According to
DoJ, a federal court in California
entered an order on Monday authorizing the IRS to serve a John Doe summons on
JustAnswer LLC, seeking information about U.S. taxpayers who were paid for
answering questions as “experts” during the years 2017-2020. The IRS is seeking
the records of individuals who were paid by JustAnswer, which operates a
digital platform through which members of the public can pay to have questions
answered by professionals such as doctors, lawyers, veterinarians, engineers
and tax professionals. JustAnswer is headquartered in Covina, California.
The “gig economy” is where people
earn income providing on-demand work, services or goods through a digital
platform like a website or an app.
Well-known examples of such platforms
include Airbnb, Uber, Lyft, DoorDash, Etsy, Handy and TaskRabbit. The gig
economy is a recent phenomenon associated with the increased prevalence of
smart phones and their applications, facilitating the development of online
marketplaces and platforms in which individuals can connect to obtain and offer
goods and services. Digital platforms commonly serve as intermediaries,
connecting sellers or service providers with customers while also processing
payments.
In the court’s order, U.S. District Judge Dolly M. Gee for the
Central District of California found that there is a reasonable basis for
believing that U.S. taxpayers who were paid by JustAnswer to answer questions
as experts may have failed to comply with federal tax laws.
The court’s order grants the IRS
permission to serve what is known as a John Doe summons on JustAnswer. There is
no indication that JustAnswer has engaged in any wrongdoing in connection with
its digital platform business. Rather, the IRS uses John Doe summonses to
obtain information about individuals whose identities are unknown and who
possibly violated internal revenue laws, such as by not reporting income they
received. This John Doe summons directs JustAnswer to produce records
identifying U.S. taxpayers who have used its platform to earn income, along
with other documents relating to their work.
“The gig economy has grown in
recent years and with it, the concern for tax compliance issues has increased,”
said Deputy Assistant Attorney General David Hubbert of the Justice
Department’s Tax Division.
“This John Doe Summons Demonstrates That Working With
The IRS We Will Use All The Tools Available To Us To
Ensure That No Matter How U.S. Taxpayers Earn Income,
They Are Properly Reporting It And Paying Their Taxes.
Those who choose to be on the forefront of the gig economy must be aware
of, and abide by, all their tax obligations.”
“Like their fellow Americans who
earn income through traditional means, U.S. taxpayers who earn income from
digital and other platforms that comprise the gig economy need to pay their
fair share of taxes,” said IRS Commissioner Danny Werfel.
“The World Is Getting Smaller For Tax Cheats,
And We Will Work Collaboratively With Our Partners
To Vigorously Enforce The Nation’s Tax Laws.”
Federal law requires U.S. individual taxpayers to pay taxes on all income
earned worldwide. Individuals must report all income earned from the gig
economy on a tax return. This includes income from part-time, temporary or
“side work”; income not reported on an information return form (like a Form W-2
or 1099) or other income statement; or income paid in cash, property, goods or
digital assets.
Have an IRS Tax Problem?
Contact the Tax Lawyers at
Marini & Associates, P.A.