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paying cash to avoid taxes


Rabbi David Sperling

Cheshvan 9, 5780
A caterer I had hired for a large Simcha offered me a big discount if I paid cash. He didn’t say why, but it is generally understood that cash income means you can get away with not reporting it and can avoid taxes. But that’s the caterer’s problem, not mine. Or is it? Would I be responsible if I were likely facilitating an illegal practice? Or should someone in my position simply enjoy the discount?
Shalom, Thank you for your question. In our hebrew site this topic was discussed at length by three very learned Rabbis who each gave their opinions (Rav Dov Leor, Rav Shlomo Ishon, Rav Baruch Paz). They all agree that the Torah gives permission for any given community to determine it's own financial monetary laws. That being, the answer we give to your question is first and foremost to check what the law of the place you live in is. Here in Israel the law does not obligate a consumer to request a written receipt for a purchase or payment for services. That being so, the Rabbi wrote that one may pay in cash (which is also legal – except for very large sums, such as when buying a house etc) and not request a receipt. However, one Rabbi raised the issue of helping and encouraging sin. The seller (or caterer in your question) certainly must pay tax. As such you are forbidden to encourage or help him sin. He believes that when asked “do you want to pay cash and not get a receipt” and one agrees to such a situation one is abetting sin. On the other hand though, in your case it could well be that the catering has some legal need for quick cash in hand (a situation not unknown to those in the catering business where one has to pay waiters and all kinds of people in cash). If that is a possibility then a person is allowed to assume the best, and one need not fear they are helping a sin – and more over one is not obligated to become a police investigator and start questioning the caterer as to his reasons. (This is based on a Mishna in Shi'ivit that allows loaning tools that could be used for prohibited work in the Sabbatical year, one the condition that there is a possibility the borrower is using them for something permitted, even though this is not the most likely case). So, in summary, if the caterer says something like “Listen, I don't want to pay tax, so pay me in cash and I'll give you a discount”, it would seem to be forbidden to take part in such a deal. On the other hand, if he merely offers a discount for cash, and does not mention giving a receipt or not, you may take part in such a transaction.
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