House Small Business Committee Hearing Considers Taxes and the Sharing Economy

At a recent hearing before the U.S. House of Representatives Committee on Small Business, certain Members and witnesses expressed concern that current tax laws are outdated and burdensome to companies in the “sharing economy.”

At a recent hearing before the U.S. House of Representatives Committee on Small Business, certain Members and witnesses expressed concern that current tax laws are outdated and burdensome to companies in the “sharing economy.” The hearing, titled, “The Sharing Economy: A Taxing Experience for New Entrepreneurs, Part I” was held on May 24, 2016.

Committee Chairman Steve Chabot (R-OH) observed that “sharing economy” companies are running into an outdated tax law that is working against this segment of the economy. Similarly, Committee Ranking Member Nydia Velazquez (D-NY) characterized the common law test, used to determine worker status, as difficult to administer in the context of the “sharing economy.”

Testifying before the Committee were representatives from TaskRabbit, ACT/The App Association, the Information Technology and Innovation Foundation, and a professor at American University.

The witnesses made similar assessments during their testimony, characterizing current tax laws as having been developed in a different time, being ill-suited to the modern on-demand economy and hindering economic growth.

One witness recommended increasing the consistency between state and federal laws that determine worker status, but also suggested establishing a new third worker classification to better reflect work relationships in the “sharing economy.”

Interestingly, a couple witnesses asserted that current laws make it difficult for “sharing economy” companies to interact with and train independent contractors, and thought the laws should be changed to permit this.

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