Payments, Gift Cards, Gifts, Tips, Taxes & PSOs

One potentially misleading statement made on the Good Morning America phone sex segment is creating a lot of drama. Near the end of the segment, Elizabeth Hasselbeck said, “For women who do not have bank accounts, some of the phone sex companies pay directly to a gift card.” This is raising concerns about everything from taxes and IRS industry scrutiny to alternative payment methods and confusion about gifts given to PSOs.

While I personally do not know of any companies making payments this way, I can only guess that there might just be companies who pay via a reloadable prepaid credit card of some sort. If they are legitimate paying and stable companies, they would be recording and reporting these sorts of payments just as they would checks, direct deposits, etc.

This is entirely different from gift cards and other gifts many phone sex operators receive from their clients, callers, and fans.

Which brings me to a post I had intended to make this holiday season, but have been too busy to get to: Gifts, Tips & Taxes.

Tips, or “tributes” as they are often called on the platform sites, are collected and dispensed by the phone sex platform company and therefore are part of reportable, taxable, income.

Gifts, however, are another matter.

Gifts are items, cash, or gift certificates and gift cards, which come from clients via traditional stores and shopping sites, such as Amazon. Among the most popular ways for a PSO to be pampered and adored, be it for a birthday, a holiday or just a “thank you” for spectacular service, is to be given an Amazon gift card. (While wishlists are popular, there are some concerns regarding privacy as ordering and tracking can show the recipient’s name and address; Amazon gift cards, on the other hand, can be sent to someone far more securely, and quickly, with only an email address shared.) In any case, gifts are defined by the Internal Revenue Service as follows:

The gift tax is a tax on the transfer of property by one individual to another while receiving nothing, or less than full value, in return. The tax applies whether the donor intends the transfer to be a gift or not.

The gift tax applies to the transfer by gift of any property. You make a gift if you give property (including money), or the use of or income from property, without expecting to receive something of at least equal value in return. If you sell something at less than its full value or if you make an interest-free or reduced-interest loan, you may be making a gift.

And the gift giver, or donor, is generally responsible for paying the gift taxes.

The IRS itself says it cannot make recommendations about specific individuals or their tax filings — and neither will I, other than to say it’s best to consult a professional regarding your individual questions and/or concerns. However, as you can see, gifts and gift cards are completely different from any company paying employees or dispensing income earned via any sort of credit or gift cards.

One thought on “Payments, Gift Cards, Gifts, Tips, Taxes & PSOs

  1. Pingback: Safety First: Gifts & Wishlists For PSOs | Phone Sex Secrets

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