Others, like the people who sell products on eBay, Etsy, or Facebook, are just regular people trying to make some extra money.
Many may not keep track of how much they have earned or realize that they are subject to tax, in part because they aren’t doing enough to trigger the current tax reporting requirements, the non-partisan Government Accountability Office said in a report last year.
“Platform workers may not receive information about their earnings, which creates compliance issues for them and enforcement challenges for the IRS,” GAO said.
This makes the region conducive to tax evasion.
The issue has been on the radar of lawmakers for several years, although much of the focus has been on competition. proposal by Senate Minority Whip John Thune (RS.D.). He has a more ambitious plan that would address things like rules for classifying workers while imposing more stringent income reporting requirements, although not as stringent as the Democrats are proposing.
Industry lobbyists say they didn’t expect Democrats to brush off Thune’s idea and redirect it for their coronavirus measure.
Said Thune: “I will continue to support a holistic approach to really help workers in the odd-job economy.”
Proposals for fundraising through so-called third-party reports have long been popular with cash-seeking lawmakers because they generate income, but are not tax increases or spending cuts. And the $ 8.4 billion the concert workers proposal raises helps keep Democrats in their $ 1.9 trillion budget for coronavirus relief.
The industry says it does not tolerate tax evasion. But he says Democrats’ threshold for reporting is too low and would affect too many people who only occasionally use their platforms.
The companies say the tax requirements may come as a surprise to many people, who might not understand what is being reported. The IRS form that businesses would use – the 1099K – would show the gross amount of money someone made.
However, that is not necessarily what they should be paying tax on. The tax would only apply to their profits, after deducting their own costs or expenses.
So if someone sold a bike on eBay for $ 800, for example, they would receive a form showing it. But if they had originally paid $ 1,000 for the bike, they probably shouldn’t have the IRS.
“It’s not about getting around tax obligations,” said Katie Vlietstra, vice president of government relations and public affairs at the National Association of Self-Employed Workers.
“A lot of people are tinkering with different ways to get to the next paycheck,” she said.
“And it’s going to be a boost for a whole community of people.”