Imagine coming to work at your accounting business on a Monday morning and finding that the plumbing in the employee washroom has been leaking over the weekend. While insurance will cover the water damage, it will not pay for the new plumbing work. Fortunately, one of your clients is a plumber. So, you call Jake the Plumber and tell him your problem. The two of you agree that the work will cost an amount equivalent to six months’ accounting work. Jake does the work, you do his accounting work, and no money changes hands.
Is there any tax liability associated with this barter transaction? Yes!
Both you and Jake have a tax liability to report on your tax returns. Jake will report a retail sale of plumbing services under both the retail sales tax and retailing (business and occupation) B&O tax lines. The amount he will report is the value of six months of accounting services. You will report the value of the plumbing services under the service and other activities B&O tax classification for the accounting services you will provide Jake. The transaction is subject to tax because the value proceeding or accruing to a business includes money, credits, or rights expressed in terms of money (RCW 82.04.090).