N.Y. Comp. Codes R. & Regs. tit. 20 § 528.29

Current through Register Vol. 46, No. 45, November 2, 2024

Section 528.29 - Precious metal bullion sold for investment

Tax Law, § 1115(a)(27)

(a)Exemption.

Precious metal bullion sold for investment is exempt from sales and use tax if:

(1) the retailer, if so required, is registered with the Department of State pursuant to section 359-e of the General Business Law;

(2) the receipt or consideration given or contracted to be given for the bullion depends only on the value of the metal content of the bullion (see subdivision [c] of this section);

(3) the total amount of the sale of precious metal bullion on any single invoice is more than $1,000; and

(4) the purchaser or user or agent of either of them holds the bullion in the same form as when it was purchased and does not manufacture, process, assemble or fabricate the bullion for its own use.

(b)Definition.

(1)Precious metal bullion means bars, ingots or coins of gold, silver, platinum, palladium, rhodium, ruthenium or iridium.

(2) Precious metal bullion does not include:

(i) coins of the Republic of South Africa; or

(ii) bars, ingots or coins which have been manufactured, processed, assembled, fabricated or used for an industrial, professional, esthetic or artistic purpose.

(c)Metal content of the bullion.

(1) Silver coins. With respect to silver coins, the receipt or consideration given or contracted to be given is deemed to depend only on the metal content of the coin if, at the time of sale or purchase at retail, the receipt or consideration does not exceed 140 percent of the greater of:

(i) the daily closing bullion cash price of silver in the open market; or

(ii) the face value of the silver coins at the prevailing rate of exchange.

(2) Gold coins weighing one-quarter ounce or less. With respect to gold coins weighing one-quarter ounce or less, the receipt or consideration given or contracted to be given is deemed to depend only on the metal content of the coin if, at the time of sale or purchase at retail, the receipt or consideration does not exceed 120 percent of the greater of:

(i) the daily closing bullion cash price of gold in the open market; or

(ii) the face value of the gold coins at the prevailing rate of exchange.

(3) other than gold coins weighing one-quarter ounce or less or silver coins. With respect to coins other than gold coins weighing one-quarter ounce or less or silver coins, the receipt or consideration given or contracted to be given is deemed to depend only on the metal content of the coin if, at the time of sale or purchase at retail, the receipt or consideration does not exceed 115 percent of the greater of:

(i) the daily closing bullion cash price of the subject precious metal in the open market; or

(ii) the face value of such coins at the prevailing rate of exchange.

(4) Bars and ingots of precious metal.

With respect to bars and ingots of precious metal, the receipt or consideration given or contracted to be given is deemed to depend only on the metal content of the bars and ingots of precious metal if, at the time of sale or purchase at retail, the receipt or consideration does not exceed 115 percent of the daily closing bullion cash price of the subject precious metal in the open market.

(5) For purposes of this subdivision, the daily closing bullion cash price of the subject precious metal in the open market means the daily closing bullion cash price of the subject precious metal in the open market for the business day immediately preceding the day of sale or purchase at retail. Where there is no such closing price for such metal, the average of the bid and asked cash prices for the business day immediately preceding the day of sale or purchase at retail must be substituted for the closing price.

(d) Where a vendor sells exempt precious metal bullion together with taxable bullion or other property and does not separately state the charge for the property being sold on the bill or invoice given to the customer, then the vendor must collect tax on the total amount of the sale. However, if the vendor separately states the charge for the exempt precious metal bullion on the bill or invoice so as to distinguish it from the other bullion or property subject to tax, then the vendor need not collect tax on the portion of the receipts for the exempt bullion.

(e) A vendor of precious metal bullion is required to maintain records sufficient to verify the taxable or exempt status of all transactions, as described in section 533.2 of this Title.

Example 1:

A registered broker sells 50 silver commemorative coins which are not legal tender to a purchaser at a price of $25 each. The silver content of each coin is 3.650 troy ounces and silver closed at $5.675 per troy ounce on the previous business day. The taxability of this transaction is determined as follows:

Selling price of the coins (50 × $25)	$1,250.00
Value of the silver content of coins (3.650 × $5.675 × 50)	1,035.69
Ratio of selling price to value of silver content	121%

The sale is exempt from tax since the selling price of the coins did not exceed 140 percent of the daily closing cash bullion price of silver and the other requirements of this section are met.

Example 2:

A registered broker sells a rare foreign gold coin with a face value of $20 (U.S.) at the current rate of exchange to a purchaser at a price of $1,250. The coin contains.9575 troy ounces of gold and gold closed on the previous business day at $375.25 per troy ounce. The taxability of this transaction is determined as follows:

Selling price of the coin	$1,250.00
Value of gold content of coin (.9575 × $375.25)	359.30
Face value of coin at current rate of exchange	20.00
Ratio of selling price of coin to value of gold content	348%
Ratio of selling price of coin to face value at current rate of exchange	6250%

The sale is taxable. The selling price of the coin exceeds 115 percent of both the value of the metal content of the coin and the face value of the coin at the current rate of exchange.

Example 3:

A manufacturer purchases palladium bullion and uses it in the manufacture of electrical contacts. This purchase does not qualify for exemption under this section, since the manufacturer did not purchase the bullion for investment. However, since the bullion is being incorporated as a physical component of a product for sale, the manufacturer may purchase the bullion tax exempt by issuing a properly completed resale certificate within 90 days from the date of sale.

Cross-reference:

See section 527.1(c) of this Title regarding the sale or exchange of coins and currency not covered by the exemption described in this section.

N.Y. Comp. Codes R. & Regs. Tit. 20 § 528.29