The Internal Revenue Service treats barter income just like cash income. The best tax advantage is to use the earned barter income to purchase the normal expenditures that are tax deductible. KTE recommends that you to seek professional accounting advice.

Members are advised that transactions involving barter dollars are generally treated as taxable events for federal, state, and local tax purposes. The declaration and reporting of all applicable local, state, and federal taxes resulting from trades rests solely with the client.

The selling member shall charge the buying member the appropriate sales tax in cash and collect and record these at the time of sale. Under no circumstances will KTE be responsible to pay any sales, excise, use or other tax on behalf on any client.

In the United States, barter exchanges are defined as third-party record keepers under the Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA) and as such are subject to Internal Revenue Service (IRS) Form 1099-B reporting for the annual gross barter sales of the barter exchange’s members. As a result, barter exchanges are also subject to IRS imposed Civil Penalties for non-matching Tax Identification Numbers (TINS) and therefore must comply with Publication 1281 B-Notice solicitation requirements where non-matching Tax Identification Numbers (TINS) have occurred.

We will require you to verify your TIN prior to being granted an account and issue you a 1099-B each year.

Barter exchanges, whether Internet based or with a physical location, are required to file Form 1099-B for all transactions (barter income). A Form 1099-B is a form issued by a barter exchange that summarizes the proceeds of all barter transactions (barter income). These sales must be reported to the IRS when you file your taxes.

KTE is required by federal law to obtain the correct taxpayer identification number of client, who is required by law to provide such number, and to report all trade sales of client to IRS on Form 1099-B.

In the event that any member changes his or her legal name, company name, and/or taxpayer identification number (TIN), the member is required to inform KTE within ten (10) days. At that time, the member must complete new client agreements and work with their Barter Coach to update the information in their KTE account. KTE reserves the right at its sole discretion to suspend the trading privileges of any client who has had a name or number change until KTE receives the new agreements and Form W-9. Once the paperwork is received, all barter and cash debts and/or credits will be transferred into the new account.

It is the member's responsibility to provide KTE with the correct federal identification name and number. Failure to provide the correct taxpayer identification number may result in the imposition of backup withholding of twenty (20%) percent of the gross proceeds of each sale transaction, under federal law. Member agrees to hold KTE harmless for any actions KTE takes to comply with federal tax laws. Members  should seek professional tax advice. IRS audit of a member's account is subject to a twenty-five ($25.00) dollar cash charge per hour with a two (2) hour minimum. A cash administrative fee of fifty ($50.00) dollars cash for each trade transaction will be charged to any business or individual who provides KTE with an incorrect taxpayer identification name and/or taxpayer identification number (TIN).

Click the links below to view barter information listed on the IRS website:

Bartering Tax Center

Barter Exchanges

Four Things You Should Know if You Barter

Taxpayer Identification Number (TIN) On-Line Matching

Topic 420 - Bartering Income