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Senator Harry Reid seeks answers on tax treatment of American Gold Eagle


Ed Haas

Senator Harry Reid seeks answers on tax treatment of American Gold Eagle

 

April 14, 2008 – Following up on a recent Muckraker Report story, IRS delivers stunning reversal on the American Gold Eagle / Income Tax Question, television reporter Christopher Hansen, host of the show American Sovereign which airs on Channel 62 in Pahrump, NV, sent Senator Reid a copy of the IRS e-mail response, found in the aforementioned article, to the following question.

If I received a $50 American Gold Eagle (legal tender) as a wage, would I need to claim $50 on my tax return or the market value?  Today, the $50 American Gold Eagle was selling for approximately $980.00.

The IRS wrote:

You will only be reporting your wages of $50.  The American Gold Eagle is now your capital asset (collectible), and any gain or loss on the coin will not be reported as income or loss until you dispose of the coin.

Senator Reid responded to Hansen on April 11, 2008 via e-mail as follows:

 

Dear Mr. Hansen:

 

Thank you for contacting me regarding the tax treatment of compensation paid in the form of the American Gold Eagle coins.  I appreciate hearing from you.

 

I took note of the article referred to in your letter and understand the confusion that has arisen regarding this matter.  So that they may provide further clarification, I have forwarded your inquiry to the Internal Revenue Service and asked that they respond to me in writing and copy you on the reply. 

 

Again, thank you for taking the time to share your thoughts with me.  For more information about my work for Nevada, my role in the United States Senate Leadership, or to subscribe to regular e-mail updates on the issues that interest you, please visit my web site at http://reid.senate.gov.  I look forward to hearing from you in the near future.

 

My best wishes to you.

 

Sincerely,

 

HARRY REID

United States Senator

Nevada 

 

Hansen, who is also the State Chairman of the Independent American Party of Nevada, had contacted the IRS, in addition to Senator Reid, seeking further validation that the response offered to the Muckraker Report was accurate.  Clearly, if Americans are only to report $50 as wages when receiving a $50 American Gold Eagle, and not be subject to any meaningful taxation until the coin is disposed, and then only be subject to a capital gain or capital loss tax rules, the impact could be far reaching. 

Amazingly, another IRS employee identified as Mr. Poprik has responded to the Hansen inquiry by suggesting that the previous IRS employee that offered the answer to the Muckraker Report question, Ms. King, had not taken into account Internal Revenue Service Notice 2007-30.  Basically one IRS employee is now saying the other IRS employee was wrong.  How then are Americans expected to navigate the IRS when it cannot establish agreement internally? 

Notice 2007-30, titled Frivolous Positions, appears to be nothing more than an IRS collection of issues it cannot directly support or back up with laws, and a catch all response to persistent questions it cannot answer in a fair and logical manner.  It should be noted that the IRS decides what is frivolous absent any oversight whatsoever, so in theory, it can dispose of any lawful taxation objection it might encounter by making questioning the tax rules of the IRS – frivolous.  With this sort of unwarranted power, Americans are decidedly at a disadvantage, if not virtually powerless against the Internal Revenue Service, particularly if the IRS is seeking vengeance for questioning its authority. 

Item 12 of Notice 2007-30 Frivolous Positions regurgitates:

In a transaction using gold and silver coins, the value of the coins is excluded from income or the amount realized in the transaction is the face value of the coins and not their fair market value for purposes of determined taxable income.

So a segment of the IRS claims that this is a frivolous position.  How can it be frivolous with no guidance offered whatsoever on this issue?  There are no tax tables issued by the IRS that define fair market value of American Gold Eagles.  And on what date is fair market value determined – on the day the coin is received, or on April 15th?  And where is the law that states that fair market value must be determined with Federal Reserve notes as the measure?  And what’s the fair market value of Federal Reserve notes anyhow?  The list of non-frivolous questions goes on and on – questions the IRS must answer rather than arrogantly dismiss using Notice 2007-30. 

The IRS is truly an out-of-control cartel that uses fear and intimidation, much like terrorists, to maintain its power and control over the people while refusing to act in good faith by showing the American people the laws that justify its actions. 

Consider what one of its former Commissioners’ had to say about the IRS, and wake up to the fact that the IRS abolishment movement needs to progress from the content of political speeches during an election year to a viable national action committee that puts this atrocity out of business once and for all. 

Eight decades of amendments and accretions to the Code have produced a virtually impenetrable maze. The rules are unintelligible to most citizens - Including those who hold advanced degrees and including many who specialize in tax law. The rules are equally mysterious to many government employees who are charged with administering and enforcing the law.


It is also a known fact that the Internal Revenue Code is a very easily misunderstood area of law, even misunderstood by trained professionals. Judges and lawyers admittedly do not know the tax laws. 
[Ms. Shirley D. Peterson, former Commissioner of the IRS made in a "Tax Policy Lecture" before Southern Methodist University, on April 14, 1993]

 

Fifteen years later Ms. Peterson, and your former agency cannot even agree on legal tender values and laws – truly an impenetrable maze! 

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