Bartering transactions are taxable

Barter transactions are exchanges of goods or services without using money. Barter transactions are considered income for tax reporting purposes and are subject to business and occupation (B&O) tax and retail sales tax, if appropriate. The value of goods or services actually received or accrued is the amount reported for a barter transaction.

Example

XYZ Accounting Firm discovered a water leak. They called their client, Jake the Plumber, for assistance. They agreed that the plumbing repair will cost an amount equivalent to six months accounting work. Jake does the plumbing work, XYZ does his accounting work, and no money changes hands.

This barter transaction must be reported by both businesses.

Plumbing services are a retail sale, so Jake will report the value of his plumbing services under both Retailing B&O tax and retail sales tax.

XYZ Accounting will report the value of six months accounting work under the Service and Other Activities B&O tax classification. XYZ Accounting does not need to collect or pay sales tax for their services.

References

WAC 458-20-112 - Value of Products

RCW 82.04.090 - Value Proceeding or Accruing