Tax Issues in the Sharing Economy: Implications for Workers
Forthcoming, Cambridge Handbook on the Law of the Sharing Economy (Nestor M. Davidson, Michele Finck & John J. Infranca, eds.)
18 Pages Posted: 10 May 2018 Last revised: 15 May 2018
Date Written: December 29, 2017
A growing number of individuals now perform work in the sector known as the “sharing economy,” and their participation raises important tax and regulatory questions. In this chapter, we survey some of the key tax issues confronting individuals operating in the sharing economy in the United States. Many of the tax implications that arise in sharing economy work stem from the threshold decision by many platforms to classify such individuals as independent contractors rather than employees. Therefore, we first discuss how the threshold classification decision affects the substantive and compliance-related tax issues faced by individuals operating in the sharing economy. We briefly summarize the doctrinal tax rules governing income taxation of sharing economy participants and discuss some of the compliance challenges experienced by these participants in fulfilling their tax obligations. The chapter then examines tax-related factors (such as lack of withholding) that may affect the labor-supply decisions of sharing economy participants. Finally, we discuss possible reforms that may help alleviate compliance challenges associated with work in this sector or may help these individuals make more informed decisions, and we explore the downsides of such reforms.
Keywords: employee, independent contractor, worker classification, sharing economy, gig economy, Uber, TaskRabbit, taxation, Airbnb, 1099-K
JEL Classification: H2, H20, J20, J01, J08, J21, J22, J23, J24, J38, J40, J48, J68, J70J80, J83, J88, L14, L20, L22
Suggested Citation: Suggested Citation