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The Tenth Circuit Court of Appeals is often overlooked as a national precedential trendsetter. The Ninth Circuit gets buzz for its “activist judges.” The Second Circuit gets the high-profile New York cases. Isn’t it about time the Tenth Circuit got some attention?
Pending the outcome of an Andover, Mass. town meeting vote this spring, the First Circuit Court of Appeals could be looking to the Tenth Circuit for advice on how taxpayer income should be evaluated in the courts.
Andover will consider a measure in April to allow town employees and contractors to receive part of their pay in $1 American Eagle silver dollars, reports The Boston Globe.
Robert Shapiro, who collected the necessary signatures to bring the idea to a vote during the April Town Meeting, claims that plan would benefit both the city and its workers. Shapiro says Andover would save about $1 million if roughly 250 employees participated, and employees would save money because they would pay less in taxes, reports the Globe.
How would that work?
The American Eagle silver dollar "is the only silver bullion coin the world with its weight, content, and purity guaranteed by the U.S. government," according to SilverMonthly.com. The coin can be traded at either face value, for $1, or for its numismatic worth, which is significantly higher. (Shapiro tells the Globe that American Eagles were worth $35 as of last month.)
Shapiro suggests that employees who take their pay in American Eagle silver dollars could use the face value of the coins when reporting their income to the IRS, but benefit from the far-greater, numismatic worth.
That's where the Tenth Circuit Court of Appeals factors in.
In Joslin v. U.S., an income interpretation case decided in 1981, the Tenth Circuit ruled that taxpayers couldn't employ the face value/numismatic worth double standard to report less income. "When a taxpayer bargains for and benefits from the higher market value of silver coins, he or she must include this amount in income. That silver dollars are designated legal tender with a nominal value of one dollar acceptable at the United States Treasury to discharge one dollar of debt, or exchangeable for a one dollar Federal Reserve note, does not require a different result."
In 2009, a Las Vegas man was sentenced to 15 years for tax fraud after he paid workers in gold and silver coins, immediately traded the coins for envelopes of cash, and advised the employees to report their income based on the face value of the coins. Based on reasoning similar to the Tenth Circuit's Joslin holding, the court found that the man committed fraud.
Republican presidential candidate Ron Paul has long trumpeted the superiority of metal-backed money over Federal Reserve notes, also known as fiat money. Even if Andover adopts Shapiro and Paul's approach, using American Eagle silver dollar coins as payment, taxpayers would be wise to the follow the Tenth Circuit Court of Appeals' precedent, and declare their income based on the numismatic worth of the coinage.