WHAT WILL THE IRS SAY?

We can only speculate upon how Business Dollars will be treated from a taxation standpoint, and how various IRS rulings might help or hinder the development, testing and growth of DualCurrency Commerce. There are already tax regulations for many kinds of non-cash transaction, as well as for different types of employee benefits. None of these apply directly to $ B.

Barter dollars and circulating local currencies are considered commercial in nature and are therefore taxable, with taxes due in U.S. dollars. $ B are not a barter dollars or a local currencies. They do not circulate from business to business or from consumers to businesses and then back into circulation.
As described earlier, they are an accounting tool, or virtual currency, for measuring and helping to distribute underutilized business capacity. Like frequent flyer miles and other forms of discounts, which are not taxed, they are issued, redeemed and then are taken off the books.

Employee benefits such as free flights for airlines employees or free tuition for university employees are also not taxed. Employing this precedent, then Business Dollars, which are distributed and redeemed within a DualCurrency Employee Benefits Network, as a universal employee benefit, should also not be taxed. Other forms of discounting, such as coupons (which, too, are issued, redeemed and then disappear) and marketing promotions such as senior citizens discounts, dollar movie night, cyber-fares and “2 for 1” dining are not taxable events. In all of these cases, the IRS is only concerned with the dollars taken in by a merchant, not by the promotional offer that got customers in the door.

There are tax precedents for noncash currencies such as Time Dollars and Community Service Credits, which circulate within not-for-profit community development networks. These transactions have been determined to be noncommercial in nature and non-taxable. In many ways, all the uses for DualCurrency Commerce and $ B are similarly related to business and community betterment, in other words to the common good.

Each DualCurrency transaction has a dollar component, which should be considered commercial and taxed accordingly. But, each also has a non-dollar component, which represents the accounting of previously wasted business-community wealth. For this reason, while businesses enjoy new cash profits, participants who have traditionally had the least spending power may find the most benefit. The “last” may indeed be the “first,” and without resort to tax funded government programs or redistribution of wealth schemes.

Perhaps the most advantageous approach for local, state and federal governments to take would be to simply support the free development of DualCurrency Commerce, without putting the burden on early adopters of owing taxes due in U.S. dollars on Business Dollar earning and spending. There are numerous ways that Business Dollars can directly subsidize government programs, without participants needing to pay taxes in cash; from supplements to social security and retraining of displaced workers to empowering true welfare reform and funding a Twenty-first Century Peace Corps. If, in the final analysis, the Business Dollar side of a DualCurrency transaction is determined to be taxable, then an electronic tracking system is already in place. A percentage of the dollars in each transaction can be set aside to satisfy the IRS.

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