NTA: Sharing Economy Participants Lack Adequate IRS Guidance

In her 2017 Annual Report to Congress, National Taxpayer Advocate (NTA) Nina Olson characterizes the IRS’ efforts to reach out to participants in the sharing or gig economy as a “Most Serious Problem.” She examines some of the challenges facing the sharing economy and how the IRS might address these in her blog post.

There are typically three parties involved in a sharing economy transaction: service providers (the freelancers who provide the goods or services), service recipients (the consumers of such good or services), and service coordinators (the third-party platforms that facilitate the transactions).

Ms. Olson notes that while nearly a quarter of the U.S. population earned money from the sharing economy, approximately 85 percent of service providers earn less than $500 per month from their gigs. When taxpayers take on multiple gigs to help make ends meet and receive information reporting from multiple service coordinators, it makes tax compliance more difficult. There are several ways the IRS can provide improved taxpayer service to participants in the sharing economy:

  • Repackage existing content, such as Publication 527, Residential Rental Property, and Publication 463, Travel, Entertainment, Gift, and Car Expenses, and tailor it for sharing economy service providers;
  • Develop a one-page brochure or flyer that touches on some very basic points relevant to service providers;
  • Take an active role in sharing economy online discussion forums; and
  • Designate liaisons to monitor sharing economy online forums to identify emerging issues.