They also invariably evade taxes. Go wild on that downvote button, guys, but there's no need: everyone already knows it, and there is never going to be a political will to do something about it.

Do you believe in a right to privacy regarding purchases? (every electronic transaction can be tracked for all time) If so, how does that weigh against the small amount of tax evasion that takes place?

I do think there's a right to privacy, and I do hope it's difficult to gather political will for taking away rights.

In my country, many retailers now have to connect their cash registers directly to the taxman. The law behind this was enacted last year to counter tax evasion.

Does it work?

I mean, it's much easier for a tax inspector to simply go to the store, when it's busy, and wait for the slip up (when the clerk accepts money but does not use the register).

But in my opinion this was rare even before. And in really small operations, they don't have a register anyway. (Or take the gamble and don't use it.)

> Does it work?

There's no reason why it shouldn't.

> I mean, it's much easier for a tax inspector to simply go to the store, when it's busy, and wait for the slip up (when the clerk accepts money but does not use the register).

Why would a lowly clerk break the law for his multi-millionaire employer? And why would a customer do business with a company that didn't provide receipts?

That's not how it works. The fraud happens further up the food chain. However, if the taxman knows exactly how much money came in from customers by monitoring the cash register, he knows how much to expect in taxes from that business.

> But in my opinion this was rare even before.

Perhaps in your country. A few years ago whistleblower protections and a reward system were enacted here. So anyone who dobs in a company that's been evading taxes gets a percentage (IIRC 10%) of the unpaid taxes subsequently recovered. Since then there's been a string of highly-publicised cases of the taxman coming down on tax evaders. They recover taxes and squeeze more out of them in penalties and fines, and the whistleblower (probably some low-paid bean counter in the company) get's a huge lump of cash for his troubles.

Anyway, as a result of these events, now the taxman monitors the tax registers of large companies that accept cash. Certain categories of commerce and small businesses are exempt.

You think Arco evades taxes? They're a pretty large gas station chain and they don't accept credit cards.

Arco is not an all-cash business though - they accept debit cards.

There's a lot of correlated factors in all-cash businesses. Yes, they don't pay CC processing, but they often sell lower-end goods, are in worse neighborhoods with lower rent, may acquire some of their merchandise in sketchier ways, etc...

are we at the point where we are criminalizing the behavior of people who choose to avoid credit cards and only accept cash?

Right or wrong, it's a fairly common stereotype: a merchant who insists on cash-only transactions is dodging taxes or selling something illegal (or both, I suppose).

On the topic of criminal behavior, it's also worth noting that doing business cash-only makes you a more tempting target for robbery; if you did almost all of your transactions via credit or debit cards, you'd have very little in the till for someone to steal.

Being a cash-only business also means they can pay their employees in cash - often because their employees aren't authorized to work in the country.

We hit that point a long time ago when having a large amount of cash with you became a justification for civil asset forfeiture.

IRS forces card processors to issue 1099-k for any card processing payments. That's how it goes.

Could you please explain this for someone not familiar with the US tax rules and forms/numbers?

In old days when cash was king, many small businesses used to under report income. Then came credit/debit cards, which require of businesses to sign up with credit card processing companies, who take the fees out and reimburse monies to your bank account.

Since old habits die hard, these small businesses used to under report income despite the trail of evidence left by credit card processors. So, IRS came in and imposed a rule on these processors: send us a copy of payments paid to Mr Small Business X--and that copy is called 1099-K. This is like W2, 1099-MISC, 1099-INT.

Basically, the tax man wants records from the third parties, since self-reported ones are mostly under reported.

All processors ( FDC, Worldpay, Global Payments etc) are required to report credit card sales for each of their customers through 1099 reporting , This reporting is done on what is called a MID ( Merchant Identification)number. Every merchant accepting credit cards has one ( sometimes multiple)

Some processors charge merchants for this reporting services to the IRS which further drives up Merchant Services cost.