One of the threads we continue to explore in this blog is the growth of the sharing economy and its impact on taxes.
For example, in our November 1 post, we updated you on Airbnb, whose hosts receive a 1099 form from the company to help track their income. More recently, in our December 22 post, we wrote about how the ride-sharing companies Lyft and Uber take different approaches to Form 1099-K.
In this two-part post, we will take note of a recent effort to quantify the remarkable growth of the peer-to-peer economy. We will also discuss some of the emerging legal issues.
The growth in the sharing economy has been so rapid that Time magazine refers to it as a revolution.
And indeed evidence of the rapid rise of sharing platforms is not hard to find. Uber, for one, has grown faster than any previous startup of any kind. It has only been around for a few years, but is already worth upwards of $60 billion.
Another big number is this: more than 90 million. According to a recent poll reported in Time, that is number of Americans who have already participated in the sharing economy, either as providers or consumers.
The tax consequences and potential legal issues involved in this social shift are profound. After all, traditional employers must still withhold payroll taxes from employees and make required payments to the government. These employers must also comply with various requirements regarding unemployment taxes, workers' compensation and so on, as well as labor laws.
For companies like Uber, however, payroll taxes are not part of their profile. But there are many legal issues lurking in the gig economy, and we will explore some of those in part two of this post.