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Tag Archive for Gig Economy Tax Compliance

Gig Worker Compliance Challenges Including AB 5

Annette Nellen On Gig Economy

On 10/1/19, the Franchise Tax Board (FTB) held a meeting, chaired by State Controller Betty Yee, focused on compliance for gig workers. You can see by the agenda that many topics were covered including background data on understanding the gig economy which for the meeting meant those finding income opportunities from web platforms such as Uber, Postmates, TaskRabbit or hundreds of other similar sites.

I was honored to participate on a panel on Challenges and Opportunities for Tax Compliance in a Gig Economy. A few points I offered:

  • The issue of worker classification is decades old and a big issue that Congress left unaddressed since at least 1978 with “Section 530” of the Revenue Act of 1978. This provision results in some workers being contractors for purposes of the employer’s employment taxes, but employees for other purposes including for the worker’s tax obligations. It is unfortunate that the multitude of classification schemes among federal and state laws has been allowed to continue for so long. I was hoping that the emergence of the platform work arrangement might finally be a time to look at this broken system, but apparently not yet. Instead we are getting more variations (such as California’s AB 5 making many workers employees where other states enacted laws in 2018 clarifying that the platform workers were contractors).  The hearing didn’t delve into the possibility of the need for a third category of work arrangement as this was focused on compliance rather than policy changes via legislation.
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