Technically, yes, you are supposed to pay taxes for income received from these types of machines. On a more practical matter, it s very difficult for the government to enforce transactions that are purely cash. However, as a former auditor, here s what the IRS might do if they suspect that a vending machine operator is cheating.1. They ll examine bank deposits to find out if there is a lot of money being deposited that isn t being reported on your company s books.2. They ll examine your purchase history of items you stock in your vending machines. If they see that you purchase and go through much more inventory than your income records support, they may reach the conclusion that you re hiding cash.3. They ll take a look at your sources of income and see if it matches your lifestyle. If you regularly report a very low income but live in an exclusive neighborhood and drive an expensive car, they ll dig into your bank records to find out what s going on.One more thing - unlike the criminal justice system, in the tax court, the burden of proof is on the taxpayer. In other words, the IRS will make an assertion about your guilt, and they have no responsibility to prove that they re right - it s your responsibility to prove that they re wrong! This makes it really tough for a tax cheat to weasel out of paying their fair share of taxes.
I would imagine that the people and companies that rent those machines pay a tax to have them there and get a percentage of the money that they bring in. OR The people who own the machines may pay walmart or a mall to let them have them set up in their store in that case I would guess that the only taxes they pay is for the product in the machine.
