Kentucky’s recently enacted sales-tax exemption for currency and bullion, effective Aug. 1, 2024, has encountered new legal and procedural challenges.
Initially, Kentucky’s decision to become the 44th state to provide a sales-tax exemption was a significant milestone for the numismatic and precious-metals community. The legislation, originating as Senate Bill 105 and later incorporated into House Bill 8, was designed to benefit dealers and collectors by defining “bullion” and “currency” for tax-exemption purposes.
The National Coin & Bullion Association has reported that, despite broad support from the General Assembly to pass the exemption, Governor Andy Beshear attempted to line-item veto the relevant section of House Bill 8, arguing that the exemption was unnecessary and that treating bullion as tangible goods was crucial. However, the veto was invalidated as unconstitutional with the support of Attorney General Russell Coleman, and the General Assembly directed the secretary of state to enroll the bill into law. However, the governor’s office disputes this opinion, which has created complications.
The General Assembly plans to legally challenge the veto, but the Kentucky Senate general counsel is advising businesses that they might need to collect sales tax in the meantime to avoid conflicts with the Department of Revenue.
Retailers now face a difficult decision. Collecting sales tax on these items could lead to consumer backlash and potential class action lawsuits for overcharging. Conversely, not collecting the tax may result in penalties or interest from the Kentucky Department of Revenue while this gets resolved in the courts.
Given these developments, dealers must carefully assess whether to charge sales tax on transactions involving bullion and currency after Aug. 1. NCBA recognizes the significant implications for businesses and urges dealers to stay informed about further updates.
NCBA will continue to monitor the situation and provide members with timely updates as more information becomes available.
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