Did an Illinois seller of gold coins and bars need tax registration, and which precious-metal sales were exempt?

Plain-English summary

A money-services and currency-exchange company considered buying and selling gold coins and bars at retail and wholesale. It asked about precious-metal dealer licensing and Illinois tax obligations.

IDOR said another agency—the Illinois Department of Financial and Professional Regulation—handled dealer licensing. For sales tax, anyone making taxable Illinois retail sales had to register before selling. A business conducting only wholesale or exempt transactions did not have to register to file and remit tax, though it could obtain a resale number to give suppliers Certificates of Resale.

Gross receipts from qualifying legal tender, currency, specified government-issued gold or silver coinage and medallions, and bullion were exempt without an exemption certificate. Privately issued coins or similar items were taxable. A gold coin incorporated into a pendant or other jewelry lost its exempt status, making the jewelry's entire receipts taxable.

What this means for you

Precious-metal businesses should separate dealer licensing from tax registration and classify each product by issuer and form. Exempt bullion or coin sales do not make unrelated taxable retail sales exempt.

Common questions

Did a seller making any taxable retail sales need IDOR registration? Yes.

Did qualifying bullion require an exemption certificate? No.

Was a gold coin in jewelry exempt? No.

Citations and references

• 35 ILCS 120/2a and 120/2-5(18).
• 86 Ill. Adm. Code 130.1405 and 130.1910.

Source

• Landing page: https://taxarchive.illinois.gov/research/legal/letter-rulings/sales-tax/2016.html
• Original PDF: https://tax.illinois.gov/content/dam/soi/en/web/taxarchive/research/legal/letter-rulings/sales-tax/2016/st-16-0017-gil.pdf

Original ruling text

ST 16-0017-GIL 05/02/2016 SALE AT RETAIL
Persons selling tangible personal property at retail are required to register with the Department
prior to making sales at retail. See 86 Ill. Adm. Code 130.701.
(This is a GIL.)

May 2, 2016

Dear Xxxxx:
This letter is in response to your letter dated January 21, 2016, in which you request
information. The Department issues two types of letter rulings. Private Letter Rulings (“PLRs”) are
issued by the Department in response to specific taxpayer inquiries concerning the application of a
tax statute or rule to a particular fact situation. A PLR is binding on the Department, but only as to the
taxpayer who is the subject of the request for ruling and only to the extent the facts recited in the PLR
are correct and complete. Persons seeking PLRs must comply with the procedures for PLRs found in
the Department’s regulations at 2 Ill. Adm. Code 1200.110. The purpose of a General Information
Letter (“GIL”) is to direct taxpayers to Department regulations or other sources of information
regarding the topic about which they have inquired. A GIL is not a statement of Department policy
and is not binding on the Department. See 2 Ill. Adm. Code 1200.120. You may access our website
at www.tax.illinois.gov to review regulations, letter rulings and other types of information relevant to
your inquiry.
The nature of your inquiry and the information you have provided require that we respond with
a GIL. In your letter you have stated and made inquiry as follows:
My name is NAME and I work in the compliance department of ABC a Money Services
Business (“MSB”) located in CITY, STATE. ABC is registered with AGENCY as an
MSB and registered with the STATE as a Money Transmitter with an active Type II
license. ABC is primarily a foreign currency exchanger which services wholesale and
retail clients.
ABC defines a wholesale customer as a Bank, MSB, Travel Agent, or other Corporation
to which we provide foreign currency exchange services, in order for our wholesale
customer to service their own clients. ABC defines a retail customer as a U.S. or
Foreign Citizen conducting a foreign currency exchange transaction on their own behalf
at one of our retail store locations. In addition to foreign currency exchange, ABC also
provides check cashing services (less than $ XXX US Dollars per day) and is a seller of
prepaid access and traveler’s checks at our retail store locations throughout the United
States.
ABC is in the market to expand our product and services at our retail locations (and
possibly to wholesale customers) and we are looking into the possibility of selling gold

coins and bars to our customers. ABC would like to sell 1oz TYPE 1 Gold Coins, 1oz
TYPE 2 Gold Leaf Coins and 1oz TYPE 3 Gold bars.
ABC intends to purchase the gold coins from XYZ, a registered precious metals vendor
operating in STATE 2, or other companies of a similar operating model. ABC intends to
offer retail customers the option of purchasing one (or more) gold coin or bar with an
average cost of $XXX US Dollars per piece. ABC notates that it will not have a sales
tax collection obligation under Illinois Act 83-1495.
ABC is writing to seek an advisory opinion from Illinois Department of Revenue related
to licensing requirements for Precious Metals Dealers under Illinois Law:

1. In the State of Illinois, would ABC be considered a “precious metals
   dealer” or “coin dealer” and require licensing if gold coins and bars
   were sold to patrons (Individuals) through our retail branch network
   located primarily in shopping malls throughout the state?
2. In the State of Illinois, would ABC be considered a “precious metals
   dealer” or “coin dealer” and require licensing if gold coins and bars
   were sold to our wholesale customers, whom would further sell the
   product onward to their patrons?
3. In the State of Illinois, would ABC be considered a “precious metals
   dealer” or “coin dealer” and require licensing if gold coins and bars
   were purchased from our wholesale customers, from which we would
   further sell the product onward to retail or wholesale customers?
   ABC does not believe it requires a license to sell gold coins at our retail locations but is
   unclear whether the sale/purchase of gold coins to wholesale customers with the
   intention to resell would change its licensing requirements.
   ABC is committed to complying with all federal and state regulations and will await your
   opinion to ensure we are properly licensed under Illinois Law. We will be pleased to
   provide you with any further information which you might require to advise us
   accordingly.

DEPARTMENT’S RESPONSE:
The Illinois Department of Revenue does not handle the licensing of “precious metal dealers”
or “coin dealers.” That is handled by the Illinois Department of Financial and Professional Regulation.
With respect to sales tax, though, we hope you find the following helpful.
The Illinois Retailers’ Occupation Tax Act, 35 ILCS 120/1 et seq., imposes a tax upon persons
engaged in the business of selling at retail tangible personal property. Section 2a of the Retailers’
Occupation Tax Act, 35 ILCS 120/2a, makes it unlawful for any person to engage in the business of

selling tangible personal property at retail in Illinois without first obtaining a certificate of registration
from the Illinois Department of Revenue. This applies to all persons whether they sell at swap meets,
flea markets, or as transient vendors along the roadside.
However, persons who exclusively make either wholesale sales and/or exempt sales are not
required to register and remit Retailers' Occupation Tax. The tax applies only to sales of tangible
personal property for use and consumption, and not for resale. Consequently, if all of your sales are
for resale, you will not be required to register, file returns and remit tax. You may, however, want to
obtain a resale number from the Department so that you have the ability to provide your suppliers
with valid Certificates of Resale. See 86 Ill. Adm. Code 130.1405. So long as you do not make
taxable retail sales, and engage exclusively in wholesale and/or exempt transactions, registration for
a resale number will not expose you to reporting and tax remittance requirements. If, however, you
make any sales at retail (non-resale or sales to end users), you will be required to register to collect
and remit taxes.
For general information, please see 86 Ill. Adm. Code 130.1910, which describes the
exemption from Illinois Retailers' Occupation Tax liability for certain collector coins, medallions, legal
tender and bullion.
Gross receipts from the sales of legal tender, currency, medallions, gold or silver coinage
issued by the State of Illinois, the government of the United States of America, or the government of
any foreign country, and bullion, are exempt from Retailers' Occupation Tax. See 120 ILCS 2-5(18)
and 86 Ill. Adm. Code 130.1910(c). No certification or exemption identification numbers are required
in order to document the nontaxable sales of such items. Because of that exemption, many coins
sold by a dealer are exempt. This is true even if they have appreciated in value and have become
rare and are unlikely to be used in today's commerce.
Note, however, when a government or entity that is not listed in the statute issues a coin or
similar item, it is subject to tax pursuant to Section 130.1910(a). For example, commemorative
medallions minted by private businesses or other states would be subject to tax. Please be advised
that gold coins or other coins incorporated into a pendant or other jewelry lose their exempt status.
The entire gross receipts from the sale of such jewelry is taxable.

I hope this information is helpful. If you require additional information, please visit our website
at www.tax.illinois.gov or contact the Department’s Taxpayer Information Division at (217) 782-3336.
Very truly yours,

Debra M. Boggess
Associate Counsel
DMB:bkl