The IRS has been so slow to adapt to the rapidly emerging peer-to-peer economy that it is likely billions of dollars in taxable income a year are probably going unreported every year, according to a study being delivered to Congress this week.
More than 2.5 million Americans earned income via on-demand platforms like Airbnb Inc., Etsy Inc. and Lyft Inc. in 2014, and the companies generated an estimated $15 billion in revenues. But the companies don’t withhold taxes on the income they pay to people who provide services or sell items via their platforms.
The companies are required to notify the IRS of that income -- and send service providers a 1099-K form of their yearly earnings to file with their tax returns -- only if they earn at least $20,000 and have 200 or more transactions in a year. The rule applies only to companies that get paid by credit card.