Let's say law enforcement was getting records of pawn and coin shops of modern bullion coins they were buying. Is there any way to tie stolen bullion coins, or let us put it this way, has law enforcement every successfully tied a robbery of precious metals consisting of common bullion coins to those same items going through a coin or pawn shop? Thanks. Also, let's say you have been storing gold, silver and platinum eagles since they came out in the 1980s. The tax authorities want to audit your inventory. Could they make a case based on the dates of the coins, inferring that you bought them near the dates stamped on them?
It would be extremely difficult to say the bullion bought by a pawn shop is that of a recent robbery/burglary because the items in question do not have a serial number on them. Any crook stupid enough to keep stolen coins in the TPG slab with the certification number on them, and sell them to a pawn shop, deserves all the jail time they get. However, if law enforcement either knows the identity of, or a good physical description of, the suspect(s), that's a different story altogether. As far as your second scenario, they would have to be able to prove that you bought them the same year they were minted, i.e. through the seller's sales records.
I would think in the first case they would be able to connect the dots if they found Kruggerands, Maple Leafs and 50 Peso Mexican gold at the Dalton Gang's hideout bungalow that matched the description of a robbery victim. Unfortunately the cops are not paid based on performance. To many of us it seems that their successes are about at the level of the Keystone cops, etc.. On the second case, I would think that the authorities would have no records unless they follow the law (4rth Amendment) and have the technological means to identify the source of the company that sold the bullion. If you are selling not every company asks for an SS number so nothing gets formally reported to the tax authorities.
Yet. Trust me, its coming. There is way too much money being lost and money changing hands uncontrolled through coin collecting, gun shows, etc for the government to keep that "loophole" open much longer. We won when they tried to pass this to pay for healthcare, but I firmly believe some other "crisis" will come up and they will pass it again. Enjoy your ability to go to a coin show and buy and sell all without record keeping while you still can.
To begin with, that's not done - ever. There is no reason to do it. The only time tax authorities get involved is after a sale because there is no tax liability until after a sale has been completed. You don't owe any tax on anything that you still own.
Still, they do sometimes want to actually audit businesses in some cases to verify inventories. I was talking to a coin dealer in Manchester, NH, who told me that when he bought the business from the previous owner, the IRS was chomping at the bit to examine his inventory stashed away over the years at his bank. He had been understating his gross for years, and they took him for quite a bit!
The IRS has been known to get permission to examine SDB and vaults of dealers. The assumption is to build such a stock they had to have capital. Either that capital had to come from profits not reported, money laundering, or an outside source. They ask you to prove the outside source if that is what you claim, if not they look for evidence of money laundering, and if finding none assume you were understating profits and tax you for it, (with penalties and interest of course).
The point is guys they don't just ask to see your inventory. They will only do that if they have some reason to suspect that you have been falsely reporting income or attempting to skirt tax liabilities. If they have no reason to suspect you, then it will not happen. Yes some businesses get audited at random just like some individuals get audited at random every year. But when they audit you they audit your books, your financial records. They don't audit the things you own, your inventory, unless the numbers tell a story that makes them suspicious. What I am trying to say is they don't just ask anybody at random to see their inventory. It simply doesn't happen.
Very true. I was not describing a normal occurence, but rather after a subpoena has been obtained. However, these are very easy to obtain and the IRS has a very sharp focus on the "tax gap" for the last 5 years. Cash businesses are listed as the number one reason there is a tax gap, and as such is one of the highest priorities for enforcement action within the IRS. People may say "yeah there is a chance to get the random audit each year", but look who disproportionately gets these "compliance audits". They are highly skewed towards those who work with cash, especially large sums of untraceable cash. There is supposed to be less than 1% chance of being selected for one of these audits, yet my father who is an electrical contractor has been "lucky" three times. Once you are in one of these audits, the auditor could get a warrant in about 10 seconds from any Tax Court to ask to see the inventory. So I agree they cannot just waltz right in Doug, but in practical purposes I think its easier than you believe. Agents are scored on results, and with the push for tax gap coverage are being rewarded for documenting a closing of this gap. I really cannot go into it more than that. Chris
