I've been thinking about one of the more basic 'axioms' we and the providers treat as so important for their safety: the premise that if the money is truly a gift, then whatever else happens between 2 consenting adults isn't prostitution. (I know, I'm oversimplyfing the court cases that have said this, but that's the core of it.) That, of course, drives the need for the open white envelope with the money displayed plus absolutely no discussion of money or services 'in return for' (because to make it truly a gift, it can't be given 'in return for' anything or even expecting something in return.  So far so good and I'm all for it. (I can hear the chorus "We already know all this", but bear with me.  But if the gift is truly a gift, as a matter of federal tax law (and I think the law in most all states), the gift is NOT taxable to the person receiving the gift. And under the federal estate and gift tax laws, any of us can give away up to $13,000 per person per year plus $5 million (starting this year) over a lifetime. Above those limits, the person GIVING the gift pays the tax, but never the person GETTING the gift. Again, many of you already know that, but bear with me one more time.  Now for the question: are most providers really treating these gifts as gifts and not paying income tax?  If so, are they at any risk? (Tax lawyers, please weigh in.)  And suppose the white-envelope 'gift' IS later reported as income for tax purposes,
by doing so, is the provider creating after-the-fact proof that what she took as a gift in the first place WASN'T a gift but was in fact 'for services rendered (because if it was really a gift, young lady, why did you then feel the need to file a state or federal tax return reporting the 'gifted' amount as income?  Doubt that LE would retroactively ever stitch the two together, but you never know. So, a question: do the lovely providers out there actually treat the gifts as gifts and not pay taxes on that hard-earned money (no sarcasm intended--I know it's a tough business)?  If they don't, are they at risk from an income tax liability standpoint? (I wouldn't think so---a gift is a gift is a non-taxable to the recipient gift--but perhaps the tax lawyers should weigh in again). I myself am a retired lawyer who was in general practice. I have lots of respect for what the providers do and would hate to see them pay taxes if they don't owe 'em, or get in trouble for not paying taxes if they do and, finally, would hate to see them walk into a 'retroactive trap' with state/county/city LE if they pay taxes they don't owe. Anyone, espec. tax attys., care to weigh in?

unfortunately I have nothing useful to add.  Lol.

Bottom line.... if you don't pay taxes, regardless of where it came from, you're gonna have a hell of a time trying to live life normally.... ie.try getting a car loan w/no proof of income... try getting a landlord to let you sign a lease w/no taxes to show them., etc, etc.  Anyone who doesn't file taxes is setting themselves up for disaster.. maybe not now, but eventually, it WILL come back to bite you in the a**.  Just my .02

as opposed to a fee for a service.

You would have to show that giving a gift to the person was reasonable on the basis of some kind of social relationship that transcended the client/provider relationship, etc.

There could be circumstances where the provider and client know each other so welll over a long period of time that such an argument could prevail, but that's about 0.01% of cases, so not worth considering here.

So, the story that bests suits reality is that the money was exchanged in return for time spent with the client (Which makes it taxable income.), and not for sex.  Which argument is already a difficult sell.

Bottom line:  Pay the taxes gals and avoid a felony.

(still not a lawyer, or an accountant for that matter)

You can call it a "gift," but the name you give it is not binding on the police, the IRS, the tax board, or anything else.  Likewise, the fact that it comes in an envelope rather than a check (or what ever) has not impact.

If your website says, "300 roses," that is what you charge, and anyone concerned knows that, from client to cop.  Think of it this way:  you say 300 roses, and a cop shows up with $300 in an envelope.  You see the envelope, but no roses, but you still let him in.  Everyone knows it is code, and the code doesn't matter.

As a CPA, I would say it is income.  I have worked with some providers and I suggest claiming the amounts as income.  Since you would be self-employed, you would have business expenses in addition to the income.  The IRS uses a principle called "substance over form", and the substance would be income.

No question the IRS or a US court would consider it income. It's a fee performed for a service. The IRS estimates that it collects 85% of taxes if everyone declared all income and were honest. It comes up with escort services because they have records showing appointments.

I agree 100% that at tax time, it should be treated as income.  What I was pointing out, however, was that the insistence by the providers that each 'donation' by each hobbiest be treated as a gift contradicts the notion that each payment is payment for a service and therefore NOT a non-taxable gift.  But if that 'contradiction' helps even one provider avoid an arrest, I understand fully.