Ask the Advocate November 2019 Tax News

FTB gig economy board meeting

Susan Maples, Taxpayers' Rights Advocate.

Susan Maples, CPA
Taxpayers’ Rights Advocate
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Like many of you, my work tends to be cyclical. There are projects, meetings, and initiatives that occur about the same time every year. This includes several annual meetings my staff and I coordinate or I chair as the Advocate. Recently though, we had something entirely new, an FTB Board Meeting covering the California Tax Landscape and the Gig Economy.

The meeting opened with three presentations covering the gig economy and tax compliance followed by two panel discussions. The first panel spoke about the challenges and opportunities for tax compliance in a gig economy while the second panel addressed the future of the gig economy and state tax obligations. The panelists were from academia, industry, and professional education providers for accounting, legal, and tax professionals. They provided insight and information about the current state of the gig economy. If you are interested in hearing what they had to say, here is a link to the Agenda and a YouTube video of the meeting.

While estimates vary as to the percent of the workforce earning income as part of the gig economy, it is by any measure significant. Unlike the more traditional forms of self-employment, there are few barriers to entry for much of the gig economy, e.g., transportation, task/project work, or selling products. Several platforms advertise just how easy it is to get started earning income right away. This ease of entry can lead to subsequent challenges for many of these new entrepreneurs. We have heard from gig workers that there isn’t a lot of information readily available to them regarding their tax filing obligations, which can lead to unpleasant surprises at tax time.

One of my many roles as Advocate is to help develop education and outreach programs to taxpayers and tax professionals. Currently, nearly two-thirds of all personal income tax returns are prepared by tax professionals, and for this reason, many of our speaking events and other education and outreach efforts are primarily geared towards you. The issue of Tax News you are reading today is a great example of this! 

But, our outreach isn’t just limited to tax professionals. We also participate in a variety of taxpayer-focused outreach events statewide, including financial literacy events and events hosted by elected officials. At small business fairs we provide information about what it means to be in business and we cover the various forms of business ownership including a sole proprietorship, which is the default entity for most gig workers.  We present information about filing requirements, estimate tax payments, and return due dates. Our presenters answer questions and provide contact information for our small business liaison line.

One communication tool we’re working on as part of our effort to provide tax help to gig workers is the FTB Gig Economy webpage. We are currently building content for this page.  There are also some other great resources for gig workers including the IRS Sharing Economy Tax Center, the California Tax Service Center, and FTB’s Small Business webpage. There is a lot a useful information on these webpages, but we want to do more.

Going forward, I believe our education and outreach about tax compliance and the gig economy will need to cast a wider net and take on many forms to better reach everyone in our external community, including partnering with gig platforms to make basic tax and self-employment information available to those working in the gig economy. We will continue seeking opportunities to educate in order to increase self-compliance and to working with you, our valued partners in the tax professional community.