Knowledgebase: IRS Tax Reporting
IRS - Tax Requirements for Barter Exchanges
Posted by Bruce Kamm on January 25 2010 01:02 AM

Barter exchanges, whether Internet based or with a physical location, are required to file Form 1099-B for all transactions unless certain exceptions are met. 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)

  • Exchanges involving property or services with a fair market value of less than $1.00

For calendar year 2008, Copy B of Form 1099-B is due to barter exchange participants by February 2, 2009. Copy A of the form is required to be filed with the IRS by March 2, 2009. If filing electronically, the due date is March 31, 2009. Software that generates a file according to the specifications in Publication 1220, Specifications for Filing Forms 1098, 1099, 5498, and W-2G Electronically (PDF) must be used by barter exchanges. The IRS does not provide a fill-in form option.

Caution: Paper forms are scanned during processing by the IRS. Forms 1096, 1098, 1099, or 5498 that are printed from will not be accepted.

Non-corporate client or member bartering is reported on a transactional basis on Form 1099-B, but additional information is to be added to the form by the barter exchange. Under Regulation 1.6045-1(f)(i), barter exchanges are required to make a return of information reporting the name, address, and taxpayer identification number of each member or client providing property or services in the exchange, the property or services provided, the amount received by the member or client for such property or services, the date on which the exchange occurred and other information required on Form 1099-B. This means that multiple Forms 1099-B may be required for member clients with multiple bartering transactions during the year. To learn more about 1.6045-a(f)(i), Returns of Information of Broker and Barter Exchanges, visit the Electronic Code of Federal Regulations site, click on "Simple Search" and enter 26 in the Title and "Returns of information of brokers and barter exchanges." in the "Search for" field.

Corporate client or member bartering is reported on the aggregate for the year, rather than on a transactional basis.  Under Regulation 1.6045-1(f)(ii), barter exchanges are required to file annual Forms 1099-B including the aggregate or total amount received by a corporate client or member during the year for property or services provided by the corporate client or member in all barter transactions through the barter exchange.  Form 1099-B additionally requires the name, address, and taxpayer identification number of the corporate client or member.


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