I was reading this interesting piece about bartering in Boise, Idaho when I got to this section which gave me pause:

Lest you consider setting fire to your Federal Reserve notes and embracing bartering as your sole means of survival, note one thing: The tax man always wants a piece of the action. The IRS explicitly states that “Barter dollars or trade dollars are identical to real dollars for tax reporting. If you conduct any direct barter–barter for another’s products or services–you will have to report the fair market value of the products or services you received on your tax return.”

“It has been my experience that the IRS pursues bartering aggressively because it can be considered earned income,” said CPA Aldon Holm. “If a business owner or individual provides a service or product that normally would be considered taxable, they have the responsibility to report that income and pay the appropriate taxes. Whenever an individual or company is audited, part of the audit is to discover barter income. They know it’s out there and growing, and they want their share.”

Also, don’t be fooled by Craigslist’s relative anonymity. They’re always watching.

“The State Tax Commission has employees who scour Craigslist for unregistered businesses,” explained Holm. “If they find someone who is operating a business without reporting to the state, they will pursue that person or business and seek compliance with all income and sales taxes laws.”

Sure enough, I read the I.R.S. policy on bartering and all you Galts out there are going to be expected to fork over some money. If you’re using Craigslist or some other website to organize barters get ready for a tax bill.