2024 Tax Preference Review:
Precious Metal and Monetized Bullion
November 2023
Eric Whitaker, Team Lead
Stephanie Hoffman, Audit
Coordinator | Eric Thomas, Legislative
Auditor
JLARC to review two preferences for sales of precious metal and monetized bullion
| Precious metal bullion Metals such as gold, silver, platinum, rhodium, and palladium that have been smelted or refined. It is valued based on the content rather than form. |
| Monetized bullion
Coins and other money that are made from gold, silver, or other metals and used as currency. |
Sales of precious metal and monetized bullion may be eligible for two tax preferences:
- Buyers are exempt from the sales and use tax on their purchase.
- Sellers are exempt from paying wholesale or retail business and occupation (B&O) taxes on all income from the sale. Instead, they pay the service and other activities B&O tax on the amount earned as commission.
Buyers and sellers cannot claim the exemption if the precious metal and monetized bullion will be incorporated into jewelry or works of art.
A review in 2012 found that the B&O tax preference was not achieving its inferred objective
The Legislature did not state an objective when it created the preferences in 1985.
JLARC staff reviewed these preferences in 2012. The review inferred that the preferences' objective is to make Washington coin and bullion dealers more competitive with out-of-state dealers. The preferences are to achieve this by treating sales of precious metal and bullion like sales of other investments.
JLARC staff found that:
- The sales and use tax preference achieved the objective.
- The B&O tax preference did not achieve the objective. Sellers of other investment products, such as real estate agents and stockbrokers, pay the service and other activities B&O tax on all income earned above the market price from a sale. The preference allows sellers of precious metal and monetized bullion to pay tax only on their commissions.
This study will address the following questions
Study questions define the scope of the audit, based on the study mandate. They reflect preliminary outreach, research, and analysis of potential racial equity considerations per RCW 44.28.076.
- Have changes in legislation and the industry since JLARC's 2012 review altered
the preference or affected its use?
- How has the estimated value of the preference changed?
- Do other states offer similar tax treatment for sales of precious metal and monetized bullion?
- What are the racial and ethnic characteristics of those who benefit from the tax preferences?
What's next
- Preliminary Report: July 2024
- Proposed Final Report: December 2024
Study team
Eric Whitaker, Team Lead, (360) 786-5618
Geoff Cunningham, Research
Analyst, (360) 786-5672
Stephanie Hoffman, Audit
Coordinator, (360) 786-5297
Eric Thomas, Legislative Auditor,
(360) 786-5182
Washington Joint Legislative Audit & Review Committee   
|
106 11th Avenue SW, Suite 2500 |