Because traditional barter deals in kind rather than in cash, it has presented problems to tax collectors. Concerns using barter's "near money" have been monitored closely by the Internal Revenue Service, often with good reason: Companies tended not to report barter "income" until it was converted back to goods. Since 1980 the IRS has demanded that such income be reported as revenue when earned and not be deferred. Another contended area between cashless commerce and tax collectors is what constitutes fair market value -- the dollar equivalent of the amount involved in barter transactions. Still another is whether some goods can be considered "used."

Despite IRS concern, barterers have deported themselves with relative distinction. The industry's watchdog, the 115-member International Association of Trade Exchanges, studied 1,687 barter exchanges and clients who were audited by the IRS from October 1, 1979, to February 19, 1982. The average assessed penalty, the IATE found, was $1,570 per return, compared with an average of $5,317 per return for all taxpayers filing individual business returns during the same period.

In one effort to clear its once-tarnished reputation, the barter industry proposed to the IRS that barter clubs issue reports on customer activities much as brokers and banks do. In the fall of 1980, the IRS accepted the proposal, but it has done nothing since to implement it. Says IATE deputy director Joseph Weiss, "It's stuck in somebody's 'in' basket over there. We welcome the chance. It would help us purge some operators who need to be rooted out."

The industry seeks both rank as brokers and recognition as third-party record-keepers. As opposed to banks and brokerage houses, barter company clients have not been accorded protection from whimsical IRS probes. Third-party protection, a right-of-notice status that is part of the 1976 Tax Reform Act, prevents the IRS from summarily summoning records without notifying the taxpayer involved, who can then attempt to have the summons stayed. In the event it is stayed, the IRS must go to court to gain enforcement.

A bill now before Congress -- the Taxpayer Compliance Improvement Act of 1982 -- recognizes barter's coming-of-age. It would add barter exchange to stock brokerage and similar industry sectors required to file information reports on client transactions. And it would specifically grant third-party record-keeping status to barter. The IRS, for its part, is seeking to place on the summoned party the burden for establishing need of protection. If the bill passes, barter will at last have gained some respect -- at least from the tax collector.