Seller Wants Cash Only - Walk Me Thru This.....

[Guilherme]

I’ve done it but don’t like to.

Wire transfers are cheap ($15-$35 at local banks and credit unions). They are my preferred way of dealing. I even pay for it as buyer or seller! With any sort of paper (bank check, certified check, money order, Travelers Checks, etc.) I’d hold the horse for 7 working days after the first working day after the payment is received before I released custody of the horse.

If you want to be REALLY paranoid remember that counterfeit hundreds are well known in most places. I’ve even seen convenience store clerks use the “reality pens” developed to detect counterfeit money on $5 bills!

There are rules on reporting cash transactions. Here is one article on one set of rules. There may be others:

https://finance.zacks.com/much-can-withdraw-savings-account-being-reported-irs-6446.html

The “underground economy” in agriculture is quite large. Someday the Feds will figure that out and there will be an enforcement push. But, as they say, “so far, so good!”

G.

[Bluey]

@Guilherme

I’ve done it but don’t like to.

Wire transfers are cheap ($15-$35 at local banks and credit unions). They are my preferred way of dealing. I even pay for it as buyer or seller! With any sort of paper (bank check, certified check, money order, Travelers Checks, etc.) I’d hold the horse for 7 working days after the first working day after the payment is received before I released custody of the horse.

If you want to be REALLY paranoid remember that counterfeit hundreds are well known in most places. I’ve even seen convenience store clerks use the “reality pens” developed to detect counterfeit money on $5 bills!

There are rules on reporting cash transactions. Here is one article on one set of rules. There may be others:

https://finance.zacks.com/much-can-w…-irs-6446.html

The “underground economy” in agriculture is quite large. Someday the Feds will figure that out and there will be an enforcement push. But, as they say, “so far, so good!”

G.

That is right, when we have some work that needs doing, we start the conversation with “we require the proper information up front to send you a 1099, before you even set foot here to start working”.

Boy, does that eliminate plenty of interested parties any more.
Some even insinuate how much cheaper they can bid if payments are not necessarily reported?

Good that we mostly use old companies that are established and play by the rules.
We don’t have to worry about those, don’t have to send some of them 1099’s, they are incorporated.

One veterinarian surprised us, he was not incorporated.
We had to send him a 1099, never before to a veterinarian?

Best way to know what is legal, that keeps changing, is to have a reputable accountant firm on board.

[Janet]

@tobruk

Actually you are supposed to send a form 1099 to anyone to whom you pay over 600 at the end of the year and a copy goes to the IRS. What the recipient does with the reporting is their business/problem. It is your responsibility to report payments over 600.

Yes, but you need the seller’s SS# to fill out the 1099. Considering how difficult it is to get SS#s for judges etc., I would not count on getting a real SS# from a seller who was planning on not reporting to the IRS.

[Bluey]

As someone mentioned before, only those in business themselves need to report on 1099 forms:

https://www.irs.gov/pub/irs-pdf/i1099msc.pdf

[Palm_Beach]

@Bluey

One veterinarian surprised us, he was not incorporated.
We had to send him a 1099, never before to a veterinarian?

Why would a veterinarian have to incorporate? He or she could be a sole proprietor, partnership or LLC. They are all valid forms of business organization.

[Bluey]

@Palm Beach

Why would a veterinarian have to incorporate? He or she could be a sole proprietor, partnership or LLC. They are all valid forms of business organization.

Most do because of several reasons, easier to get insurance, less personal liability, but of course they don’t have to.

[BeeHoney]

It’s perfectly respectable to require cash for local sales of livestock including horses. I have bought and sold many horses using cash up to $10K. Both parties plus a witness count out that cash in front of each other. The BOS (two copies) is sitting right there and the receiving party signs that they have received the cash. (When buying, I often bring copies of a simple BOS with me in case the seller does not have one.) These are not necessarily “underground” transactions. In my case I have always accounted for it appropriately on my taxes. It’s not necessary for a buyer or seller to worry about what the other party does in this regard.

Bank checks are also reasonable but they are easily forged, so it is understandable that a buyer would not want to accept that form of payment. Also, for lower end sales where you might make one trip to see the horse and buy it on the spot, having cash allows you to negotiate a slightly lower price. Additionally, cash in hand is a great negotiating point.

I don’t accept, and therefore would not expect another seller to accept personal checks. Writing a bad check is incredibly easy to do and easy to get away with. It’s essentially theft but law enforcement doesn’t seem to take it seriously IME. Worst of all, you might not find out that a check is bad until a fairly long time after a check is deposited. So checks are a very poor form of payment for sales unless the horse is remaining on the seller’s property for several weeks after the sale.

Wire transfer is another option, but does require you to exchange some banking information, which some people find unattractive. I think it is a good option for long distance sales, and for sales involving larger amounts.

You do not need to give a 1099 to someone that you pay in cash for a horse. 1099s are not for purchases of livestock or supplies. Obviously consult your accountant if you have questions.

[soloudinhere]

@tobruk

“Requiring cash payment allows the seller to circumvent the IRS. That’s not your problem. As others have mentioned, get all the proper paperwork and hand over the money.”

Actually you are supposed to send a form 1099 to anyone to whom you pay over 600 at the end of the year and a copy goes to the IRS. What the recipient does with the reporting is their business/problem. It is your responsibility to report payments over 600.

Only for employment or services rendered. The purchase in kind of an item, ex equipment, horse, whatever is a like exchange of goods and not a cash payment.

[Gestalt]

@StarPattern

I’ll do this sometimes too, maybe not in such large amounts, but still. I like to separate my money into two pockets - pocket 1 has the amount I’d like to start negotiating at, usually lower than I think the item is worth. If the seller accepts my first offer, I’m laughing. If not, I know I have X amount in pocket two that I can use to further negotiate “and go get” if the seller doesn’t take my first offer. Saves me the hassle of counting out bills and the seller seeing that I actually did have extra money.

I’m not good at selling, I usually ask less than what the item is worth. So when I have someone try your trick on me I boot them off my property. I don’t “dicker”, the price is the price.

[Ladylexie]

I bought my horse with a bank check but he didn’t leave Kentucky until after they deposited the check.

[StarPattern]

@Gestalt

I’m not good at selling, I usually ask less than what the item is worth. So when I have someone try your trick on me I boot them off my property. I don’t “dicker”, the price is the price.

And that’s the difference between you and someone who prices their item higher than it’s worth because they expect someone to pull my trick. If I’m buying online, I always ask the seller first off, “is your price firm or is there some wiggle room?” If their price is firm, I decide if it’s worth that price to me. If it is, I buy it. If it’s not, I decline the item. If there is some wiggle room, I always make a fair offer. Even when I’m buying in person, I’m not the kind of person who shows up expecting to get half off. On a recent saddle purchase, it was listed for $400 and I offered the person $350. They declined, so I handed them the other $50 because I wanted the saddle.

[Palm_Beach]

@Bluey

Most do because of several reasons, easier to get insurance, less personal liability, but of course they don’t have to.

Must be a TX thing. Most small businesses are LLCs in the Mid Atlantic area. You are protected from personal liability as an LLC, and there is no difference in the ability to get insurance.