In 1982, the United States Congress passed TEFRA, the Tax Equity Fiscal Responsibility Act. TEFRA recognizes barter exchanges, like New England Trade, Inc., as third-party record keepers of barter transactions and stipulates that all trade revenue earned is treated as income.
Barter exchanges are required by the IRS to file Form 1099-B, Proceeds from Broker and Barter Exchange Transactions, for all member transactions within the calendar year.
Accordingly, New England Trade issues Form 1099-B summarizing the value of all sales made through the exchange during the year. The IRS receives the same information.
Certain purchases made through the exchange are tax deductible. Further, you may deduct the costs you incurred to perform the work that was traded through the exchange 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 trade business. Additional examples of bartering and information on how to report the income are described in IRS Publication 525, Taxable and Nontaxable Income.Sales Tax on Trade Transactions
Sales tax, when applicable, is paid in cash to the seller. As the seller, you are responsible for collecting sales tax on New England Trade, Inc. sales and remitting taxes to the US government in cash.