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Comment by nickjj | Hacker News Reader

> Any transaction in cash for such a high amount, is intentionally done to keep the transaction off-book (and avoid taxes)

What if you wanted to buy a $25,000 car in cash from a dealership? That's not intentionally avoiding taxes. It's trying to get a better deal.

It's not unreasonable to want to avoid keeping a lot of money in a checking account in the US. They offer 0% interest rates. It doesn't make sense to have large sums of money sitting there. Why let the bank profit off your money if they aren't going to return some of it back to you for letting them use your money to make them more money.

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> What if you wanted to buy a $25,000 car in cash from a dealership?

I think you’ve not done this in the past twenty years, or just heard the phrase and misunderstood it.

“Paying cash” at a dealership for a new car doesn’t mean literally bringing in paper currency. Generally you pay via cashiers check or wire transfer (rarely via personal check, but with a waiting period most of the time then). Saying “paying cash” at a dealership means “not financing the vehicle.”

I’m not saying it’s not possible to use paper currency, I’ve done it myself. For anything of value though, you’ll generally get a less enthused recipient (as they’ll have hassles depositing it), not to mention the hassle you’ll get just to withdraw the money. As an example in the US, withdrawing over $10k in cash requires filling out paperwork. Withdrawing much larger amounts will generally involve even more scrutiny. Trying to break up the withdrawals to stay under $10k will very likely set off red flags with the bank and lead to inquiries from their compliance department at best (usually much worse).

The beauty of cash is that everyone knows "it's good" (ignoring counterfeiting for the moment). There's no "stop payment" on cash.

If I'm buying a car from a dealership, ACH/e-check or regular check is fine. If I'm buying a classic car or a boat from a private seller on a weekend, cash is still king. A dealership may prefer a check over cash, but a private seller who is on the fence about taking your semi-lowball offer is often somewhat motivated by seeing physical cash and imagining (even if subconsciously) having the cash and being done with the transaction.

Physical cash's non-recourse is a security problem for theft, of course.

Try going and depositing $50k in cash at a US bank (let alone orders of magnitude more) and tell me it was a pleasurable experience. As someone who’s withdrawn and deposited multiple large amounts of cash (largest being in 7 figures range), I can say it’s a real pain.

There's no waiting period if you pay by check. (Yes, real world personal experience.) Don't forget they're happy to let it go with just a promise to pay later.

I’ve paid by personal check before too without a waiting period, but I also have first hand knowledge that it’s not the norm, at some dealerships anyway. Obviously every place will likely be somewhat different.

> What if you wanted to buy a $25,000 car in cash from a dealership? That's not intentionally avoiding taxes. It's trying to get a better deal.

Eh? The normal way you get a better deal by paying upfront is by avoiding the financing costs or convincing them that you're closing the deal immediately - although sometimes the financing makes the dealership money at the expense of the manufacturer, so it could go either way.

All other possible ways of getting a discount for cash involve either tax evasion or fraud (e.g. salesperson gives you 5% off, writes down 10% off in the records and pockets the remaining money).

> It's not unreasonable to want to avoid keeping a lot of money in a checking account in the US.

The bank is insured, while you're not, and at risk of being held up at gunpoint by robbers or the police. Keeping a large amount of physical cash lying around incurs security costs and risks.

> What if you wanted to buy a $25,000 car in cash from a dealership?

A Dealership in America is never going to say No to an actual buyer, but they'll encourage you to finance (that's where they make their profit) or bring a check (large amounts of physical currency and filing Suspicious Transaction Reports are annoying).

Only private sellers want actual cash because our financial system exposes the recipients of any other form of payment to too much fraud risk.

Why would the dealership offer a better deal for cash payment than for s check/bank transfer, unless they want to underreport the sale price and the taxes owed?

Not paying a middleman a percentage of the transaction would have some value to it.

A check would likely be the same deal as cash. But there's no incentive to keep that amount of money sitting around in a checking account.

I don't think a dealership would try to under report the transaction for tax evasion purposes. There's too much risk. The customer will get a receipt for the real amount they paid, and it's also very possible the customer will report the transaction on their taxes as a business write off.

> I don't think a dealership would try to under report the transaction for tax evasion purposes.

Ah yes, the famed honor and integrity that the car dealership profession is known for.

> customer will report the transaction on their taxes as a business write off

Businesses don't do this. Unless they're money laundering fronts, businesses don't buy stuff in actual physical cash unless they have to, and they know that any cash discount would be from under-reporting the sales tax and that recording the transaction would be bad for both sides.

I take it you haven't done any home remodeling work lately? Businesses like plumbers _love_ cash, in the sort of amounts under discussion. Thinking it doesn't happen is just bizarre.

That's not paying the business, that's paying the person - it's exactly the same thing one step back. That cash won't appear in their business accounts. The whole purpose of paying them cash is to enable their tax evasion.

Simply false. In every case of my personal knowledge, and there are very many, it has been to protect the right to privacy, and no taxes have been evaded. I find use of cash in all amounts to be increasing as surveillance increases.

> Businesses don't do this. Unless they're money laundering fronts, businesses don't buy stuff in actual physical cash unless they have to, and they know that any cash discount would be from under-reporting the sales tax and that recording the transaction would be bad for both sides.

There's nothing wrong with buying computer parts with cash for your business and then writing it off. I do it whenever I'm in a pinch and want something "right now" instead of ordering it online and waiting for shipping. A store will give you a receipt.

I choose to use cash whenever possible to purchase small and large things because I don't like the idea of banks and other payment providers profiting from me without sharing those profits.

Unfortunately my business involves accepting money digitally, but I say it's unfortunate not because I'm trying to cheat any systems. It's because I'm forced to allow banks and other entities to harvest my private financial data and leverage my money for profit, and the alternative of not doing that is worse (ie., I personally accept it instead of being unemployed and homeless).

> Businesses don't do this.

My old bar owner had no option but to pay the liquor distributor in cash (for various reasons) with both parties having no intention to engage in tax evasion.

Well, maybe the bar owner was but I believe liquor receivables were how the tax man determined if he was under reporting income so his books had to align with the distributor.

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