Director's Rule 5-523
Sales of Precious Metal Bullion and Monetized Bullion
Sales of precious metal bullion and monetized bullion
(1) Introduction. This rule defines the terms "precious metal bullion" and "monetized bullion," explains the business license tax deduction that applies to retail and wholesale sales of these items, and provides examples of those types of sales that qualify for the deduction. This rule also explains the applicability of the business license tax on those who sell precious metal bullion and monetized bullion on a commission basis.
(2) Definitions.
(a) The term, "precious metal bullion," as defined in SMC 5.30.040, means "any precious metal which has been put through a process of smelting or refining, including, but not limited to, gold, silver, platinum, rhodium, and palladium, and which is in such state or condition that its value depends upon its contents and not upon its form."
(b) The term, "monetized bullion," as defined in SMC 5.30.040, means "coins or other forms of money manufactured from gold, silver, or other metals and heretofore, now, or hereafter used as a medium of exchange under the laws of this state, the United States, or any foreign nation, but does not include coins or money sold to be manufactured into jewelry or works of art.
(3) Business License Tax.
(a) Amounts received as commissions upon sales of precious metals by dealers, brokers, and other selling and/or buying agents who sell or buy precious metal bullion or monetized bullion for the accounts of customers are subject to the service and other activities classification of business license tax.
(b) Deduction for sales at wholesale or retail. Pursuant to SMC 5.45. IOO(N), in computing the business license tax, there may be deducted from the measure of the tax amounts derived from the sale at wholesale or retail of precious metal bullion and monetized bullion. This deduction applies equally to sales of precious metal bullion or monetized bullion transferred through documents of ownership, certificates, confirmation slips, or other indicia of ownership.
(4) Examples.
(a) Precious metal bullion.
(i) Sales of processed or refined precious metal valued solely u pon the content thereof, whatever its form, are not subject to tax. This includes processed nuggets, bars, sticks, dust, and other processed forms of precious metal. For example, sales of gold or silver in raw, refined forms to dentists, laboratories, jewelers, and other p ersons, for their own consumption or for resale are not taxable.
(ii) However, sales of precious metal which has been manufactured or further processed into any form which determines or adds to the value thereof are fully taxable. For example, sales of jewelry items, medallions, artworks, and other items, the value of which i s dependent u pon m ore than the m ere content of precious metal therein, are subject to wholesaling or retailing business license tax, whichever is applicable.
(b) Monetized bullion.
(i) Sales of metal money, in coined or other form, which is recognized as a medium of exchange in the financial marketplace, are not taxable.
(ii) However, sales of coin or money, whether or not recognized as a medium of exchange, to jewelers or other persons for the purpose of manufacturing jewelry or artwork therefrom are fully taxable. For example, sales of coins for necklaces or to be used as buttons or in paintings or painting frames are taxable.
(iii) To receive a deduction for sales of coins or metal money, persons who knowingly sell such things to buyers who are regularly engaged in the business of manufacturing jewelry or works of art must take a written, signed, and dated statement from such buyers that the coins or metal money are not being purchased for use in manufacturing jewelry or works of art.
Effective: July 15, 2005
DIRECTOR'S CERTIFICATION
I, Kenneth J. Nakatsu, Director of the Department of Executive Administration of the City of Seattle, do hereby certify under penalty of perjury of law, that the within and foregoing is a true and correct copy as adopted by the City of Seattle, Department of Executive Administration.