Accounting & Bookkeeping & Small Business Forum

[doubllane]

Hi! I'm new here and I hope this question is on topic.

For my small business, which is a corporation, I buy used and new computer equipment, primarily with cash. I always make sure to get the seller's name, phone number, and address.

I have purchased large quantities of new computers from a particular individual, again with cash. When I asked how he is able to do this and why only cash, he informed me that he works for a reseller, and his employer pays him his bonuses in merchandise, when he then sells it for cash, and therefore doesn't pay taxes.

Obviously this person is evading taxes, but my question is, am I doing anything wrong by buying from him? Am I an accessory to tax evasion, etc.? It seems to me that the burden of paying taxes in this case is his, however I don't want to deal with him if I am breaking laws. I'm reluctant to stop dealing with him if I am in the clear, though, because he's a great source of good merchandise. He does sign receipts, and I have all his information. I feel like I should stop buying from him, but, again, it's hard to cut off a good source of income, so I want to know the law.

Thanks in advance for any help!

John

[stasia2003]

doubllane wrote: Hi! I'm new here and I hope this question is on topic.

For my small business, which is a corporation, I buy used and new computer equipment, primarily with cash. I always make sure to get the seller's name, phone number, and address.

I have purchased large quantities of new computers from a particular individual, again with cash. When I asked how he is able to do this and why only cash, he informed me that he works for a reseller, and his employer pays him his bonuses in merchandise, when he then sells it for cash, and therefore doesn't pay taxes.

Obviously this person is evading taxes, but my question is, am I doing anything wrong by buying from him? Am I an accessory to tax evasion, etc.? It seems to me that the burden of paying taxes in this case is his, however I don't want to deal with him if I am breaking laws. I'm reluctant to stop dealing with him if I am in the clear, though, because he's a great source of good merchandise. He does sign receipts, and I have all his information. I feel like I should stop buying from him, but, again, it's hard to cut off a good source of income, so I want to know the law.

Thanks in advance for any help!

John

I understand your ethical dilemma but you have a repuation to uphold. For all you know, you could be purchasing stolen property. If they are tax evading, then only God knows what else they are doing. I would cut that relationship off. If you care anything about your ethics and integrity, just find another source to get your merchandise but make sure they are credible and ask for references.

[RobJ]

doubllane wrote: Obviously this person is evading taxes, but my question is, am I doing anything wrong by buying from him? Am I an accessory to tax evasion, etc.? It seems to me that the burden of paying taxes in this case is his, however I don't want to deal with him if I am breaking laws. I'm reluctant to stop dealing with him if I am in the clear, though, because he's a great source of good merchandise. He does sign receipts, and I have all his information. I feel like I should stop buying from him, but, again, it's hard to cut off a good source of income, so I want to know the law.
Assuming that he is committing tax evasion, you are not an accessory to his tax evasion. I wouldn't hesitate doing business with him simply because you "think" he isn't paying his taxes. If he isn't paying his taxes, the result is that you're probably getting the merchandise for a lower cost. If you can live with that, that's your business.

However, if he's selling stolen goods, you might find yourself in deep do-do. I'd hate to see your name on the front page of your local newspaper or on the local news for receiving stolen goods. That is a crime that you could be guilty of. In that regard, I think I'd use this guideline - what do you think a jury would believe?

[stasia2003]

"In that regard, I think I'd use this guideline - what do you think a jury would believe?"

:lol: I'm not sure I would want to know what a jury would believe? Sometimes I wonder, what goes on in the heads of those 12 people. I have watched CourtTV and they would let guilty people walk because they felt sorry for them...ahhhh...so I would scratch that question. :lol:

[RobJ]

stasia2003 wrote: :lol: I'm not sure I would want to know what a jury would believe? Sometimes I wonder, what goes on in the heads of those 12 people. I have watched CourtTV and they would let guilty people walk because they felt sorry for them...ahhhh...so I would scratch that question. :lol:
Yeah, I know what you mean. I've only served on one jury and it was for tax evasion. The guy and his attorney were morons. In the end, we found him guilty. There wasn't a whole lot of deliberation.

[doubllane]

Thanks everyone for your help with this! I know the guy is not stealing the merchandise, because I make him give me the packing slips when he picks it up from the distributor, and he also works for a company I am familiar with.

But I think I will cut it off regardless, if only because paying for merchandise with large amounts of cash just seems wrong and destined for some kind of problem. It's a shame, though, because he offers really good deals and it's easy money for my business.

Thanks again!