January 15, 2021 - Douglas Myser

Improving gig worker tax compliance. Gig work is certain activity you do to earn income, often through an app or website(digital platform), like Drive a car for booked rides or deliveries: rent out properties or part of it: run errands or complete tasks: sell goods online: rent equipment: provide creative or professional services: provide other temporary or demand or freelance work. The digital platforms that are used to assist in such work can be ridesharing services: delivery services: crafts and handmade item marketplaces: on demand labor and repair services: or property and space rentals. As the platform workforce grows, this issue could pose problems for workers and the Internal Revenue Service. The U.S. Government Accountability Office has submitted seven recommendations to the IRS in order to help increase worker awareness of their tax responsibilities and improve their ability to comply with them.  Improving gig worker tax compliance.

Change schedule C or Form 1099 NFC, so that taxpayers can identify if they received payment for platform work. Develop a process for monitoring feedback on its communications efforts and products tailored for platform workers, which should include documenting and evaluating feedback. Clarify the instructions and publications for Forms 1040 and 1099-K by adding plain language to clearly indicate to platform workers that the forms apply to them. Amend the 6050W (1) tie-breaker rule that applies to duplicative reporting requirements so that payments made through a third party payment network are reportable under Section 6-41 (2), rather than under Section 6050(W).

Determine what thresholds would be the most appropriate for payment information reporting and, if warranted, recommend that Congress adjust the threshold. Implement, voluntary withholding for companies making payments for services to platform workers and other independent contractors who choose to participate. Assess the impact of withholding that is voluntary for companies, since implemented, and if warranted, work with the Secretary of the Treasury on a proposal to Congress that would require TPSO's to offer tax withholding to platform workers and other independent contractors who choose to participate. We work with many Gig Workers who do not keep good tax records and end up with tax debt, only to need tax resolution services. These recommendations are a good start to helping those in need.