Coin Collecting and Louisiana Law
by Hal Odom Jr., J.D.
President, Shreveport Coin Club
Part 1. Sales tax on numismatic items
The biggest current issue with numismatists in Louisiana is whether the sales of coins, currency and precious metals are subject to the sales and use tax. This has been an on-again, off-again thing. For several years, numismatic sales were exempt. However, chronic fiscal problems have led the legislature to scrub a lot of exemptions, and sales of rare coin and precious metals were often made the poster child of a tax system that appeared to favor the wealthy.
At the time of this writing, August 2017, Louisiana law excludes from the definition of “tangible personal property” the following: “gold, silver, or numismatic coins, or platinum, gold, or silver bullion[,]” but only for purposes of three specific state-imposed sales and use taxes. Sales of numismatic items, therefore, are currently subject to city, parish and other local sales and use taxes. Obviously, tax rates vary from place to place.
Thanks to extraordinary commitment by the Louisiana Professional Coin Dealers Association, the 2017 legislature restored exactly three sales tax exemptions, and numismatic sales were one of the restored items. Starting October 1, 2017, “tangible personal property” does not include “Platinum, gold, or silver bullion, that is valued solely upon its precious metal content, whether in coin or ingot form[,]” “Numismatic coins that have a sales price of no more than one thousand dollars[,]” or “Numismatic coins sold at a national, statewide, or multi-parish numismatic trade show.” The legal citation is La. R.S. 47:301 (16)(b)(ii)(aa), (bb) and (cc). The amendments, specifically set to take effect October 1, 2017, remove numismatic items from the definition of “tangible personal property” and thus exempt them from both state and local sales and use tax.
The 2017 amendment is obviously beneficial to collectors, as it saves them around 10% on numismatic purchases, but also to dealers, as it will help keep numismatic and bullion trade inside the state and place them on equal footing with other large states that do not tax numismatic sales. In addition, most coin shows in Louisiana are sponsored by nonprofit coin clubs, groups that can have difficulty recruiting quality dealers from out-of-state owing to Louisiana’s byzantine tax laws.
The law is always changing, so check with parish tax offices, but this writer hopes the exemption will remain in force for the foreseeable future.
Part 2. Coin shops as secondhand dealers
Next to the taxation issue, another topic of great interest to Louisiana coin dealers is the registry of numismatic purchases. A major part of the coin business is buying coins and bullion from customers who walk in the door, and many of these are persons with whom the dealer has never previously traded. Most dealers simply buy the items, so they are not subject to the special rules for pawnbrokers.
A related law, the “Second-Hand Dealer” Act, requires secondhand dealers to keep a register of all items purchased, with information about the seller (including a “photograph of a person selling or delivering merchandise or articles to the dealer” if the material has a fair market value of $100 or more), description of the items sold, date and place of each transaction, and a signed statement from the seller that he is in fact the owner of the items sold. The dealer must file this or make it electronically available to law enforcement when requested.
Technically, the sale or purchase of “manufactured registered bullion bars, coins, or other numismatic items” is exempt from this particular provision. The legal citation is La. R.S. 37:1864.1 C(1). However, most dealers will make a Xerox copy of the seller’s photo ID and maintain the registry information because of the potential liability for receiving stolen property. The law does not strictly require that the register of secondhand sales be kept confidential, but it authorizes disclosure only to “a law enforcement agency,” so it is unlikely that the seller’s privacy will be compromised.
There is no exemption, however, from a separate provision of the Second-Hand Dealer Act, one that prohibits the dealer from selling, disposing of, or changing or destroying the identity of the items purchased for 30 days after the sale. The legal citation is La. R.S. 37:1867. This is an inconvenience to dealers, many of whom operate on a slim margin, but it was probably considered a reasonable period in which law enforcement could investigate reports of burglary or theft. But, in short, dealers cannot sell the stuff they buy until 31 days later.
Part 3. Coin dealers as itinerant vendors
A final issue of special interest to coin dealers, in northwest Louisiana, is the treatment of coin show dealers as “itinerant vendors.” This is defined not only as door-to-door salesmen, but any person “who engages in a temporary business in this state exhibiting merchandise to the public for the purpose of selling or offering to sell such merchandise when such vendor does not have a permanent address in this state[.]” The law requires itinerant vendors to appoint a Louisiana agent and to post a $5,000 bond. However, this bond is not required of “stamp shows, coin shows, trade shows, festivals, fairs, or gun shows[.]” The legal citation is La. R.S. 37:1923 A. Coin show dealers are off the hook for hiring the agent and posting the performance bond.
However, another form of registration has reared its ugly head. A tragic event occurred in 2010 in which a registered sex offender, working as a cab driver in a different parish, lured a 12-year-old boy by text messages to accept a cab ride ostensibly to meet a young female admirer. Unfortunately, the cab driver drove the boy into the woods, molested and murdered him. The legislature responded, in 2016, by making it illegal for any registered sex offender to be employed as a “door-to-door solicitor, peddler, or itinerant vendor selling any type of goods or service including magazines or periodicals or subscriptions to magazines or periodicals.” (Note the failure to mention cab drivers!) The legal citation is La. R.S. 15:553 D.
Bossier Parish has interpreted this statute as authorizing it to require trade show vendors to fill out an application for background check and pay a fee of $20, all to certify that they are not registered sex offenders back home. The Ark-La-Tex Coin, Stamp & Card Exposition, which is held each year in Bossier City, has been subjected to this new system.
To this writer’s knowledge, Bossier is the only parish in the state that has enacted such a provision with respect to trade shows. In this writer’s view, Bossier’s action greatly exceeds the authority bestowed by R.S. 15:553 D. Fortunately, the parish has softened its position and not required each individual coin dealer to complete the application and pay the fee. For 2017, only the sponsor (Shreveport Coin Club) was required to do this. However, given the arbitrariness of the rule, Bossier could revise it at any time to require the long, intrusive application and the fee from each individual dealer. This writer hopes Bossier Parish will leave “bad enough alone” and not treat all our coin dealers like suspected sex offenders.
Part 4. Miscellaneous
As a postscript, this writer has found two quirky provisions of general interest. Telemarketers (called “telephonic sellers”) who phone people in Louisiana are subject to regulation by the Louisiana Department of Justice. Numismatic telemarketers are subject to such regulation, but are exempt if the selling price of their wares is not more than 25% of the seller’s buying price, and if the seller has a retail location in the state and phone sales are not the seller’s primary business. The phrasing is fairly convoluted, but it is nice to know that consumers can report shady phone scams to the Attorney General. The legal citation is La. R.S. 45:822 B(14). Coin telemarketing seems not to be a major enterprise in the state.
Finally, Louisiana’s Criminal Code includes a section on forgery. This applies to, among other things, “Money, coins, tokens, stamps, seals, credit cards, badges, and trademarks[.]” The offense is a felony, carrying up to 10 years, without or without hard labor, a fine of $5,000, or both. The legal citation is La. R.S. 14:72. Traditionally, counterfeiting is handled by federal authorities. However, with the advent of really excellent laser printers, an occasional lone wolf may try to print a small amount of currency. In that event, police and sheriffs can investigate and arrest.
Hal Odom Jr.
10 August 2017