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This isn't a good take. > If you do the work but undervalue it, it's likely tax fraud. A company can value it's services as it chooses. If the work is perform
by scarby2 4mo ago
This isn't a good take.
> If you do the work but undervalue it, it's likely tax fraud.
A company can value it's services as it chooses. If the work is performed for $1 or $5000 the government doesn't get a say in that.
> you do the work but overvalue it, it's likely investor fraud.
Quite possibly. Assuming this was done with the intention of misrepresenting your revenue and gaining investment.
>The vendor may have been chosen not by merit, but by its willingness to accept an exchange of services. Saying you have $X in revenue implies you won that revenue by merit.
Vendors are chosen all the time because of their willingness to accept specific payment terms and a whole bunch of non-merit pipelines via family, via golf course deals etc.
- bloppe 4mo ago> If the work is performed for $1 or $5000 the government doesn't get a say in that What if you're getting paid in landscaping?
- scarby2 4mo agoOn a corporate level it doesn't really matter as you're only taxed on your profits/losses. If we do a service swap ultimately it's just adding a revenue item with a matching loss, and these are infact quantified. As an individual interestingly it does matter because services received for free are considered taxable income (but businesses are not taxed on their income).
- kube-system 4mo agoThere are corporate taxes on revenue in some situations
- danielmarkbruce 4mo agoYou are just making stuff up, this isn't remotely close to how tax law works.
- gamblor956 4mo agoThe first paragraph is generally correct. The second is not. Business are taxed on their net income but many jurisdictions tax businesses on their gross revenue as well (look up GRT and GET).
- cjbgkagh 4mo agoTax law is guilty until proven innocent. Investor fraud is usually brought as a civil case and takes a balance of evidence approach. Since enforcement is stochastic and rare these practices are pretty common. The freedom to do ‘whatever’ is really dependent on the discretion of the government and investors. Most companies can and do fly under the radar but have to be careful not to piss off the wrong people.
- philipallstar 4mo agoOkay but then why are we singling this out as tax fraud, if the justification is just "anything can be"? Why not claim that posting on HN is tax fraud?
- cjbgkagh 4mo agoBarter counts as income by many tax jurisdictions, if you don’t declare the fair market value of the exchange you are in violation. Most people don’t declare this and it is rarely ever enforced.
- gamblor956 4mo agoTax fraud is treated the same as other crimes and is subject to the same evidentiary threshold.
- cjbgkagh 4mo agoIt depends on jurisdiction, the US is unusual, most countries they’ll reassess you and it’s on you to prove them wrong. I did have to look it up, I didn’t know that the US was different in this way. I did have the California tax authority make a mistake and take money directly out of my account and there didn’t appear to be a way to fight it. It wasn’t enough to be worth hiring a lawyer over so I let it go but it didn’t give me much faith in the governance of California, very Kafkaesque.
- gamblor956 4mo agoI'm a tax lawyer... CA FTB does not take money out of your account unless you have explicitly authorized it to do so and it definitely does not do so automatically. It only pulls specifically authorized amounts when specifically authorized to do so unless you have a garnishment order issued by a court. (I deal with the CA FTB on a daily basis.) You're also wrong about most other countries as well, with the exception of France.
- cortesoft 4mo ago> A company can value it's services as it chooses. If the work is performed for $1 or $5000 the government doesn't get a say in that. It isn’t that black and white. If you are being paid in cash, you can charge whatever you want, that is true. But if you are exchanging goods or services for other goods or services, the government is going to care how you value that transaction.
- elil17 4mo ago> A company can value it's services as it chooses. If the work is performed for $1 or $5000 the government doesn't get a say in that. That's simply not true. You may get a certain amount of leeway, but it has to be reasonable.
- andix 4mo agoNo, it doesn't have to be "reasonable". Its only illegal if it is used to cover up some other illegal thing. For example giving huge discounts below cost only to family members, which is more or less like paying them money without paying taxes for it.
- thih9 4mo agoNote that we’re talking about two companies exchanging services. When two companies undervalue the services that they offer to each other, they pay lower taxes. This is the illegal part.
- tstenner 4mo agoIf the expense is tax deductable, it mostly doesn't matter whether you have $10 earnings vs $10 business expenses or $10K.
- deleted 4mo ago[deleted]
- thih9 4mo agoGood luck explaining that to the IRS.
- gamblor956 4mo agoThe IRS would be fine worth it if taxable income is unchanged. Businesses are taxed on their net income, not get gross.
- stymaar 4mo ago> A company can value it's services as it chooses. If the work is performed for $1 or $5000 the government doesn't get a say in that. Whether it you think it should or not depends on your personal preferences, but in practice the government does get a say in anything that it deems to be an undue way to reduce your taxes. Barter would be much more common if it was a legal way of avoiding taxes.
- hattmall 4mo agoHow would this reduce taxes? If I normally charge 20k for widget Z but only invoice company A 10k because they will see me widget B for 10k and we trade widgets, there is no taxable event. If company A was willing to pay the 20k instead obviously I would rather have that even if it creates 10k taxable income because profit. Investor fraud is much more likely if neither company actually needs each other's widgets and it's just to pump revenue.
- nine_k 4mo ago[dead]
- nitwit005 4mo ago[dead]
- danielmarkbruce 4mo agoThis is pure nonsense. In the US the internal revenue code doesn't allow you to just value services however you choose in what is effectively a barter arrangement.
- Gathering6678 4mo agoTax is a complex issue that differs from one jurisdiction to another, and I am in no way an expert in any of them, but I do believe most tax authorities would require fair value exchanges. Which means, "If the work is performed for $1 or $5000 the government doesn't get a say in that." --- it absolutely does, in the way of requiring the person getting a "$1 service" to calculate their tax as if they got $5000.