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.
