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Hearing held on bill to exclude bullion capital gains; tax department requests clarifying language
Summary
Representative Johnston introduced House Bill 1379 proposing to exclude capital gains from sales of bullion from state income tax; supporters argued it would encourage local depositories and the tax department sought clearer drafting on gains versus losses.
House Bill 1379, introduced by Representative Dan Johnston, would change North Dakota law to exclude capital gains from certain bullion transactions from the state's income tax base. Johnston told the House Finance and Taxation Committee the bill would "back out gains and losses" for qualified bullion sales and called the approach tax-neutral because losses would also be disallowed.
Larry Schneider, owner of the Bismarck Gold and Silver Exchange, testified in support and said the bill would encourage precious-metal IRAs and depositories to locate in North Dakota, improving local access and consumer protections. Schneider said many IRAs that hold bullion are currently stored out of state, and allowing the exemption could move some custodial business into North Dakota banks.
Tax department staff raised drafting questions. Matt Pearl noted the bill language appears to reduce taxable income by "net capital gain," which he said would provide benefit in years with gains but not necessarily exclude losses. He recommended clarify whether the intent is to also reverse out capital losses or otherwise change statutory language to reflect the sponsor's intent.
Committee members asked whether other states have experienced revenue changes after similar measures; Pearl and members suggested researching experience in other states. The hearing closed with the committee asking the sponsor and staff to gather additional information and potentially clarify bill language.
