The tax man may be coming for Uber and Lyft drivers

The IRS believes many Uber and Lyft drivers are cheating on their taxes, and Sen. John Thune, R-S.D., is pushing legislation that would dramatically reduce the income threshold above which gig economy companies that rely on contractors must report to the IRS.

As a means of cracking down, the legislation would force Uber and Lyft to report to the IRS any amount driver contractors earn over $1,000 in a year, rather than the current $20,000.

…Underreporting of income skyrockets when no third party is required to report it, the IRS has found. In instances where companies report their contractor payments, only 7 percent of contractors underreported earnings, according to a 2016 report by the agency. But that rose to 63 percent in cases where companies did not report payments.

Uber and Lyft drivers make less than $10 an hour after expenses, according to a 2018 Massachusetts Institute of Technology study.


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