Large discount for cash: Liability to purchaser?

In My Humble Opinion
1

I was paying a woman who provides a service for my business. Ordinarily she sends a bill, but I had the business check book with me, so I offered to pay. She told me the total was $845.00. As I began writing the check, she mentions that she could offer me a cash discount, and my total would be $350.

Cool. I had just enough cash on me and I took advantage of her “generosity”.

Now, she has a business partner and this may have been a way to cheat her. Or it could be a “tax thing”, although the amount of the discount makes me wonder.

General Question: Is there any potential downside for me here?

I am happy with the service she provides. I have no need for a canceled check for my own taxes. Just curious.

2

Well, for starters, if you have no proof that you’ve paid her, the other business partner can start bugging you about your outstanding $845 bill.

3

Legal questions are best suited to IMHO.

Colibri
General Questions Moderator

4

No, although they are partners, I’ve never met the other one. The one I paid is the one I’ve always dealt with.

5

So did you get a receipt? Is the discount listed on it?

6

No receipt, but then again I wouldn’t receive one had I paid by check.

7

I’m familiar with cash discounts, but man, that’s a huge one!

8

Wow, I’ve seen enough Judge Judy to know you ALWAYS get a receipt for a cash payment. That just sounds fishy all around. Sure you wouldn’t have gotten a receipt from handing her the check, but when she cashed it, you’ll have a copy of the canceled check from your bank to prove payment. If I were you I’d call her ASAP and get a receipt.

9

Yeah, a cash discount on that scale suggests the person is doing something unethical and possibly illegal. They could be trying to pocket money and avoid tax reporting as you aren’t required to issue a 1099 to an entity that your business pays for goods/services if the amount is under $600/year. Could be her deal with you was partially “off the book” and if you pay in cash she gets to avoid reporting it to her partnership, and thus pocket the money with no record on her end that any work was done.

Either way she’s either cheating the government or cheating the partner and I think that is a near certainty. However, I don’t see how either is something you’d be liable for. If you were making a larger cash payment such that you’d be required to issue a 1099 and you failed to do so that could get you in minor tax trouble, but aside from the risk of her claiming you never paid her I see no real risk to you. Plus if you have a regular business relationship with her it wouldn’t make sense for her to screw you over since that would just end any opportunities for future business for her.

10

Yeah, but with a check you always have the bank records that can show that they deposited it. With cash you have no proof at all.

11

OK, that answers my question. I’m happy with the service provided, and have no fear of being without a receipt, given the savings.

12

Unless she or her partner comes back to you at a later date demanding full payment. And then you’re screwed when they take you to court.

13

Nah, she’s a friend.:slight_smile:

The IRS was my big concern.

14

Well her business partner might not be so generous or friendly. But your call. You’re more trusting than I would be lol

15

I don’t get receipts for everything I do with my business either. At some point if you’re doing a lot of business with someone, if they screw you on one transaction because of no receipt what is really lost? It would be a he-said/she-said court case anyway, and difficult to prove one way or another, and that would be the end of the business relationship at that point. A business that is a going concern or a contractor that wants regular work isn’t going to screw you over one transaction. Especially one for such a small amount, they’d lose the revenue from that customer forever from doing that one time.