Airbnb hosts and Etsy vendors in the US who have previously legally avoided taxes on income from the sharing economy might have to start pay in future, with a Republican Senator proposing lowering the threshhold at which the platform must disclose income about vendors from $20,000 to $1,000.
The number of ‘platform economy’ workers in the US is expected to double by 2020 to about 7 million, so the move could net billions of dollars for the State. The proposal has received a detailed examination from the Joint Committee on Taxation eager to tackle issues related to independent contractors.
Contractors are generally responsible for paying taxes out of their own pockets, but the bill would require sharing economy platforms and companies to withhold 5% of contractors’ payments up to $20,000 and deposit that with the IRS. Uber already reports drivers’ income to the IRS, regardless of the amount earned, and Lyft reports gross annual income above $600.