# The IRS may crackdown on Uber drivers unpaid taxes



## BurgerTiime (Jun 22, 2015)

https://skift.com/2017/07/21/irs-airbnb-host-uber-income-taxes-payments/








"That's going to raise a ton of money," said Caroline Bruckner, managing director of American University's Kogod Tax Policy Center in Washington. Billions of dollars in taxable income are probably going unreported every year, Bruckner wrote in a report last year. Those uncollected taxes will probably only increase as the number of so-called platform economy workers is expected to double by 2020 to about 7 million, the study warned. "This is easily a multibillion-dollar bill," Bruckner said.

To be sure, that's only a fraction of the multitrillion-dollar tax cuts that congressional leaders and Trump administration officials are considering. Still, as lawmakers seek to avoid adding to the deficit, every little bit helps.

Thune's proposal is under serious consideration and has received a detailed examination from the Joint Committee on Taxation, according to two sources familiar with the discussions. The JCT, which is responsible for evaluating the cost of tax legislation, is eager to tackle issues related to independent contractors, one of the people said.

"It's a small piece but something that could very well fit nicely in a tax reform package," said Dean Zerbe, a former senior counsel to the Senate Finance Committee, who hasn't been involved in the discussions.

Companies in the sharing economy - such as firms that provide home repairs and food deliveries - link buyers with workers who the companies label as independent contractors rather than formal employees. Because the companies process payments, IRS rules say they only need to report revenue exceeding the $20,000 threshold. The rule applies only to companies that get paid by credit card.

"My legislation would provide clear rules so these freelance-style workers can work as independent contractors with the peace of mind that their tax status will be respected by the IRS," Thune said in a statement. His office declined to comment further.

*AIRBNB HOSTS*
Uber Technologies Inc. reports drivers' income to the IRS and the drivers themselves, regardless of the amount earned. Lyft Inc. does so when gross income exceeds $600 annually. Uber didn't respond to requests for comment. Spokeswomen for Lyft and Etsy declined to comment on Thune's proposal.

"While we're evaluating this proposal, we have always made it clear to every Airbnb host that they must pay taxes," said Nick Papas, a spokesman for the home-rental company. "We regularly communicate with our hosts to remind them about tax rules and have a dedicated section on our website where hosts can get all the information they need to meet their obligations."

Contractors are generally responsible for paying taxes out of their own pockets, but Thune's bill would also require sharing economy companies to withhold 5 percent of contractors' payments - up to $20,000 - and deposit those payments with the IRS. The funds would be treated like an estimated tax payment by the company.

Adapting to the bill's requirements would not "be a significant issue at all" for the companies, said Arun Sundararajan, a professor at New York University's Stern School of Business and author of "The Sharing Economy."

*'TAX PRICE'*
About 60 percent of 518 sharing economy workers surveyed in 2016 said they didn't receive the forms that would notify the IRS of their earnings, according to Bruckner's report.

"It's arbitrary and inefficient to legislate that a guy who drives a taxi for a taxi company faces different rules, different benefit requirements, has taxes on wages withheld than a guy who does an identical job but whose employer gets to claim that he's a contractor," said Adam Looney, a senior fellow at the Brookings Institution.

Another provision in Thune's proposal would ease the reporting requirements for more traditional independent-contractor relationships. Businesses that hire those workers directly - such as FedEx Corp. - would only have to report payments that total more than $1,000 a year, instead of $600 as the current rule requires. That change could reduce some of the revenue generated by the lower threshold for independent contractors in the sharing economy, Zerbe said.

"FedEx supports legislative efforts that bring greater certainty to businesses large and small and that encourage entrepreneurial pursuits - such as small business ownership - that have proven to be the growth engine of the economy," Jack Pfeiffer, a FedEx spokesman, said in an email.

Companies "want clarity without paying too much of a tax price," said George Yin, a former Senate Finance Committee tax counsel. "That's part of the balance of the bill."


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## effortx2 (Jun 21, 2017)

To be clear, this seems to apply to drivers who don't pay taxes at all, vs. ones who pay taxes (including the gig workers who file taxes and then eventually go onto the IRS montly payment plan, which may include late penalties).


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## BurgerTiime (Jun 22, 2015)

effortx2 said:


> To be clear, this seems to apply to drivers who don't pay taxes at all, vs. ones who pay taxes (including the gig workers who file taxes and then eventually go onto the IRS montly payment plan, which may include late penalties).


Of course this pertains to non-paying tax drivers! This could be devastating to Uber and Lyft. The vast majority of driver do this part time. Most are avoiding detection, avoiding child support, are collecting social security and have an illegal driver profile. This would open a whole can of worms and be very problematic for drivers and any gig-economy job. This potentially could cost Uber and Lyft 10's of thousands of drivers to leave the platform.


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## effortx2 (Jun 21, 2017)

Yeah they said it could be well into multibillions of dollars. Very interesting. At the very least, it could make the gigjob scene more gig-like and less like some nightmarish post-apocalyptic future.


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## Hogg (Feb 7, 2016)

As far as I can tell no rideshare driver should owe taxes, the rates we get paid are generally less than the IRS allows you to deduct. There's hardly any money to be gained by going after them, maybe if you only drive during surge or something, but you still have a ton of dead miles you aren't getting paid for but you can still deduct.


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## BurgerTiime (Jun 22, 2015)

Hogg said:


> As far as I can tell no rideshare driver should owe taxes, the rates we get paid are generally less than the IRS allows you to deduct. There's hardly any money to be gained by going after them, maybe if you only drive during surge or something, but you still have a ton of dead miles you aren't getting paid for but you can still deduct.


Lol good one. Yeah in that case everything I do is rideshare related and I should never have to pay taxes! I'm on your team


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## Amsoil Uber Connect (Jan 14, 2015)

Ok b4 I read the rest, as always,,,.... Define the word Income and the sources from which it is derived. As listed in the Code of Federal Regulations.

Kunckle heads are so far out of touch with with ride share drivers.

What they should be doing is change the labor laws so the drivers can earn a living. That way they would garanteed some revenue once the 1040 is filed. well sort of.

Then again they could cut the per mile deduction in half to .26 a mile in stead of .54.

And that is the other thing about doing Flex. At 18hr and putting half the miles average on your car. One is surly going to owe something unless one can offset enough miles with uber / lyft miles.


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## UberProphet? (Dec 24, 2014)

Hogg said:


> As far as I can tell no rideshare driver should owe taxes, the rates we get paid are generally less than the IRS allows you to deduct. There's hardly any money to be gained by going after them, maybe if you only drive during surge or something, but you still have a ton of dead miles you aren't getting paid for but you can still deduct.


Beware the rule that says a business without a reasonable expectation of profit is a HOBBY.

The rule on hobbies is that revenues are taxable and expenses are not deductible. For example, say your wife is involved in show jumping as a hobby. her expenses are NOT deductible but that $5,000 prize is treated as income.

Thus, any fare below $1.08 per mile to the driver is not able to make any profit, let alone a substantial one. This is the real danger from the IRS.


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## TwoFiddyMile (Mar 13, 2015)

IRS wont get a dime.
At a deduction of $0.54 per mile anyone with an IQ of 86 and a calculator can not owe taxes.
I think this move is actually designed to go after gig corps like Uber and Postmates to make sure the 1099 paperwork is being filled and sent out.
How did the feds shut down Al Capone?
Back taxes.


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## Jesusdrivesuber (Jan 5, 2017)

Do these people actually believe any IC working for Uber makes more than what he spends?

What a pointless waste of time, I blame uber for fake reporting their so called "gross earnings" to evade taxes themselves and pocket money they shouldn't.


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## effortx2 (Jun 21, 2017)

BurgerTiime said:


> Of course this pertains to non-paying tax drivers! This could be devastating to Uber and Lyft. The vast majority of driver do this part time. Most are avoiding detection, avoiding child support, are collecting social security and have an illegal driver profile. This would open a whole can of worms and be very problematic for drivers and any gig-economy job. This potentially could cost Uber and Lyft 10's of thousands of drivers to leave the platform.


I wonder if it's about getting undocumented drivers to pay taxes. As somebody mentioned, Flex could be a cash cow if the drivers are forced to pay their taxes. That could push many more Flex drivers to do Uber as well for the massive business expenses Uber generates.


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## RamzFanz (Jan 31, 2015)

BurgerTiime said:


> Of course this pertains to non-paying tax drivers! This could be devastating to Uber and Lyft. The vast majority of driver do this part time. Most are avoiding detection, avoiding child support, are collecting social security and have an illegal driver profile. This would open a whole can of worms and be very problematic for drivers and any gig-economy job. This potentially could cost Uber and Lyft 10's of thousands of drivers to leave the platform.


Annnnnd, you just made that up.



Jesusdrivesuber said:


> Do these people actually believe any IC working for Uber makes more than what he spends?
> 
> What a pointless waste of time, I blame uber for fake reporting their so called "gross earnings" to evade taxes themselves and pocket money they shouldn't.


I make more than I spend. Quite a bit more. Why else would I do this?

I would love to hear how Uber is "fake" reporting their gross earnings to "evade" taxes.


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## Mars Troll Number 4 (Oct 30, 2015)

The standard mileage rate isn't meant for what uber and it's drivers are using it for, that's the problem.


99.9999% of the time employees fall under 2 categories.

1. They almost never, or never need to drive on the job. very rarely they are comped for a few miles here and there, or an occasional out of town business trip.

2. they drive so fricken much that it's cheaper to issue them a company car/gas card.



People get issued company cars because after so many thousands of miles a year it's just plain cheaper, it's why service technicians and construction workers get issued company cars all the time.


The standard mileage rate is good for comping employees who very rarely occasionally use their own vehicle. It's a great deduction for small business owners who need every deduction they can get. It's horrible for a mega company with a million employees nationwide.


It's being used by uber drivers, because that's what it's there for. No one has ever done a cab company (Yes uber is a cab company) where people are using their own cars and getting paid so little for it.


When I was independent i was charging $2.40 a mile, and deducting 54-57c a mile. With about 35% paid miles... still came out to about $1.00 in taxable profit for every mile I drove.

The SRM was meant as a... catch all for fairly comping employees to drive around the block every once in a while, it wasn't meant for 200+ miles a day 300+ days a year.


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## Jesusdrivesuber (Jan 5, 2017)

RamzFanz said:


> I make more than I spend. Quite a bit more. Why else would I do this?


I came negative last tax year, considering all the spendings, if you had to pay or showed otherwise, your tax guy sucked.



RamzFanz said:


> I would love to hear how Uber is "fake" reporting their gross earnings to "evade" taxes.


They overestimated the gross income inserting fees and numbers we never got to see, this causes such confusion for most drivers that they end up paying Uber's side or deducting for them.


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## Trafficat (Dec 19, 2016)

UberProphet? said:


> Beware the rule that says a business without a reasonable expectation of profit is a HOBBY.
> 
> The rule on hobbies is that revenues are taxable and expenses are not deductible. For example, say your wife is involved in show jumping as a hobby. her expenses are NOT deductible but that $5,000 prize is treated as income.
> 
> Thus, any fare below $1.08 per mile to the driver is not able to make any profit, let alone a substantial one. This is the real danger from the IRS.


Not quite:
https://www.irs.gov/uac/newsroom/five-basic-tax-tips-about-hobbies

This says you can deduct expenses from hobbies if you itemize expenses, but you can only deduct as much expense as revenue. If Uber is a hobby then you probably can't do standard mileage deduction though and then you'd therefore show significant profits, which would therefore jeapordize the hobby status.

According to the IRS, here is how you determine if something is a hobby:
https://www.irs.gov/help-resources/...ther-business/income-expenses/income-expenses



> Whether you carry on the activity in a businesslike manner.
> Whether the time and effort you put into the activity indicate you intend to make it profitable.
> Whether you depend on income from the activity for your livelihood.
> Whether your losses are due to circumstances beyond your control (or are normal in the startup phase of your type of business).
> ...


Business like manner- Check
Time and effort- Check
Depend on income- Check
Losses beyond control or normal in the startup phase- Well, if my goal is to start as uberX and save up for an XL or Select car that is more profitable... Also Uber not showing us destinations means a lot of times the loss is beyond our control.
Change methods- Check, surge hunting etc.
Knowledge needed- Huh?
Made a profit in the past- Meh... plus you make a real profit even if not an IRS profit. That may count for evidence of business to IRS.
Profit in some years- Might actually turn a tiny profit!
Future profit from appreciation of assets- Uh... no.

I think there is a good chance IRS would say it is not a hobby even if you get losses for many years in a row.


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## RamzFanz (Jan 31, 2015)

Jesusdrivesuber said:


> I came negative last tax year, considering all the spendings, if you had to pay or showed otherwise, your tax guy sucked.


Deductions are not "spendings", they are deductions. What you deduct and what you actually spent are two different things.



Jesusdrivesuber said:


> They overestimated the gross income inserting fees and numbers we never got to see, this causes such confusion for most drivers that they end up paying Uber's side or deducting for them.


It's how it's always done. I've been a contractor for most of my life. All 1099s are this way if you are paying the issuer fees. It's on the driver to do his taxes correctly. Uber GAVE you the fee numbers and all other deductions on their summary so you would know what fees to deduct. They are not required to do that.

And no, that in no way means Uber didn't report the fees as income. It means the taxes may have been paid twice if drivers didn't do their homework.


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## Mars Troll Number 4 (Oct 30, 2015)

RamzFanz said:


> Deductions are not "spendings", they are deductions. What you deduct and what you actually spent are two different things.
> 
> It's how it's always done. I've been a contractor for most of my life. All 1099s are this way if you are paying the issuer fees. It's on the driver to do his taxes correctly. Uber GAVE you the fee numbers and all other deductions on their summary so you would know what fees to deduct. They are not required to do that.
> 
> And no, that in no way means Uber didn't report the fees as income. It means the taxes may have been paid twice if drivers didn't do their homework.


With the cab company i delt with last year they reported my credit card revenue and that's it.

$30,000ish in credit card revenue, $15,000 in deductible expenses, plus another 15,000 in cash revenue that i had to report myself,

Leaving me with the tax bill to pay on $30,000 in income. (ehh.. there's totally not any unreported cash income on top of that)


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