For the past several years I’ve spent a lot of time on tax issues – federal, state and local, for the gig economy. While at the ABA Tax Section meeting in DC, I co-presented on this topic and participated in a podcast on the topic for Bloomberg Tax. Here is the link.
A few reform suggestions I have:
- Remove the de minimis filing threshold for From 1099-K for third-party settlement organizations such as Uber, Lyft, Airbnb and Paypal. This ensures everyone receiving a payment from someone else through these platforms gets a reporting form. That makes it easier for tax compliance for the gig workers because the document can feed into their tax prep software. Yes, they need to make adjustments to the gross receipts shown on the 1099-K but the platforms can help by making those adjustments (such as for the platform’s fees, returns, etc) easy to find on the taxpayer’s platform account. Yes, this causes a hassle for non-business folks selling household junk on eBay at a loss, but the IRS should create a schedule for reconciling reporting forms. This will help all taxpayers and the IRS, well beyond the eBay example.
- Congress needs to clarify worker classification rules and ideally, work with states to have just one classification system for all laws. It is crazy that within a state or a federal legal system or between federal and state laws, a worker might be a contractor for one law but an employee for another.
- Laws need to change to make it easier for gig workers to save for retirement and other needs. Tax dollars benefiting employee fringe benefits (including the exclusion for employer-provided health insurance) and retirement benefits can be reduced to free up funds to benefit all workers whether they are employee or contractors.
Annette Nellen, CPA, Esq., is a professor in and director of San Jose State University’s graduate tax program (MST), teaching courses in tax research, accounting methods, property transactions, state taxation, employment tax, ethics, tax policy, tax reform, and high technology tax issues.
Annette is the immediate past chair of the AICPA Individual Taxation Technical Resource Panel and a current member of the Executive Committee of the Tax Section of the California Bar. Annette is a regular contributor to the AICPA Tax Insider and Corporate Taxation Insider e-newsletters. She is the author of BNA Portfolio #533, Amortization of Intangibles.
Annette has testified before the House Ways & Means Committee, Senate Finance Committee, California Assembly Revenue & Taxation Committee, and tax reform commissions and committees on various aspects of federal and state tax reform.
Prior to joining SJSU, Annette was with Ernst & Young and the IRS.
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