.jpg?width=320&name=bigstock--156638345%20(1).jpg "tax fraud")
Bartering was the earliest form of business transaction. When those tit for tat evaluations became more difficult, money became the currency for transaction. When you report your income, you may not think to count products or services that you gained through an exchange of goods, but the IRS says you should. Failure to report these earnings can lead to charges of tax fraud.
From an article by Super Lawyers, featuring our own Robert Fedor:
A lot of these types of transactions fall below the radar. Business owners may not even be thinking about services exchanged on a friendly level as reportable gross receipts. But be aware that the IRS is not so casual. “It’s one of the first questions that comes out of an IRS agent’s mouth when you’re going through an audit,” says Cleveland tax attorney Robert Fedor. Fedor notes that barter, especially in today’s gig-fueled economy, is fairly prevalent, “and very little is picked up as 1099 income. It’s become a big tax gap issue for the U.S. economy.”
“A wage is a wage, no matter how it’s paid,” adds Denver employment attorney Clayton Wire. He references other forms of in-kind payments, such as health insurance, as part of an employee’s total compensation. Tax implications will arise from a barter arrangement to both the worker and the recipient of services. But how do you know how much to declare when you were paid in-kind?
San Diego tax attorney Kevan McLaughlin states,” When it comes to bartering, the general rule is you have to pay taxes on thefair market value of the goods or services that you’ve exchanged.”
There’s a specific tax form for declaring barter income, particularly if you use an online broker service linking people who wish to barter for goods or services (think Uber, for traded services). If you use one of these exchanges, you must file an IRS Form 1099-B declaring the value of all barter-based income.
If you are aware of unreported income, or fail to file appropriate returns for assets and income held in the United States, speak with an IRS tax lawyer experienced with criminal tax matters.
Speak with a knowledgeable criminal tax defense attorney
With offices in Chicago and Cleveland, the law firm of Robert J. Fedor Esq., LLC provides strategic local and international defense for individuals and entities facing an IRS criminal tax investigation. Contact our law firm today.
