[RobFromGa]

Fair Tax allows business expenses to be paid with untaxed dollars. Business purchases are not taxed under fair tax at all.

I understand this. How will they be able to enforce what is and what is not a business expense?

[Principled]

How will they be able to enforce what is and what is not a business expense?

THe same way they do now. How many folks do you know that have a fraudulent Sales Tax Exempt card? Those sales tax guys don't mess around. Sure it can be done. It can be done now. There will always be cheats.

Blip on compliance. Consider the source - but consider the information too.

[rwrcpa1]

I understand this. How will they be able to enforce what is and what is not a business expense?

I believe the burden of proof will be on YOU, just like it is now.

[Ditto]

How will they be able to enforce what is and what is not a business expense?

Probably about the way they do it now, which for small business is not very good.

The fundamental criteria is if the purchase is for final consumption, or if the expense is for purchase/resale.

Example: Coffee for your mess at Rob's Software vs. coffee for Joe's Restaurant.

Of course, right now, you could buy an extra can every week and take it home while not declaring it's value as compensation. Right now, Joe can do the same while still claiming it as a business expense.

The Fair Tax will not change that kind of thing. Big time abusers will be just as likely to raise red flags during an audit under either system.