IRS Strikes Gold at Sale of Old Coins : Currency: Half a million dollars is raised at sealed-bid auction here for 1,006 mostly non-circulated pieces seized from man who owed back taxes.

Internal Revenue Service officials quietly recouped more than half a million dollars Wednesday in an unusual way.

In a nondescript room at a Bank of America, 1,006 U.S. gold coins seized from a San Diego man who owed a little more than $1 million in unpaid taxes were turned over to a Santa Monica firm for $511,111. The firm had been the high bidder at a sealed-bid auction Tuesday.

“I’ve never seen anything like this,” said Judith Golden, an IRS spokeswoman.

The scene resembled a Las Vegas gaming table, as stacks of shiny coins--some dating to 1878--sat in front of the buyer.

Steven Deeds of Goldline International Inc. inspected the coins and gave the IRS a cashier’s check for $401,111. A down payment of $110,000 had been made the day before at the auction in the San Diego federal courthouse.

Deeds told IRS revenue officer Dan Smith that he needed to count the collection.

“Count each coin?” Smith asked.

Yes, Deeds said.

As Smith and two other IRS officials watched, Deeds examined the coins, all $20 pieces the government stopped making in 1933 when the country moved more toward paper currency, he said. Each coin contained about an ounce of gold.

Deeds called a collection of such size “unusual.” The two most valuable were made in 1924 and together were worth $4,000, Deeds said. They were given a rating of “MS-66” (mint state of 66 on a scale of 0 to 70) by the Numismatic Guaranty Corp. of America. The service had rated nearly 400 pieces of the collection that never circulated publicly.

“They were never taken to a corner bar and spent,” Deeds said.

Two recent appraisals of the seized coins put their value at $508,000 and $513,000, respectively, Deeds said.

Most of the collection will be sold to investors within 30 days, he said.

The coins had been stored in a Cleveland facility before IRS agents seized them, and an armored-car service hauled them to Laguna Niguel, Golden said.

Although the IRS would not elaborate on the case, Golden said the IRS usually tries to seize property when it files a lien against someone who owes back taxes and contends he or she is destitute, Golden said.