Alan Van Vliet Enterprises, Inc. v. State Board of Equalization

Opinion

FLEMING, J. Plaintiff Alan Van Vliet Enterprises, Inc., doing business as American Coin Company, persuaded the trial court that a regulation of defendant California State Board of Equalization (Cal. Admin. Code, tit. 18, reg. 1599) too narrowly defines the transactions which qualify for the statutory exemption from sales and use taxes for commodity transactions in gold and other metal coins. (Rev. & Tax. Code, § 6355.) The board appeals the judgment.

The first subdivision of section 6355 states the tax exemption: “(a) There are exempted from the taxes imposed by this part the gross receipts from the sales in bulk of monetized bullion which are substantially equivalent to transactions in securities or commodities through a national securities or commodities exchange and the storage, use or other consumption in this state of monetized bullion so sold.” In other words, while an ordinary sale of rare coins to a numismatist may be taxable, a bulk sale of coins to an investor interested in the coins for the value of their metallic content should be treated as any other commodity transaction, exempt from sales and use taxes.

The subsequent subdivisions amplify the meaning of the first: “(b) A sale in bulk, for purposes of this section, shall be deemed to have occurred if the amount of monetized bullion sold in the transaction totals, in face amount, the sum of one thousand dollars ($1,000) or more, or its equivalent.” In other words, the transaction should involve substantial value, at least $1,000 face amount, to distinguish it as a commodity transaction from the usual coin sale to a hobbyist.

“(c) ‘Monetized bullion,’ for purposes of this section, means coins or other forms of money manufactured of gold, silver, or other metal and heretofore, now, or hereafter used as a medium of exchange under the laws of this state, the United States, or any foreign nation.” In other [967]words, the tax exemption applies to transactions in real money coins, not private-minted tokens or medallions.1

Regulation 1599 provides in pertinent part at subdivision

“Neither the sales tax nor the use tax applies to sales of ‘monetized bullion’ provided the following conditions are met:

“(A) The sale is in bulk amount. A sale in bulk occurs if the face amount of the ‘monetized bullion’ is $1,000 or more. For example, 2,000 U.S.A. half dollar pieces have a sum face amount of $1,000.