What would cause the IRS to target income from Uber, AIRBnB and other sharing forms of income? American University in Washington D. C. published a recent study that notes 2.5 million Americans earn income from Etsy, Uber, AIRBnB and other sources of “sharing” that presently go unreported. The IRS realizes this is tremendous income stream that would generate a substantial flow of taxes. Income from these sources often fails to be reported as there are no present systems designed to capture the transactions, apply taxation and report both to the federal agency.
What would be required for the IRS to target income from “sharing” sources? Evidently, the report believes there is confusion surrounding the requirement to produce 1099-K if they produce more than $20,000 in a calendar year through 200 or more credit card transactions. Businesses are also required to issue a 1099-MISC if they issue payment of $600 or more to independent contractors, freelance artists or workers or other small businesses. The IRS is concerned that many “sharing” companies do not produce the required 1099’s and that US taxpayers are much less likely to report income when it is not formally reported to the government. The IRS estimates that the loss to the US Treasury is more than $1 Billion.
The IRS recently unveiled a website that specifically targets the “sharing” economy. The goal of the IRS: ensure that participants in UBER, AIRBnB and other sharing economies pay their fair share of taxes.
The website is http://www.irs.gov/businesses/small-businesses-self-employed/sharing-economy-tax-center
The new site states “if you receive income from a sharing economy activity, it’s generally taxable” (regardless of whether you receive reporting forms such as a 1099 or W-2). “This is true even if you do it as a side job or just as a part time business and even if you are paid in cash,” the site goes on to say. “On the other hand, depending upon the circumstances, some or all of your business expenses may be deductible, subject to the normal tax limitations and rules.” In a statement on the matter, IRS Commissioner John Koskinen said: “This rapidly evolving area often presents new challenges for people engaged in these economic activities, whether they are renting a room or providing a ride.”
If you are an independent contractor or taking part in the “sharing” economy or are concerned about plans of the the IRS to target income from UBER, AIRBnB or other “sharing” income sources visit the site above. If you are contacted by the IRS for an audit regarding sharing income we invite you to call for a free consultation at 866-631-3470.