oz. & 1 kilo | .995 | One 100 troy oz. bar or 3 kilo bars | |
1,000 oz. | .999 | 5 bars (5,000 troy oz.) | |
10 troy oz. or greater | .9995 | 50 troy oz. | |
10 troy oz. or greater | .9995 | 100 troy oz. |
*Note: Only bars made by accredited brands are reportable
Form 1099-B
For any reportable precious metal transaction, a broker is required to furnish Form 1099-B to both the IRS and the customer by February 28 if paper-filing or by March 31 if e-filing. Form 1099-B (Proceeds from Broker and Barter Exchange Transactions) lists the gross proceeds, gains or losses, and reportable items in order to prevent tax evasion and to keep track of individuals who may be selling assets as a source of income.
Breaking Down The Requirements
In order to understand which transactions are reportable, let's first look at the IRS's official language.
Official IRS Guidelines (IRS Rev. Proc. 92-103)
In seeking to achieve a fair, reasonable, and consistent minimum threshold for reporting for bullion transactions in the US, the Industry Council for Tangible Assets (ICTA) opened negotiations directly with the IRS. The only IRS official language at the time was contained within Section 6045 of the Internal Revenue Code and Section 1.6045-1 of the Income Tax Regulations. In 1992, as a result of these negotiations, the IRS officially released their only guidance regarding understanding the reporting requirements of bullion transactions via IRS Revenue Procedure 92-103, and they were vague, to say the least.
Section 2: Background
"...all persons doing business as a broker must file information returns...[for] any type of personal property or an interest therein in which the trading of regulated futures contracts in that type of property has been approved by the CFTC. The CFTC has approved trading in the follow 'precious metals': gold, silver, platinum, and palladium...no return of information is required...for excepted sales." -IRS Rev. Proc. 92-103, Sec. 2
In simpler language, this section of the Rev. Proc. outlines that a broker is required to file an information return for any sales of certain gold, silver, platinum, and palladium products that are part of a CFTC (Commodity Futures Trading Commission)-approved regulated futures contract, aside from any excepted sales. So what are excepted sales?
Section 3: Excepted Sales
"A sale of a precious metal that is an "excepted sale"...is not subject to information reporting...A sale of a precious metal in a form that may be used to satisfy a CFTC-approved regulated futures contract is an excepted sale...provided the quantity of the precious metal sold...is less than the minimum amount needed to satisfy a CFTC-approved regulated future contract...A sale of a precious metal in any form other than that which may be used to satisfy a CFTC-approved regulated futures contract is an excepted sale." -IRS Rev. Proc. 92-103, Sec. 3
As this lays out, an excepted sale is any sale that cannot be used to satisfy a CFTC-approved regulated futures contract, such as precious metals that are a) not in the right form or b) less than the minimum amount needed to satisfy the contract.
Section 4: Anti-Abuse Rules
"Sales of precious metals effected by a broker for the same customer during a 24-hour period will be aggregated and considered a single sale for purposes of this revenue procedure. No sale of a precious metal may be treated as an excepted sale for purposes of this revenue procedure if the broker knows or has reason to know that a customer (either alone or together with a person related to the customer) is engaging in one or more sales with a principal purpose of avoiding information reporting...A person is considered related to a customer if the person and the customer have a relationship described in sections 267(b) or 707 (b)(1) of the code." -IRS Rev. Proc. 92-103, Sec. 4
Section 4 helps lay out that the timeline criteria for a reportable transaction is a 24-hour period. This can be reasonably understood as any running 24-hour period as measured from the same time zone; not a calendar day, trading day, or a transaction that only happens in the same "24-hour period" due to changes in time zone.
This section goes on to mention that a broker should be aware of related parties (known or suspected) conducting a similar sale in the same 24-hour period that appear to be related, and properly reporting these as part of the same sale if the aggregate sale meets the minimum reporting requirements.
The First Clarification - ICTA Consumer Information Kit (1992)
Following the release of IRS Rev. Proc. 92-103, there were many questions surrounding the ambiguity provided by this document. In order to provide further clarification, the ICTA released its Consumer Information Kit to help precious metals dealers understand their reporting requirements. In "understanding...the spirit of these negotiations", the ITCA released the list of reportable items that have become the industry standard up to this point.
ICTA Reportable Items
Reportable Item | Minimum Fineness | Minimum Reportable Amount |
.995 | Greater than or equal to 1 kilo (32.15 troy oz.) | |
.999 | Greater than or equal to 1,000 troy oz. | |
.9995 | Greater than or equal to 25 troy oz. | |
.9995 | Greater than or equal to 100 troy oz. | |
As Minted | 25 1-oz. coins | |
As Minted | 25 1-oz. coins | |
As Minted | 25 1-oz. coins | |
As Minted | Any combination of dimes, quarters, or half-dollars totaling $1,000 face value or more |
The Monumental Update (2023)
The ICTA's clarification provided undisputed guidance for bullion reporting requirements for more than three decades; long enough that the ICTA even changed its name in that time to the National Coin & Bullion Association (NCBA) in order to emphasize their focus and advocacy for the numismatic community.
In December 2023, the NCBA, lead by the efforts of member Gary Knaus of Knaus & Associates, Inc., successfully negotiated once again with the IRS for additional clarity on the reporting requirements for dealers in precious metals. They released the result of their efforts in March 2024, titled Understanding Reportable Items and Approved Brands for Precious Metals Contracts.
Updated Reporting Requirements
Thanks to Gary Knaus and the NCBA, the list of reportable items has been confirmed with the IRS to be much smaller than before, and much less cumbersome for dealers and Anti-Money Laundering groups to comply with.
"Under the current set of CFTC precious metals futures contracts, all settleable contracts must be settled with precious-metal bars from approved brands, generally of a specific purity and a specific number of ounces or kilograms."
- Gary Knaus, NCBA member,
Understanding Reportable Items and Approved Brands for Precious Metals Contracts
While the NCBA, still the ICTA in 1992, provided useful guidelines for precious metal dealers in the early months of IRS requirements, the reportable items list originally laid out did not accurately reflect the Revenue Procedure's requirement. During the negotiations, Gary and his colleagues were able to confirm through various meetings with the IRS Office of Chief Counsel, including meetings and emails, and from confirmation from an attorney with the IRS, that precious coins (such as the 1 oz. Maple Leafs, Krugerrands, and Mexican Onzas) and $1,000 face-value bags of 90% silver are not reportable.
Additionally, it was clarified that the Revenue Procedure should be interpreted as written regarding what is reportable.
Consolidating The Requirements Once And For All
Following the IRS requirements is often difficult due to many references to other code sections or other source material in order to determine the answer. For the sake of clarity, the information has been aggregated below.
As written in Rev. Proc. 92-103 and confirmed by the NCBA, an item sold is only reportable if it can be used to satisfy CFTC-approved regulated futures contracts. The CFTC-approved precious metals contracts are listed on the COMEX and NYMEX websites, and are simplified as follows, as of December 2024:
Gold
Contract size: 100 troy oz.
Bar Specification: Either one (1) 100 troy oz. bar, or three (3) one (1) kilo bars
Minimum fineness: .995
Each bar must have weight, fineness, bar number, month and year of production (beginning January 1, 2026), and brand mark clearly incised on the bar
These specifications rule out all gold bullion coins (namely the previously listed 1 oz. Maple Leafs, Krugerrands, and Onzas), gold bars without brand marks or specifications (most non-accredited brands), gold bars in any weight other than 100 troy oz. or 1 kilo, and scrap gold.
Silver
Contract Size: 5,000 troy oz.
Bar Specification: Five (5) one thousand (1,000) troy oz. bars
Minimum fineness: .999
Each bar must have weight, fineness, bar number, month and year of production (beginning January 1, 2026), and brand mark clearly incised on the bar
These specifications rule out all silver bullion coins, 90% silver coins, silver bars without brand marks or specifications (most non-accredited brands), silver bars in any weight other than 1,000 troy oz., and scrap silver.
Platinum
Contract Size: 50 troy oz.
Bar Specification: Plates and/or ingots, with no individual piece weighing less than 10 troy oz.
Minimum fineness: .9995
These specifications rule out all platinum bullion coins, platinum plates or bars weighing less than 10 troy oz., and scrap platinum.
Palladium
Contract Size: 100 troy oz.
Bar Specification: Plates and/or ingots, with no individual piece weighing less than 10 troy oz.
Minimum fineness: .9995
These specifications rule out all palladium bullion coins, palladium plates or bars weighing less than 10 troy oz., and scrap palladium.
Approved Precious-Metal Brands
Finally, the last remaining qualification is that these CFTC contracts can only be satisfied using products made by approved precious metal brands, determined by the LBMA - the London, UK-Based Independent Precious Metals Authority. The list of these service providers can be found here.
As the LBMA will only approve accredited brands, as opposed to thoroughly vetting the entire list and comparing it against the offerings of a precious metals dealer, a pragmatic approach may be to simply report transactions involving the sale of reportable items from any accredited brand.
For any questions or requests, please feel free to reach out to me directly at [email protected] or reach me on my cell at (862) 260-1865.
The CFTC-approved regulated futures contract information and corresponding links were accurate to the best of the author's knowledge as of December 12, 2024. Please note that these contracts may change and new contracts may be approved or removed in the future, altering the above information and potentially triggering an information return filing obligation. It is the responsibility of the reader to understand the active CFTC-approved regulated futures contracts in order to maintain compliance with the IRS guidelines.
Any information contained in this post is not intended to be used as, or as a substitute for, actual advice from a professional tax or legal adviser. Any information in this document is intended to provide general guidance for members of the precious metals and numismatic coin community. No part of this post may be reproduced or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without prior written permission of PM Technologies Corporation.