Should You Tell the Government You Own Gold and Silver?
Aug 14th, 2008 | By Bob Bauman | Category: Gold MarketSovereign Society members and readers often ask me if there’s any U.S. law that forces them to report their gold, silver or other precious metals to the U.S. government - especially if they hold those precious metals in foreign accounts or safety deposit boxes.
The question arises because if you’re a U.S. person, by law, you must report if you have any direct or indirect control over any offshore “account” on the annual income tax IRS Form 1040. If your account exceeds US$10,000 at anytime during the calendar year, you also must file a foreign bank account disclosure form (FBAR) no later than June 30th each year.
What About the Perth Mint? Does That Count?
My friend and long-time associate, Vern Jacobs CPA, CLU, recently addressed this question in his free online “Jacobs Report.”
One of his U.S. readers asked Vern if he had to report the metals held in his name at the Perth Mint in Australia.
The inquiring person had researched the Perth Mint website and among other statements, found this: “Perth Mint Depository Services (PMDS) operates like a private client bank account or stock-broking account, except with balances of precious metals in troy ounces.”
The website also said that Perth Mint Depository Certificates allow clients to hold, deposit and withdraw funds in various national currencies, place market orders for precious metals, plus exercise put and call options for gold and silver.
Wise Advice: I’d Have to Agree
Vern Jacobs assessed the facts and gave the same opinion that I have: ”Perth Mint states that they function like a bank or brokerage account except with balances of precious metals in troy ounces. I mention this because I anticipate questions from readers who will want to use that ‘exception’ as a justification for not reporting [to the IRS] funds held in bullion form in a segregated account.
“To the extent that the bullion can be converted into other currencies or used to purchase investments it seems to me that the IRS will treat the account as a foreign financial account.
“To the extent that the bullion is physically being stored in a segregated vault or deposit box and can’t be converted into currencies or investments as part of an integrated banking service, then there might be some justification for claiming it is not a financial account…I agree that the IRS is likely to argue that the Perth Mint program is a foreign financial account.”
Bottom Line: To Report or Not to Report
In other words, if the IRS can view your precious metals account as a trading or banking account, then you should report. If you’re just holding physical bullion, and not using it to buy other assets, then you should be able to justify not reporting.
However, my view is if you’re in doubt about reporting to the IRS, err on the side of caution and go ahead and report. Better safe than sorry.
BOB BAUMAN, Legal Counsel
Source: Should You Tell the Government You Own Gold and Silver?
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Bob E. Bauman is a former member of the U.S. House of Representatives from Maryland and the author of several books on offshore financial topics. Mr. Bauman serves as legal counsel to The Sovereign Society, an international group of citizens concerned with government encroachment on financial freedom.
