Wednesday, July 4, 2007

Do I have to declare my barter income to the Washington State Department of Revenue?

The answer is yes if you are doing business in Washington State.

Recently, I was asked by a client that I met through Biznik - a new national business and startup networking group if I would be interested in trading my QuickBooks training and tutoring services for their marketing expertise. So I asked the agency that handles these sort of matters the following question:

If I trade, swap, or barter my services for third party services, is the value of the services that I receive reportable and do I have to pay B&O tax on the value of the service that I receive? What if I barter my services for goods?

According to the Department, "generally, barter transactions are considered income for tax reporting purposes and subject to B&O tax and retail sales or use tax, if appropriate.

The measure of tax is based on the amount of consideration actually received or accrued which includes the value of the property or services a business receives in lieu of any monetary payment for such services or property.

The value of the property received is defined in the Washington Administrative Code (WAC) 458-20-112.

In addition, any purchase of goods by a business (via barter) without payment of retail sales tax is subject to use tax on the value of the goods."

If you want to find out how to set up a barter account in your QuickBooks company file, contact me.

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