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Gold buy-backs of interest as IRS visits jewelers

October 28, 2009

New York--The Internal Revenue Service (IRS) will soon be examining jewelers' anti-money-laundering (AML) programs for U.S. Patriot Act compliance, and with the rising number of jewelers doing gold buy-back programs, more retailers may need to be in compliance.

The IRS had previously asked Jewelers Vigilance Committee (JVC) President and Chief Executive Officer Cecilia Gardner to train examiners on the complexities of the jewelry industry as the IRS prepares to examine jewelers' anti-money-laundering programs (AML).

After meeting with IRS officials, Gardner said on Wednesday that the IRS will be looking at all segments of the industry, including retailers, for compliance, and those examinations will start soon.

"Many retailers were excluded from the requirements of the U.S. Patriot Act--until they started buying gold from the public in large numbers," Gardner told National Jeweler. "If they buy and sell more than $50,000 in jewelry from members of the public, then they must comply with the U.S. Patriot Act and implement an anti-money-laundering program."  

From what Gardner has determined, the IRS plans to conduct examinations according to its "accepted protocols," and according to discussions she had, the agency's intention would not be to immediately assess fines or penalties.

"If they find that a particular jeweler is required to comply, and is not, they will issue a 'corrective' letter and give the jeweler a period of time to come into compliance, if there are no other extenuating circumstances," Gardner said.
 
In an effort to aid the IRS, prior to Gardner's meeting, the JVC provided an overview of the unique aspects of the jewelry industry to help IRS examiners understand the diverse sectors, multiple business models and complex methods of doing business in the jewelry industry.

"Many jewelry businesses, particularly small, family-run businesses, operate in ways that IRS examiners may not have encountered when reviewing banks or other financial institutions. JVC is committed to helping examiners understand how the industry thinks and what to expect--and what not to expect--prior to their review of jewelers' AML programs," Gardner said in a press release prior to her visit.

Gardner went on to say that the JVC has long represented the industry's needs and concerns before government agencies that regulate the business, so the IRS' request for JVC to train their examiners is a logical extension of the JVC's role as the governmental industry liaison.

"JVC welcomes input from industry manufacturers and retailers," she said in the release. "Jewelers with ideas about how to advance communication with the IRS should contact me at the JVC."

For more information, visit the JVC's Web site, JVCLegal.org.
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