One of the big coin wholesalers is asking both collectors/investors and dealers whether they have a license as coin dealers. This is a new one on me. I can understand the need for licenses in areas where an industry could thereby be better regulated. I can understand the value of membership in organizations like the PNG, the ANA, and other such two-way organizations that help keep everyone on good behavior; but licenses?
The dealers in my area have a business license, and permit authorizing them to collect state sales tax from customers, but nothing specifically for being a coin dealer that I know of.
So how do you get one? Is filing for a sales and use permit all you need to do? And what about the federal vs. state permit or license. Is there a difference?
They are referring to a 'business license' as the first post pointed out. Every state/local area is different in the details, but you just generally go to your local govt and start a business. If your state or municipality requires anything special, your county will let you know when you apply for a business license. There is NO federal requirement beyond filing your taxes as always. If your business is big enough, you will have to decide if you want to file as a proprietor (self employed) or a corporation. But that is an accounting issue. The wholesaler just wants to see your business license.
I do not know what state you live in but here is how it works in CA: 21626. Secondhand dealer; coin dealer (a) A "secondhand dealer," as used in this article, means and includes any person, copartnership, firm, or corporation whose business includes buying, selling, trading, taking in pawn, accepting for sale on consignment, accepting for auctioning, or auctioning secondhand tangible personal property. A "secondhand dealer" does not include a "coin dealer" or participants at gun shows or events, as defined in Section 478.100 of Title 27 of the Code of Federal Regulations, or its successor, who are not required to be licensed pursuant to Section 12071 of the Penal Code, who are acting in compliance with the requirements of Section 12070 and subdivision (d) of Section 12072 of the Penal Code, and who are not a "Gun Show Trader," as described in paragraph (5) of subdivision (b) of Section 12070 of the Penal Code. (b) As used in this section, a "coin dealer" means any person, firm, partnership, or corporation whose principal business is the buying, selling, and trading of coins, monetized bullion, or commercial grade ingots of gold, or silver, or other precious metals. 21627. Tangible personal property (a) As used in this article, "tangible personal property" includes, but is not limited to, all secondhand tangible personal property which bears a serial number or personalized initials or inscription or which, at the time it is acquired by the secondhand dealer, bears evidence of having had a serial number or personalized initials or inscription. (b) "Tangible personal property" also includes, but is not limited to, the following: (1) All tangible personal property, new or used, including motor vehicles, received in pledge as security for a loan by a pawnbroker. (2) All tangible personal property that bears a serial number or personalized initials or inscription which is purchased by a secondhand dealer or a pawnbroker or which, at the time of such purchase, bears evidence of having had a serial number or personalized initials or inscription. (3) All personal property commonly sold by secondhand dealers which statistically is found through crime reports to the Attorney General to constitute a significant class of stolen goods. A list of such personal property shall be supplied by the Attorney General to all local law enforcement agencies. Such list shall be reviewed periodically by the Attorney General to insure that it addresses current problems with stolen goods. (c) As used in this article, "tangible personal property" does not include any new goods or merchandise purchased from a bona fide manufacturer or distributor or wholesaler of such new goods or merchandise by a secondhand dealer. For the purposes of this article, however, a secondhand dealer shall retain for one year from the date of purchase, and shall make available for inspection by any law enforcement officer, any receipt, invoice, bill of sale or other evidence of purchase of such new goods or merchandise. (d) As used in this article, "tangible personal property" does not include coins, monetized bullion, or commercial grade ingots of gold, silver, or other precious metals. "Commercial grade ingots" means 0.99 fine ingots of gold, silver, or platinum, or 0.925 fine sterling silver art bars and medallions, provided that the ingots, art bars, and medallions are marked by the refiner or fabricator as to their assay fineness. In a nutshell as long as "coin dealers" are only dealing in coins and "commercial grade ingots" they do not need to have a second hand dealers license. Where many people cross the line is in buying scrap and you can not do this without a license: 21652. Presentation to dealer of adequate evidence of authority to sell Every junk dealer or secondhand dealer shall, before accepting for resale from any person any finished product, new item of finished or merchandisable quality, inventory item of new materials or finished quality, or other goods and materials in such a state or condition as to show that they are neither abandoned nor scrapped, shall require that such person present adequate evidence of authority to sell. Violation of this section is a misdemeanor. 21653. Violations Every junk dealer or secondhand dealer who resells any item acquired in violation of Section 21652 is guilty of a felony, if the value of the item exceeds four hundred dollars ($400), and is guilty of a misdemeanor if the value of the item does not exceed four hundred dollars ($400).
I went to town hall years ago to register my DBA; necessary for opening a bank account with that DBA name. It's strange that none of the CPA's, accountants, numismatic professionals or even the state DRS or IRS have filled me in on regulations on this and other aspects of doing business.
That is because most coin stores would only deal in coins and bullion, now with the PM's prices and sales lagging they look to make money anyplace that they can. It is the same thing with jewelery stores most of them think what they are doing is legal as well.
I think the word wholesaler is the key. I deal with jewelery supply wholesalers, and they will not give price lists to go with their catalogs or offers, unless they are sure your are part of the trade group and not just a retail buyer trying to get a reduced price, usually requires a bank reference, business license, and state resale number if applicable. I have tried to buy electrical motors/components , and have to have an electrician friend go with me to a wholesaler.
In New York, you get the sales and use permit along with your small business license from the County Clerk's office. You don't need a federal permit unless you are dealing in commodities that have a federal excise tax on them, or firearms, etc.
It's like Jim said Owle - all they are trying to do is make sure that the people they are selling to (at wholesale prices) are indeed coin dealers, meaning having a business license - and not just some collector trying to buy at wholesale prices.
Not a bad idea to actually license them, like plumbers, electricians, etc. A set of standards they have to work with. That wouldn't work for some dealers, though, as they might actually have to learn ethics. Remember, I said SOME, not all!!!
My permit is in process. Obviously the governor is much in need of funds. My cynical side thinks they like to keep people in the dark then spring their mine on unsuspecting business people--that way they get not just the principal tax but interest and penalties. Plus publicity for those they nail. Look at their top 100 list of deadbeats.
If a person selling coins online and have a tax registration certificate( the business license) , is called a coin dealer? Is there any other requirement to become a coin dealer such as some special professional license?
As Conder said, nothing needed generally, so, just consider yourself a coin dealer on XX day, and then go out and buy a BUNCH of coins (from real expensive to 'collector grade'....you have to be prepared for ANYTHING), for as little as possible, and then proceed to try and SELL 'em for as much as possible. You also MIGHT want to consider throwing in a bunch of, oh, silver, gold, platinum, perhaps some palladium, bullion...coins, bars, rounds, etc....and maybe a few bags of 90% while you're at it, for as little as possible, and then proceed to try and sell THAT for as much as possible. Repeat this cycle as often as possible, until you either make money, or go broke. Yep, it's as easy as that! Just jump in both feet first, and don't even consider if the water is cold or not!! Damn the torpedoes, full steam ahead!!!
