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Barter Exchanges
A barter exchange is any person or organization with
members or clients that contract with each other (or with the barter
exchange) to jointly trade or barter property or services. The term does not
include arrangements that provide solely for the informal exchange of
similar services on a noncommercial basis.
The Internet has provided a medium for new growth in the bartering exchange
industry. This growth prompts the following reminder: Barter exchanges are
required to file Form 1099-B for all transactions unless certain exceptions
are met.
Under the exceptions, barter exchanges are not required to file Form 1099-B
for:
Exchanges through a barter exchange having fewer than 100 transactions
during the year.
Exempt foreign persons as defined in Regulations section 1.6045-1(g)(1)(i).
Exchanges involving property or services with a fair market value of less
than $1.00.
For corporate members or clients, transactions may be combined and reported
in aggregate.
Forms 1099-B are due by March 1, 2004 (March 31, 2004, if filing
electronically).
Failure to file can result in significant penalties (Internal Code Section
6721). The penalty is based on when you file correct information return. The
penalty is:
$15 per information return if you correctly file within 30 days of the due
date (March 1, 2003), maximum penalty $75,000 per filing period.
$30 per information return if you correctly file 30 days after the due date,
but by August 1; maximum penalty $150,000 per filing period.
$50 per information return if you file after August 1, or you do not file
required information returns; maximum penalty $250,000 per filing period.
Additional information is available through the links below:
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