In this blog post, I will discuss how the IRS has been dealing with a growing sector of our economy called the “sharing” economy (also known as the gig economy). Proponents of the sharing economy believe it promotes marketplace efficiency by enabling individuals to generate revenue from assets while the assets are not being used personally. For example, a vacation home owner may rent out her home while she is not using it. Airbnb (short-term home rentals) and Uber (shared car services) are two of the more prominent companies that facilitate a sharing economy.
I will be speaking, July 19 in Claremont, CA at the Double Tree Hotel at the Inland Empire Chapter of the California Society of Tax Consultants. The topic is “Taxation of the Gig / Sharing Economy”.
The event will be from 7pm to 9pm PST. The event will be broadcast on Facebook Live. For those of you interested in viewing the event please be sure to visit my Facebook page at https://www.facebook.com/AscendBusinessAdvisory/ Read More
I will be speaking, June 6 in Las Vegas at the Gold Coast Hotel and Casino at the California Society of Tax Consultant’s Annual Summer Symposium. The topic is “Taxation of the Gig / Sharing Economy”.
I define the sharing economy broadly as including both sharing assets and one’s time. Four characteristics:
- Monetizing unused time and assets.
- Using technology to match those with resources to those willing to pay for them.
- Providing assets where temporary need exists (such as bike share).
- Operating in the broadest space possible (including digital services provided to a global marketplace).
In September, the IRS created a Sharing Economy Tax Center with links to tax information to help freelancers and those renting property. This center offers general information primarily to help individuals understand related tax matters. But it’s not enough for practitioners, as it doesn’t cover all possible tax issues (such as state and local ones) or provide links to relevant law provisions.
If you’ve ever been picked up by an Uber driver or know someone who’s rented a room through Airbnb, then you are aware of the ‘sharing economy.’
In the past few years, the ‘sharing economy’ has become a targeted focal point for the IRS. Needless to say, they really want their “fair share” of this rapidly growing business segment.
As children we all learn that sharing is a good thing. We shared our candy, lunches, and toys. Yet, when we become adults, sometimes sharing gets reprogrammed out of our systems. Sometimes, those who make it to powerful positions in government are not inclined to share.
The House Small Business Committee held a hearing today (May 24) (part 1 of 2) on “The Sharing Economy: A Taxing Experience or New Entrepreneurs.” Part 2 is scheduled for May 26 with National Taxpayer Advocate Nina Olson speaking. A focal point of the hearing per the posted testimony was difficulties freelancers face in the sharing economy because they don’t fully understand their tax obligations.
We’ve been in the “digital economy” for some time, yet it continues to evolve with new business activities and ways of living. And, we see “old economy” businesses, like Ford Motor, move more into the new economy.
I define the digital economy from the perspective of how people and businesses engage in it:
• Transacting business with virtual currencies, such as Bitcoin;
• Providing digital goods and services; and
• Transacting business enhanced by the Internet, such as finding customers, including Read More
We hear a lot about the sharing economy – making money by sharing something you are not fully using, such as a room in your home, or your entire home or vacation home. Sounds like a good way to make some extra money and perhaps raise your standard of living* (note- the rental income is taxable unless the dwelling is rented out less than 15 days for the year (Section 280A(g)). The federal tax treatment (and state as most states follow the federal income tax rules) can be complicated due to the need to determine which of two rules apply to measure deductible expenses and what to do with any loss generated. If the average rental period is 7 days or less, treatment of any income and loss also depends on whether you materially participate. The income tax rules easily get complex. Read More