Taxing the Sharing Economy

• In Event: Big Data, Taxation, Future education & Revenue Recognition

Abstract

The past decade has seen unprecedented growth in peer-to-peer commerce, also referred to as the sharing economy. This paper summarizes the taxation issues faced by participants in the sharing economy by examining the federal, state, and local tax laws affecting internet platforms such as Airbnb and Uber and the hosts and service-providers using such platforms to acquire customers; and by exploring the unique challenges to taxing authorities in administering and enforcing these tax laws. The conclusion is that clearer guidance as to the distinctions between classifications for rental versus business activities, employee versus self-employed status, and merchant-acquiring versus third-party settlement organizations will resolve much of the confusion and facilitate better tax compliance. Furthermore, the provision of safe harbors and standardized expense rates could further improve the efficiency of compliance as well as administration and enforcement.

Author

• Mary Ann Hofmann, Appalachian State University