InternationalReciprocalTradeAssociation
524MiddleStreet
Portsmouth,VA23704
PH:757-393-2292
FAX:757-257-4014
fromhttp://www.communitycurrencieslaw.org
TheIRSisconcernedthatbarterexchangesprovideanopportunityfortaxavoidance,soanorganizationthat
fallswithinthedefinitionofabarterexchangeisrequiredtoreporttotheIRSregardingthetransactionsofits
members.
ARECOMMUNITY/LOCALCURRENCIESALSO
BARTEREXCHANGES?
Unfortunately,itisdifficulttodeterminewhethercomplementarycurrencieswouldbeconsideredbarter
exchangesandthereforesubjecttotheserequirements.TheIRShasdeterminedinseveralprivateletter
rulingsthataninformal,non-commercialtimedollarprogramisnotabarterexchange.Theseprivateletter
rulingsindicatedthatitwassignificantthatthemediumofexchangewasnoteasilyconvertibletoU.S.
Dollars.5
TheIRSalsoconsideredtheexistenceofcontractualliabilitiesbetweenmembersandtheorganizationor
amongmembers.Forexample,inP.L.R.9608009,theIRSacknowledgethattheexchangeoperatedona
“noncommercialbasis”becausemembersdidnothavea“contractualrighttoreceiveanyservicesfrom[the
organization]or[theorganization’s]members,”amongotherreasons.6
Thereisoneexampleofaprivateletterrulingthatfoundadifferentkindofcomplementarycurrencysystem
didnotfallwithinthedefinitionofabarterexchange.Inaprivateletterruling,7theIRSfoundthatan
“electroniccashexchangesystem”wasnotabarterexchange.Thesysteminvolvedthestoringand
transferringofelectroniccashonacard.Thestoredvaluecouldbetransferredfromcardtocardby
consumersandretailersinexchangeforgoodsandservices.OneunitofvalueonthecardisequaltooneU.S.
dollarandissoldtoparticipantsinexchangeforcash.Theamountofmoneythatmaybestoredonanycardis
expectedinitiallytobelimitedtobetween$100and$1,000.Membershavetherighttoselltheircardsback
totheissueratfacevalueatanytime.