Cohousing-L Mailing List: Re: ALternative economic systems

[Rob Sandelin (robsan]

I had an interesting discussion with a senior IRS official (a relative) 
about the Ithica hours system.  The IRS has been grappling with the 
"barter economy" for a number of years.  There have been three recent 
court cases relative to trying to define whether and how taxes are due 
on bartered goods and services.  So far (and this discussion happened 
last summer and another case was in the courts) the courts have ruled 
in the direction that under the current tax laws the IRS  must bear the 
burden of defining the taxable  income value of bartered services.  
This is such a burden as to make it practically impossible to bother 
with.  Defining the income value of services, and enforcing tax 
collection on it,  would cost several times the revenue it would 
generate. Thus no IRS action.  It doesn't mean they can't, or maybe 
even won't, it just means that it isn't worth it....Yet.

According to my Uncle, there was a small effort made by Congress in the 
1993 tax bill to deal with bartered "Income" and it got removed in 
committee.  However, there have been previous  hearings by the Senate 
in how to deal with the "underground economy" as it has been labled.  
Communitarians might want to pay attention to this debate as the next 
tax law changes get drafted.  When you hear talk of "closing loopholes 
on tax evaders" barter systems are being included under this rhetoric.  
One specific angle to this would be for the goverment to pass a simple 
tax amendment which clearly shifted the burden of defining the income 
value of bartered services to the individual.  This small change in tax 
law could change the playing field for tax enforcement on bartered services.

According to my uncle, the question of using a printed credit system 
such as the Ithica hours, which denote specific marketable value, is in 
the realm of  state and local municipalities which have their own tax 
charters which can and do effect such things.