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Since the IRS taxes barter transactions, is it legal to pay your taxes to the IRS in non-cash payments such as produce or cattle or other goods?

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    Please add a [jurisdiction] tag so we know which country's IRS you are asking about.
    – user35069
    Feb 18, 2022 at 17:33
  • I think you are confused. "Barter transactions are taxed" means that they are taxed as if they were done with money, but not specially. Usually paying your taxes is not considered a transaction, so you would not pay (extra) tax for the barter the same way you do not pay when you pay with money. Of course, the IRS may refuse the goods you offer.
    – SJuan76
    Feb 18, 2022 at 17:43
  • And to put an example I am familiar with, Spanish tax authorities do on occasion agree to payments with goods. I think the most usual situation is that someone inherits lots of artworks, and the IRS agrees to be paid by a share of them (instead of forcing the heir to sell them). But that is done on a case by case basis.
    – SJuan76
    Feb 18, 2022 at 17:46
  • If you showed up at your local IRS field office with some cattle to pay your tax bill, it's likely you would be asked to leave. But I imagine that there are circumstances where the IRS has agreed to take property offered to settle a bill but I imagine those would be exceptional circumstances. I do know that the IRS may seize property to cover unpaid tax bills and I would not be surprised if they at some time or another have seized cattle.
    – jwh20
    Feb 18, 2022 at 18:44
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    @ohwilleke I do not see that clarity in the question: hence my comment seeking it. The mention of cattle made me think of the sacred cow, and what the reaction would be if such a payment was attempted to the India IRS.
    – user35069
    Feb 19, 2022 at 3:27

1 Answer 1

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The IRS is only required to accept legal tender as payment. It is not required to accept payment in kind.

This said, if you don't have an ability to pay and don't have sufficient legal tender to make a tax payment, and you don't yourself voluntarily sell property you own to make that payment, the primary remedy of the IRS is to impose a tax lien on all of the property that you own, and it can then foreclose on that property in order to collect the tax debt.

The downside of that is that once you are in a collection phase of the tax collection process, you have already incurred failure to pay tax penalties and you owe interest on unpaid taxes, something that doesn't happen when you pay your tax debts on time in legal tender.

The IRS will also negotiate settlements in cases where the taxpayer genuinely does not have enough legal tender or property to satisfy a tax debt, or if the property that the taxpayer has is not liquid, as part of the collections process. But by assumption in the question, if the taxpayer has property whose value is sufficient to pay the taxpayer's debt to the IRS, this doesn't come up in this question's facts.

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