If you are paying in cash for $10,000+ value of silver products from a dealer, the dealer will have to fill out an 8300 form and send it to the IRS. This limit also applies to related transactions, meaning that if you are “string buying” large quantities of silver the dealer will still have to send the form.
What is String Buying?
String buying refers to time-related purchases. The official guidance is that transactions are time-related if sufficient purchases happen in the same 24-hour period. If transactions that are obviously related, but are made over a longer period, the dealer may also report them as a “single” transaction. The rules are somewhat vague in their wording. You should be aware if your buying activity is going to trigger the form being filled.
Related Transactions by Item Similarity
Further guidance states that transactions are related if you buy a similar item on several occasions. If you were buying 90% silver rounds on one day, and then Canadian Maples another, they may not be classified as related transactions.
However, if the dealer feels you are buying these different items in order to avoid reporting requirements then they may be considered related. Again the rules seem a bit vague and unclear. No doubt different dealers have different interpretations.
Your relationship with your dealer of choice will help you have a low key discussion on the matter.
What is Classified as Cash?
Cash in this case is defined as notes, bankers’ checks or any untraceable form of money. The 8300 is for people engaged in trade or business, so private sellers will not normally have to complete the form. Some states have extra rules for reporting, and have sales tax to be paid, so local ordinance comes into play in some transactions.
Your Notification of Reporting
When a transaction is reported the dealer must tell you by Jan 31st of the next year (1099 forms). However, if their reporting was not due to a $10,000 limit, but because of suspicious activity, then they do not have to inform you at all.
Silver Tax
The purchase of silver does not attract VAT and other taxes in the United States; it does in countries such as the United Kingdom. In the US the tax that you will likely pay is State Sales Tax, which will be different depending on where you are buying.
The rules differ massively from state to state in terms of tax rates and the limits that cause the sales tax to kick in (and kick out). If you buy remotely from another state then you may not have to pay the State Sales Tax but will probably have to pay a “Use Tax” instead.
Keep a log of purchases you make, and retain the receipts. Then if you need to explain your silver purchases you have what you require. Better safe than sorry!