March 2018 Numismatic Legislation Review

While Congress delves into the abyss of their usual folly, the numismatic industry went almost hysterical at the bill introduced by Rep. Barbara Lee (D-CA) to create yet another quarters series to begin in 2021.

Not considering the topic, there is a fatigue over changing quarter designs. The 50 State Quarter Series was a success while economic times were good and the states were taking their responsibility for designing the quarters serious. Some states really missed out on good design and good choices that there are some quarters that should be melted and spared from our change.

And while there have been wonderful designs for the America the Beautiful quarters, the response has been anywhere from underwhelming to non-existent. Few people know the series exists and when it is pointed out to them there is a collective shrug of acknowledgment.

The other problem goes to the mouth-breathing aspect of the coverage in that the bill was just introduced into the House of Representatives, it is not the law. It is a long way from a bill being a law. If you forgot the process you can always rewatch the old Schoolhouse Rock video I’m Just a Bill.

For the record, I have no problem with honoring the Nineteenth Amendment and the women who made it possible. I would also have no problem with a coin program honoring the Fourteenth Amendment and the people involved in Civil Rights. This country can use a dose of education and if it can be done using coinage, then maybe I might reconsider my stance on the ever-changing coin designs.

At least David Ryder’s nomination was confirmed!

PN1355: David J. Ryder — Department of the Treasury
Date Received from President: January 8, 2018
Summary: David J. Ryder, of New Jersey, to be Director of the Mint for a term of five years, vice Edmund C. Moy, resigned.
Received in the Senate and referred to the Committee on Banking, Housing, and Urban Affairs. — Jan 8, 2018
Committee on Banking, Housing, and Urban Affairs. Ordered to be reported favorably. — Jan 17, 2018
Reported by Senator Crapo, Committee on Banking, Housing, and Urban Affairs, without printed report. — Jan 17, 2018
Placed on Senate Executive Calendar. Calendar No. 596. Subject to nominee’s commitment to respond to requests to appear and testify before any duly constituted committee of the Senate. — Jan 17, 2018
Considered by Senate. — Mar 21, 2018
Confirmed by the Senate by Voice Vote. — Mar 21, 2018
Nomination tracking information can be found at http://bit.ly/115-PN1355.

H.R. 5308: Women’s History and Nineteenth Amendment Centennial Quarter Dollar Coin Program Act
Sponsor: Rep. Barbara Lee (D-CA)
Introduced: March 15, 2018
Referred to the House Committee on Financial Services. — Mar 15, 2018
This bill can be tracked at http://bit.ly/115-HR5308.

David J. Ryder Confirmed!

David J. Ryder, 39th Director of the U.S. Mint

During the latter portion of the Wednesday, March 22, 2018 session in the United States Senate, the nomination of David J. Ryder to be the 39th Director of the U.S. Mint was confirmed by a voice vote.

As the Senate was processing the nominations on the Senate Executive Calendar, Ryder’s name rose to the top of the list. When the clerk read the nomination and asked for commentary from the floor, the only statement was from Cory Booker (D-NJ). It is customary that a senator from the nominee’s home state to say something in support the nominee. Since there was no objection from the floor, the Senate moved to suspend the rules and pass the nomination by voice vote.

Previously, Sen. Chuck Grassley (R-IA) threatened to block the nomination because he felt that the Department of the Treasury did not respond to inquiries to his satisfaction. When it came time to follow through with the threat, Grassley was not even in the Senate chamber during the vote.

There was no comment offered by Grassley’s office.

After 2,629 days or 7 years, 2 months, and 13 days, our long nightmare is over. The U.S. Mint now has a permanent director!

Good luck Director Ryder.

PN1355: David J. Ryder — Department of the Treasury
Date Received from President: January 8, 2018
Summary: David J. Ryder, of New Jersey, to be Director of the Mint for a term of five years, vice Edmund C. Moy, resigned.
Received in the Senate and referred to the Committee on Banking, Housing, and Urban Affairs. — Jan 8, 2018
Committee on Banking, Housing, and Urban Affairs. Ordered to be reported favorably. — Jan 17, 2018
Reported by Senator Crapo, Committee on Banking, Housing, and Urban Affairs, without printed report. — Jan 17, 2018
Placed on Senate Executive Calendar. Calendar No. 596. Subject to nominee’s commitment to respond to requests to appear and testify before any duly constituted committee of the Senate. — Jan 17, 2018
Considered by Senate. — Mar 21, 2018
Confirmed by the Senate by Voice Vote. — Mar 21, 2018
This nomination can be tracked at http://bit.ly/115-PN1355.

The U.S. Mint Disappoints Congress

NOTE: This was written and queued for posting prior to the confirmation of David Ryder to become the 39th Director of the U.S. Mint.

Today’s “Dummy of the Day Award” goes to Rep. Alex Mooney (R-WV) (Official House of Representatives Photo)

Earlier this month, Rep. Alex Mooney (R-WV) complained to the U.S. Mint that they did not answer an inquiry to his satisfaction. Mooney, like the rest of congress who does more for show than being constructive, went to the press in order to show his dissatisfaction.

In October, Mooney and Rep. Frank Lucas (R-OK) sent a letter to the U.S. Mint asking about what is being done to protect the integrity of U.S. coinage from counterfeiting. The letter contained a gold-plated tungsten American Gold Eagle coin. It was sent after the testimony of David Ryder during his confirmation hearing.

The letter was addressed to Acting Deputy Director David Moti (sic) and Randolph D. Alles, Director of the U.S. Secret Service.

The letter sent by Mooney and Lucas was sent to the U.S. Mint that was run by its fourth non-appointed, interim director since the resignation of Edmund Moy in January 2011. While the interim directors have the same power as political appointees, it is customary that the interim directors maintain the status quo until the Senate approves the president’s nomination.

The U.S. Mint’s response was written under the signatory of Acting Deputy Director David Motl. Motl, Motl’s response to the representative’s inquiry read exactly what can be expected from an interim appointee warming the seat. Basically, the letter said that the U.S. Mint is doing its job as defined by the law and the Acting Deputy Director is working to keep the agency going until a regular director can be approved.

Of course, these representatives did not like this response. They want the U.S. Mint to do something and even gave suggestions. There are two problems with the response that reads like an advertisement for a commercial service. First, if these representatives understood the division of responsibilities, the agency responsible for protecting the integrity of the money supply is the United State Secret Service. The U.S. Mint is the manufacturer of the money, the U.S. Secret Service is the police force that is responsible for protecting the money. One would think that members of Congress who have access to staff and a full-time research department would understand the roles of the various agencies.

Secondly, what would they want an acting director to do? If the acting director is there to make sure the bureau functions until a new director is appointed, then figure out why the U.S. Mint does not have a permanent director? If Mooney does not like the answer then why not take a walk to the other side of the capital and ask Sen. Chuck Grassley (R-IA) why he is throwing a hissy fit and holding up the nomination of a qualified candidate that could legally answer the questions.

David Croft, Acting Deputy Director of the U.S. Mint since 1-Feb-18 (U.S. Mint Photo)

Instead, Mooney would rather complain and pound his proverbial chest to make it look like he is doing something whereas to anyone who really looks at the situation sees him as foolish.

To add to the fun, the U.S. Mint has a new Acting Deputy Director. Because there is a limited amount of time that a government employee can serve in an “acting” role for an appointed position, David M. Croft has been appointed to the posting as of February 1, 2018. Prior to his appointment as Acting Deputy Director, Croft was the Mint’s Associate Director of Manufacturing. Croft becomes the fifth non-appointed “acting” director since Moy’s resignation.

If there are members of Congress that are not happy with the way the U.S. Mint is being run, they need to work out the problems which they are responsible. Mooney and Lucas should take the U.S. Mint leadership issue up with Grassley. Otherwise, they are doing nothing more than spitting into the wind.

Yet another quarter series?

Nineteenth Amendment

With so little happening in Congress regarding numismatic-related legislation, it should not be a surprise that I would become excited I am alerted that there was something to see.

The excitement wore off when I saw the bill that was introduced.

Rep. Barbara Lee (D-CA) introduced H.R. 5308 with the initial title of To amend title 31, United States Code, to require the Secretary of the Treasury to mint and issue quarter dollars in commemoration of the Nineteenth Amendment, and for other purposes.

The text of the bill is not available, yet.

The Nineteenth Amendment granted women the right to vote. It was the culmination of the women’s suffrage movement. To amend the constitution, it passed the House of Representatives on May 21, 1919, the Senate on June 4, 1919, then by 36 of the 48 states on August 18, 1920.

How do you create a design to commemorate the Nineteenth Amendment? Will there be one quarter per state? If so, what would be on Maryland’s quarter? Maryland rejected the amendment in 1920, the legislature ratified it in 1941, but the vote was not certified until 1958.

Then there is Mississippi that rejected the amendment in 1920 but passed it in 1984 becoming the 48th and last state to ratify the amendment (Alaska and Hawaii were not admitted to the union at the time and are ineligible to vote on the amendment).

While it is appropriate to celebrate the 100th anniversary of Women’s Suffrage, maybe it should be a commemorative coin with the proceeds going to an organization like the League of Women Voters.

H.R. 5308: To amend title 31, United States Code, to require the Secretary of the Treasury to mint and issue quarter dollars in commemoration of the Nineteenth Amendment, and for other purposes.
Sponsor: Rep. Barbara Lee (D-CA)
Introduced: March 15, 2018
Referred to the House Committee on Financial Services. — Mar 15, 2018
This bill can be tracked at http://bit.ly/115-HR5308.

February 2018 Numismatic Legislation Review

I really want to say something pithy in this month’s legislative update, but nothing comes to mind. It is a situation where there is both a lot and a little going on. There is a lot of talk coming from Capitol Hill but there is little else. The number of bills and resolutions have reduced.

To judge the activity of Congress, I use a few sites to send alerts when one of my senators of the representative of my congressional district does something that registers legislatively. Most of the alerts are for votes with the occasional introduction of a bill or being added as a co-sponsor to other bills. In my unscientific view of what these people have been doing since the opening of the second session of the 115th Congress, the answer appears to be “not much.”

Sen. Chris Murphy (D-CT) did cause a little numismatic stir when he introduced the American Innovation $1 Coin Act. Murphy wants to add a $1 coin for each state, territory, and the District of Columbia to honor a significant innovation, an innovator, or a group of innovators. For example, Tennessee could consider honoring the work in Oak Ridge; Florida could consider honoring Katherine Johnson, Dorothy Vaughan, and Mary Jackson; while New Jersey would likely honor Thomas Edison.

Even if it is a good idea, the program will be a failure as long as Congress does nothing to ensure dollar coins are circulated. The only way to ensure dollar coins circulate is to stop issuing the one-dollar note. Given that Congress has a hard time passing budget and spending bills, I doubt they would do anything to change the monetary system, regardless of the savings that have been projected.

On a lighter note, David Ryder’s nomination to become the next director of the U.S. Mint is still on hold while Chuck Grassley (R-IA) pouts from his Senate office.

S. 2399: American Innovation $1 Coin Act
Sponsor: Sen. Christopher Murphy (D-CT)
Introduced: February 7, 2018
Read twice and referred to the Committee on Banking, Housing, and Urban Affairs. — Feb 7, 2018
This bill can be tracked at http://bit.ly/115-S2399.

January 2018 Numismatic Legislation Review

Numismatically, the legislative news of the month is the hold placed on David Ryder’s nomination by Sen. Chuck Grassley (R-IA) in what amounts to a hissy fit over the Department of the Treasury not answering his inquiries. The problem is that to Secretary of the Treasury Steven Mnuchin, it does not matter.

Currently, David Motl is the Acting Deputy Director and the highest-ranking official at the U.S. Mint. Providing department oversight of the U.S. Mint is Treasurer of the United States Jovita Carranza, who has been in office since June 19, 2017. From Mnuchin’s perspective, there is no urgency to have a permanent director when there are two people doing the job.

A source tells me that there is a strange dynamic between Mnuchin and Congress. While he seems to get along with members of the Senate Banking Committee, there are strains in relationships with other members including Grassley, who is the Chair of the Senate Judiciary Committee. One source suggested that Mnuchin may feel that he does not have to answer to the Judiciary Committee since the Banking Committee has more direct oversight of Treasury.

Regardless of the issues, it is preventing Ryder’s nomination from moving forward.

H.R. 770: American Innovation $1 Coin Act
Sponsor: Rep. James A. Himes (D-CT)
Introduced: January 31, 2017
Summary: This bill directs the Department of the Treasury to mint and issue “American Innovation” $1 coins commemorating an innovation, an individual innovator or pioneer, or a group of innovators or pioneers from each state, each U.S. territory, and the District of Columbia. Treasury shall issue four coins per year, in alphabetical order by jurisdiction, until a coin has been issued for each jurisdiction.
Referred to the House Committee on Financial Services. — Jan 31, 2017
Mr. Duffy moved to suspend the rules and pass the bill, as amended. — Jan 16, 2018
Considered under suspension of the rules. — Jan 16, 2018
DEBATE – The House proceeded with forty minutes of debate on H.R. 770. — Jan 16, 2018
On motion to suspend the rules and pass the bill, as amended Agreed to by voice vote. — Jan 16, 2018
Motion to reconsider laid on the table Agreed to without objection. — Jan 16, 2018
Received in the Senate and Read twice and referred to the Committee on Banking, Housing, and Urban Affairs. — Jan 17, 2018
This bill can be tracked at http://bit.ly/115-HR770.

PN1355: David J. Ryder — Department of the Treasury
Date Received from President: January 8, 2018
Summary: David J. Ryder, of New Jersey, to be Director of the Mint for a term of five years, vice Edmund C. Moy, resigned.
Received in the Senate and referred to the Committee on Banking, Housing, and Urban Affairs. — Jan 8, 2018
Committee on Banking, Housing, and Urban Affairs. Ordered to be reported favorably. — Jan 17, 2018
Reported by Senator Crapo, Committee on Banking, Housing, and Urban Affairs, without printed report. — Jan 17, 2018
Placed on Senate Executive Calendar. Calendar No. 596. Subject to nominee’s commitment to respond to requests to appear and testify before any duly constituted committee of the Senate. — Jan 17, 2018
This nomination can be tracked at http://bit.ly/115-PN1355.

Update on Ryder Nomination

David J. Ryder at the hearing regarding his nomination to be the 39th Director of the U.S. Mint

As previously reported, the nomination of David J. Ryder to become the 39th Director of the U.S. Mint was returned to the President at the beginning of the second session of the 115th Congress. Under Senate Rules, the nomination neither confirmed nor rejected during the session can be returned on adjournment, unless the Senate agrees to allow the nomination to carry forward by unanimous consent or the majority leader makes the decision.

Apparently, Ryder’s nomination was returned to remove the hold placed by Sen. Chuck Grassley (R-IA) in December. Grassley filed an intent to object to the nomination because “the Department of the Treasury has failed to respond to a letter I sent on September 29, 2017, to a bureau within the Department seeking documents relevant to an ongoing investigation by the Senate Committee on the Judiciary.” Grassley said that the objection was not intended to question Ryder’s credentials but as a punitive action against the Department of the Treasury for not answering his committee’s inquiry.

Ryder’s nomination was resubmitted by the President on January 8, 2018 (PN1355). As required, it was referred to the Senate Committee on Banking, Housing, and Urban Affairs. It is likely to be passed out of committee without a hearing. However, that does not mean Grassley or any other senator would not put a hold on the nomination.

Your government at work.

PN1355: David J. Ryder — Department of the Treasury
Date Received from President: January 8, 2018
Summary: David J. Ryder, of New Jersey, to be Director of the Mint for a term of five years, vice Edmund C. Moy, resigned.
Received in the Senate and referred to the Committee on Banking, Housing, and Urban Affairs. — Jan 8, 2019
This nomination can be tracked at http://bit.ly/115-PN1355.

November 2017 Numismatic Legislation Review

Most of the work in Congress has been on the tax bill (H.R. 1) and non-controversial legislation. The Senate has worked on reducing the number of presidential nominees on the Executive Calendar. Currently, there are 100 nominations waiting to be acted on and David J. Ryder, nominated to be the Director of the U.S. Mint, is 70th on the calendar, up from 126th last month.
 

PN1082: David J. Ryder — Department of the Treasury
Date Received from President: October 5, 2017
Summary: David J. Ryder, of New Jersey, to be Director of the Mint for a term of five years, vice Edmund C. Moy, resigned.
Received in the Senate and referred to the Committee on Banking, Housing, and Urban Affairs. — Oct 5, 2017
Committee on Banking, Housing, and Urban Affairs. Hearings held. — Oct 24, 2017
Committee on Banking, Housing, and Urban Affairs. Ordered to be reported favorably. — Nov 1, 2017
Reported by Senator Crapo, Committee on Banking, Housing, and Urban Affairs, without printed report. — Nov 1, 2017
Placed on Senate Executive Calendar. Calendar No. 458. Subject to nominee’s commitment to respond to requests to appear and testify before any duly constituted committee of the Senate. — Nov 1, 2017
This nomination can be tracked at http://bit.ly/115-PN1082.

How the new tax bill will hurt numismatic businesses

The Industry Council for Tangible Assets (ICTA) issued an alert warning that a provision on the House of Representatives’s tax plan has the potential to hurt the numismatic industry and asked its members to contact their representatives to let them know of the issue.

Like many legislative actions, the bill was probably not targeted at the numismatic industry but at others where alleged abuses have allowed some to avoid paying taxes or reducing their tax burden. Some suggest that it is aimed at the burgeoning crypto-currency or Bitcoin economy.

In a bill that is supposed to be business-friendly, under Title III, Subtitle D (Reform of Business-Related Exclusions, Deductions, Etc.), Section. 3303 (Like-Kind Exchanges of Real Property) has an innocuous statement that says:

Section 1031(a)(1) is amended by striking “property” each place it appears and inserting “real property”.

Section 1301(a)(1) refers to 26 U.S.C. §1301(a)(1) that currently says:

No gain or loss shall be recognized on the exchange of property held for productive use in a trade or business or for investment if such property is exchanged solely for property of like kind which is to be held either for productive use in a trade or business or for investment.

In plain English, this is the basis of the bartering economy. If I trade goods and services for goods and services, they are assumed to be a trade of even value and no taxes are paid on the transaction. The new bill (H.R. 1) will tax the barter economy.

In numismatic terms, a collector walks into to a coin shop with 10 Mercury dimes graded by one of the third-party grading services worth about $475 on the retail market. While talking to a dealer you see a nice 1928 Peace Dollar that he has marked $460 rather than selling the Mercury dimes for cash, you work out a trade with the dealer for the Peace Dollar. You make the trade and everyone is happy.

Under the current tax law, that is a “like kind” trade of items of value and not taxed as income.

If the bill that just passed the House is enacted, the dealer will be required to pay a tax on that that transaction.

The amount of the tax will be based on an interpretation of the law by the IRS which is where this could get very tricky.

If the dealer is taxed on the retail value of the trade, the dealer could be taxed on $15 of income if based on the dealer’s valuation of the transaction.

If the IRS requires the dealer to make a valuation based on prevailing market values, who sets those market values? Can the dealer use any price guide to determine the value of the coins? For example, if a price guide determines the Mercury dimes are worth $475 on the retail market as we assumed earlier, but the Peace dollar is worth $450 on one price guide but $480 on another, which guide does the dealer use? The dealer will either make $25 on the transaction, which is subject to taxation or lose $5 that will lower the dealer’s overall tax liability.

But the dealer does not buy at retail valuation. The cost of the inventory would be based on market values of the coins. Does the IRS allow the dealer to base the transaction on the “buy” cost of the coins? Based on the “buy” valuation the transaction may be closer to break-even.

The result will be more bookkeeping for the dealer and a tougher set of accounting rules when managing inventory. Managing inventory for a coin dealer is not like a regular retail store. Each coin is its only item and may be given its own identification (stock keeping unit, or SKU).

Most coin dealers are small businesses that are either sole proprietors or have a few employees. They either work at coin shows or have a few thousand square feet of retail space. Some are family operated business while others hire from the local community. Dealers make a living but it may not be enough to support the necessary change to their inventory management under the new tax law.

Eventually, this will make you, the collector, the loser.

First, it will eliminate the possibility of a trading because of the accounting problems. The dealer who has the Peace dollar in inventory that is not selling but can trade it for Mercury dimes that will sell quicker will not be able to happen. Of course, the dealer could buy the Mercury dimes for the same price as you buy the Peace dollars. The dealer could also be accused of a tax avoidance scheme which will make matters worse. Even if the accusation is not true, the IRS is notorious for treating these cases as “guilty until proven innocent.”

This can also drive dealers out of business.

If this drives small dealers out of business, then there will be no dealers to participate in local, small coin shows. With no dealers, those shows will end and so will your access to dealers to help you with your collection. With no smaller shows, you will have to travel further to find shows or will have lesser access to quality collectibles. Sure, you can purchase coins and currency online, but who will be there to answer questions? What happens if you are not happy with the purchase and you have to ship the coin back to the seller?

Ironically, the change proposed in H.R. 1 strengthens the trading of real estate and real property as “like kind” transaction.

This change in the tax law is not good for small business or the numismatic industry. Please contact your member of the House and Senators to let them know that the side effects of Title III Section 3303 will hurt the hobby we love!

If you do not know your member of Congress, you can call the Capitol switchboard operator at (202) 224-3121. They can transfer you to the appropriate representative.

If you are not sure what to say to the staffer who answers the phone, try the following:

Please tell the Representative/Senator that in H.R. 1, the new tax bill, Section 3303 of Title III may have the unintended consequences of hurting the barter economy and the numismatic industry. It will place a heavy accounting burden on coin dealers who are mostly small businesses that will damage the industry. I cannot express in any stronger terms how this change in the tax law will hurt this sector of the small business economy. Thank you for passing this message along.

Please call! Make your voice heard!

Ryder Nomination Moves Forward

David J. Ryder

The Nomination of David J. Ryder to become the 39th Director of the U.S. Mint moves forward as the Senate Committee on Banking, Housing, and Urban Affairs ordered that his appointment to be reported favorably.

Committee Chairman Sen. Mike Crapo (R-ID) reported the committee’s recommendation without a printed report. His nomination was added to the Senate Executive Calendar for a vote by the full Senate.

With Ryder’s addition, there are 126 nominations pending for a vote in the Senate. The Senate has not approved a presidential nomination since June 8, 2017.

PN1082: David J. Ryder — Department of the Treasury
Date Received from President: October 5, 2017
Summary: David J. Ryder, of New Jersey, to be Director of the Mint for a term of five years, vice Edmund C. Moy, resigned.
Received in the Senate and referred to the Committee on Banking, Housing, and Urban Affairs. — Oct 5, 2017
Committee on Banking, Housing, and Urban Affairs. Hearings held. — Oct 24, 2017
Committee on Banking, Housing, and Urban Affairs. Ordered to be reported favorably. — Nov 1, 2017
Reported by Senator Crapo, Committee on Banking, Housing, and Urban Affairs, without printed report. — Nov 1, 2017
Placed on Senate Executive Calendar. Calendar No. 458. Subject to nominee’s commitment to respond to requests to appear and testify before any duly constituted committee of the Senate. — Nov 1, 2017
This nomination can be tracked at http://bit.ly/115-PN1082.

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