The Obamacare health reform bill gives the U.S. government the power to track sales of gold coins and other precious metals, analysts say, letting the government know exactly who is buying and selling gold, silver and platinum, and how much the sales contained.
The reason? The bill requires small businesses and self-employed people to issue 1099 forms, which are used to track and report the miscellaneous income paid to independent contractors or self-employed individuals, for every vendor with whom they do more than $600 business in a calendar year.
The new regulation, which goes into effect January 1, 2012, was put in ostensibly to create tax revenues for financing some of the bill’s other provisions.
According to ABC News, dealers in gold coins and bullion are among those most rankled by the regulation. Unlike businesses with a comparatively small number of vendors, coin dealers frequently buy from members of the general public as well as from other dealers.
Pat Heller, who owns Liberty Coin Service in Lansing, Mich., deals with around 1,000 customers every week and estimates that he'll be filling out between 10,000 and 20,000 tax forms per year after the new law takes effect.
"I'll have to hire two full-time people just to track all this stuff, which cuts into my profitability," Heller said.
California congressman Daniel Lungren has introduced legislation to repeal the section of the health care bill that would trigger the new tax-reporting requirement because compliance would unduly burden on small businesses.
Even though gold has outperformed all other core assets over the last ten years economist Nouriel Roubini, chairman of RGE Monitor, is advising against buying gold now.
"The concerns propelling the price of gold specifically are very real and should not be ignored,” Roubini wrote in a note to investors. “But is now the time for investors to jump the gold bandwagon? We wouldn’t encourage it."
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