“I have people come from all over just because we accept BizX.” - Dr. Ricardo Perez, owner of Cosmetic Dental Spa. BizX Member since March 2006.
Taxes
There is no tax advantage or disadvantage to BizX transactions.
BizXchange is considered a modern barter exchange. BizX income generated through BizX is taxable in the year in which the sales occur. In 1982, the United States Congress passed TEFRA, the Tax Equity Fiscal Responsibility Act. TEFRA recognizes trade exchanges, like BizXchange, as third-party record keepers of barter transactions and stipulates that all BizX revenue earned is treated as income.
All BizX transactions are reported to the IRS, just like cash purchases. Accordingly, BizXchange issues each member a Form 1099-B, Proceeds from Broker and Barter Exchange Transactions, summarizing the value of all sales made through the exchange during the year. The IRS receives the same information. Business purchases made through BizX are deductible. Further, you may deduct the costs you incurred to perform the work that was sold through BizX as long as the expense is company related.
We encourage you to consult a CPA or tax professional to determine the best way to record and account for BizX transactions. Additional examples of bartering and information on how to report the income are described in IRS Publication 525, Taxable and Nontaxable Income.
For more information on taxes and barter dollars, please refer to the following articles on the IRS website:
- Do You Barter?
- Bartering Tax Center
- Bartering Income
- Tax Responsibilities of Bartering Participants
- Barter Exchanges
- Topic 420 – Bartering Income
Sales Tax on Trade Transactions
Sales tax, when applicable, is included in the total BizX transaction amount. As the seller, you are responsible for collecting sales tax on BizX sales and remitting taxes to the US government in cash. Sales tax expenses can be recouped when you spend your BizX dollars within the exchange, provided that purchases made are taxable purchases.
