SINCE the bank can charge you $5 for noncustomer check cashing fees or not charge you they can decide if and or when they do this.
That's so true that it's a pointless tautology.
whoever doe's get charged has to claim this $100 as income.
That's not true. Let's say grandma writes a check to her grandson as a birthday present. The grandson does not need to declare the $100 as income.
If the check represents income to the payee (under the Internal Revenue Code), then the payee must declare it as such regardless of any check cashing transaction and regardless of whether the payee receives a receipt for any check cashing fee.
Now the person agrees to this $5 chage and gets back $95. Since the check is for $100 that person pays taxes on $100 yet the bank gets $5 the books remain $100 in $100 Boom the receipt, Who can prove what and why or when.
The highlighted portion of this quote is a grammatical mess, and I'm not really sure what you're saying or who's trying to prove something. If a bank charges a $5 fee on the $100 check cashed, it will book $5 of income. It's as simple as that.
They don't need to report income since $100 came in and $100 went out.
Assuming "they" is the bank, it most certainly
does need to report income. Also, it was $100 in and $95 out (unless you're suggesting the teller is pocketing the fee, which is a whole different issue).
Unless you think the IRS will take your word of how many times you can deduct this without proof.
I'm going to be blunt here. If you are a business owner and routinely receive checks to pay for whatever products or services you sell and are cashing every check you receive at a bank where you don't have an account, you are a moron.
Legitimate businesses maintain bank accounts and deposit checks into those accounts.
As far as the IRS, you are required to file "proof" of almost nothing when filing your tax return. You only need to provide
evidence if you get audited. If you claim deductions for massive amounts of bank fees without having evidence that you paid those fees (beyond your word), then yeah, you are probably going to get assessed additional taxes, etc. But this gets back to the prior paragraph. The way to avoid this quandary is to open a bank account and deposit the checks.
Bottom line: if you choose to conduct your business in an unconventional way, then you accept the risks that come with your choices.