Input:
	Background

The platform economy is relatively new. Its rise has been tied to the  development of the iPhone and Apple’s app store, which launched in  2008. Smart phones and apps made it easier for people to develop online  marketplaces where buyers and sellers could connect to exchange  goods. Since then, more platform companies have emerged, expanding  into marketplaces for a host of services. This expansion has increased  the ways in which people could sell their services or goods and lowered  the barriers to entering this type of work.
Platform companies generally facilitate the match, transaction, and  payment between those seeking goods or services online and those  providing them. Platform companies can be divided into marketplaces for  services or goods and can be further divided into two types of services— transportation or other types of services—and two types of goods—retail  or short-term rental. See figure 1 for a description of the different platform  company marketplaces.
Transportation platforms comprise the largest sector of the platform  economy—by revenue and number of workers—and include companies  like Uber and Lyft. Examples of platform companies providing other  types of services include Care.com (child or senior care) and Upwork (a  range of freelance services). Retail platforms like Etsy and eBay provide  an online marketplace for goods. Companies that facilitate short-term  rental include Airbnb (property) or Kerb (parking spaces).
Platform companies also vary by the number and degree of specialization  of services offered. For example, platform companies could be  differentiated by the range of services offered, from those that offer a  single service, such as transporting people and goods, to those that are a  one-stop source to access workers specializing in an array of fields such  as legal, information technology, marketing, writing, design, and  accounting. Further, companies have adopted different business models.  Some set prices while others allow the worker and customer to negotiate  a price for the good or service provided.
While platform workers can choose whether to accept work, companies  are not committed to pay workers for a set number of hours, which allows  companies to more easily manage demand fluctuations. Many platform  companies classify workers providing services as independent  contractors rather than as employees. This classification has implications  for companies and workers. For independent contractors, companies are  not responsible for paying a minimum wage or overtime and do not  typically provide benefits such as paid leave, health insurance, or  retirement plans. Furthermore, numerous labor protections that apply to  employees do not apply to independent contractors.
Companies also do not have to withhold and remit federal income or  employment taxes for independent contractors. Instead, the worker is  responsible for estimating, saving, and remitting these taxes each quarter  to IRS. Furthermore, a platform company that operates as an  intermediary between buyers and sellers to transfer funds for  transactions—for example, a ride-hailing company that matches drivers  and riders and processes those riders’ payments to drivers—may act as a  third party settlement organization (TPSO) under IRS regulations,  depending on its circumstances. Acting as a TPSO can further reduce  the tax reporting requirements for these companies.
SB/SE oversees taxpayers filing tax returns as self-employed individuals  with business income, such as independent contractors, and businesses  with less than $10 million in total assets. SB/SE aims to promote  compliance among this population by raising awareness through outreach  and education about tax obligations and how to comply. SB/SE also takes  enforcement actions such as audits to pursue noncompliance, although  with budget cuts, the number of audits has dropped considerably over  time.

	Platform Work Has Some Unique Characteristics, but Lack of Data Complicates Efforts to Describe the Workforce Unique Characteristics of Platform Work Affect Tax Responsibilities and Information Reported

While the nature of the work may be similar, key differences exist among  traditional independent contractors, platform workers, and employees. We  use the term platform worker for those workers that platform companies  classify as independent contractors, which is the focus of our report. A  major similarity is that all three types of workers provide services to  customers in a business transaction, regardless of whether the customer  is another business or an individual such as a homeowner. However, the  three types of workers differ in terms of payments, tax responsibilities,  and the information reported to IRS and workers. Figure 2 summarizes  these differences, which are discussed below.
A major difference is how these workers provide their services and  receive payments. Traditional independent contractors directly provide  their services to and receive payments from a business or an individual  customer. Employees provide services through an employer who pays  them wages. Unlike the other two types of workers, the platform worker  provides services through a third party intermediary—the platform  company—that uses online tools to connect workers with customers and  facilitates payment between them.
Platform workers that are classified as independent contractors have  different tax obligations than employees. Independent contractors are  generally expected to pay the full amount of their personal federal income  and self-employment taxes—which are comprised of Social Security and  Medicare taxes—through quarterly estimated tax payments to IRS. For  employer-employee relationships, both the employer and the employee  each pay roughly half of the Federal Insurance Contribution Act (FICA)  taxes—which are comprised of Social Security and Medicare taxes. An  employer is required to withhold income taxes and the employee portion  of FICA taxes from wage payments made to the employee and pay these  taxes to IRS. Additionally the employer is required to pay its own portion  of the FICA taxes to IRS.
These workers have different requirements for filing annual tax returns.  Generally, independent contractors, including those that are platform  workers, are to use Schedule C, Profit or Loss from Business (Sole  Proprietorship), to report their self-employment revenues and expenses,  and to calculate net income; the Schedule C is to be attached to their  Form 1040. Employees are to report wage amounts received on their  Form 1040.
Businesses also differ in information-reporting obligations for workers  classified as independent contractors and employees. Generally  speaking, when a business pays an independent contractor, the business  is required to report annual payments of $600 or more on Form 1099- MISC; for tax year 2020, businesses are to start using Form 1099-NEC to  report such payments. Instead of a Form 1099-MISC (or Form 1099- NEC), TPSOs are required to file Form 1099-K to report annual payments  made through their payment networks that exceed $20,000 and 200  transactions. When paying employees, businesses are to file a Form W- 2 annually to report all wages paid.
A difference between platform workers and traditional independent  contractors is that platform companies often have information on workers’  earnings and some expenses that could help workers file tax returns. For  example, a ride-hailing company has information on fares, tips, and miles  driven for each customer as well as fees and other charges. Traditional  independent contractors who provide rides to individuals typically have no  equivalent third party to provide such information.

		Platform Workforce Size and Characteristics Are Uncertain but Many Believe It Is Growing

The population of platform workers is difficult to count, due in part to the  variation in terms and definitions used to describe these workers such as  gig, on-demand, sharing economy, contingent, and freelance, among  others. As a result of these and other barriers, efforts to measure the  size of the platform workforce through household surveys or  administrative data have produced estimates that lack certainty; these  estimates of the workforce size generally have ranged from around 1.5  million to 2 million for recent years and suggest that the platform  workforce may be growing.
In 2017, the Department of Labor’s Bureau of Labor Statistics (BLS)  collected data on alternative employment. BLS’s survey found there are  an estimated 1.6 million “electronically-mediated workers,” defined as  those obtaining work through mobile apps and websites that connect  workers with customers and arrange payment. However, in January 2019  we reported that several factors may have contributed to an undercount  of platform workers. For example, survey questions may not have  captured individuals who engage in platform work on a part-time or  sporadic basis. BLS has stated that it will not use the same questions  again and it is working with stakeholders and the Committee on National  Statistics of the National Academies of Science, Engineering, and  Medicine to address survey limitations.
Despite the difficulties estimating the size of the workforce, two studies  and stakeholders we interviewed have concluded that the platform  workforce is growing. For example, in a review of customer checking  account transactions, the JP Morgan Chase Institute documented a five- fold increase between 2012 and 2018 to about 2.3 million families  receiving at least one payment from known platform companies.
Two studies have also found that the majority of platform workers work  part time, for a short time, for secondary income, and for relatively low  earnings. For its sample, the JP Morgan Chase & Co. Institute found that  platform work was not the primary source of income for most families that  participated in the platform economy between 2012 and 2018. Yet the  study also found that platform work can account for roughly 20 percent of  workers’ income during months when they are actively engaged in  platform work. Also, while the number of platform workers who provide  transportation has increased, their average monthly earnings fell steadily  between 2014 and 2018.
In another study, IRS used tax data to attempt to estimate the population  of platform workers, which it termed “gig workers.” Similar to BLS, IRS  attempted to count workers who use websites and mobile apps to  connect with customers to obtain short-term work and to receive payment  through the company that owns the website or mobile app. IRS identified  the names and Employer Identification Numbers of companies providing  labor services and matched Forms 1099-MISC and 1099-K issued by the  companies to workers. IRS estimated the number of workers who  received a Form 1099-K or 1099-MISC from known labor platform  companies increased from roughly 20,000 in 2012 to 1.9 million in 2016,  then dropped to 1.3 million in 2017.
However, IRS’s methodology had limitations that make the study an  uncertain source for determining the number of platform workers. First,  IRS cannot easily identify the universe of platform companies because it  is rapidly changing and not well documented. Second, according to IRS,  an unknown number of platform workers receive neither a Form 1099- MISC nor a Form 1099-K, for reasons we discuss later in the report. In  sum, the data IRS receives do not allow it to accurately count the number  of platform workers or determine their tax reporting behaviors.

		Certain Tax Form Changes Could Help IRS Better Understand the Size, Characteristics, and Reporting Behaviors of the Platform Worker Population

Given the limited data IRS has on the platform workforce, IRS cannot be  assured that it knows enough about the size, characteristics, and  behaviors of this workforce to better understand how to help workers  comply with tax obligations. According to federal standards for internal  control, managers should collect and use quality information to achieve  an entity’s objectives. IRS officials we interviewed acknowledged that  identifying platform workers is challenging given limitations within IRS’s  data.
IRS does not have a straightforward way for taxpayers to indicate on their  tax forms whether they performed platform work. For example, Schedule  C—the form that independent contractors are to use to report profit or  loss—includes a series of yes/no checkboxes near the top of the form;  however, it does not have a checkbox to indicate whether any reported income or expenses are from platform work. Similarly, Schedule C has  a six-digit code to indicate the type of business or activity conducted, but  it does not include a code for all platform workers. Although this  information would be self-reported and imperfect, it would provide more  information than IRS has on platform workers.
Obtaining more information on the number of platform workers and their  tax filing and reporting behaviors could help IRS develop ways to assist  platform workers in complying with their tax obligations. For example, if  IRS had more data on the types of deductions that certain types of  workers were reporting, IRS would be better able to craft guidance on  such deductions or do outreach to help those types of workers comply.
Further, without changes to Schedule C, IRS cannot cross-check whether  workers who self-identify as platform workers are also identified as  platform workers on Forms 1099 filed by platform companies; a cross- check would enhance IRS’s understanding of the platform workforce. For  example, if the cross-check shows that the number of workers who self- identify as platform workers significantly exceeds the number of Forms  1099 filed, IRS may have to work with platform companies to understand  the filing shortfall. Conversely, if the number of filed Forms 1099 is  significantly higher, IRS may need to enhance outreach efforts to make  platform workers more aware of their tax obligations.

	Challenges for Platform Workers Include Awareness of Tax Responsibilities, Limited Income Information, and Saving and Remitting Quarterly Taxes

We identified three areas of challenges for platform workers’ compliance  with their tax obligations. First, according to our stakeholder interviews,  platform workers may be less aware of their tax responsibilities than  some independent contractors. Independent contractors typically have  to advertise or seek referrals to gain customers, develop a network of  peers, and learn about rules related to licensing or certifications. These  activities can educate them about the basic responsibilities of being self- employed, including their tax obligations. In contrast, entry into platform  work can be quick and workers may begin the activity without time to  learn how their tax obligations differ from those of employees.
For example, someone with a car, a valid driver’s license, and a smart  phone can start working as a ride-hailing driver after they register with an  app. Likewise, some platform workers may approach platform work as a  hobby, an artistic endeavor, or something they do for a short time or in  addition to another job. They may not realize that the company is treating  them as an independent contractor, that the platform income may affect  their taxes owed, and that they may need to track their expenses and  make quarterly tax payments.
As a second challenge, platform workers may have limited information  about the payments they receive for their work. TPSOs are not required  to file information returns to report earnings information to workers or IRS  if the workers receive $20,000 or less in annual payments or have 200 or  fewer transactions. Available tax data from tax year 2016 suggest that  only around 30 percent of platform workers who were known to IRS had  gross platform-related earnings higher than $5,000. Hence, most platform  workers are likely not receiving an information return from the company.  As a result, workers may not be aware that their income is taxable and  IRS is less able to the check the workers’ tax compliance.
A third challenge, according to stakeholders, is the burden associated  with the steps platform workers must take to estimate, save, and remit  quarterly tax payments. Because earnings of some platform workers may  be low and earnings and expenses may fluctuate, they can have difficulty  estimating their taxes owed and setting aside money to pay the taxes.  They may also find it time consuming or costly to track expenses and  determine profit. To the extent these burdens and difficulties confuse  workers, they are less likely to pay the estimated tax payments fully and  on time and may incur a penalty as a result. One stakeholder from a large  tax preparation firm raised the concern that if the penalty or amount owed  is more than workers can afford, they are at risk of falling into a cycle of  noncompliance.

	IRS’s Strategy to Promote Compliance by Platform Workers Features Enhanced Communication, but Lacks Key Details for Monitoring Feedback and Clarifying Guidance

In response to a February 2019 recommendation by the Treasury  Inspector General for Tax Administration, IRS formed a team of officials  from across the agency to develop a strategy to promote compliance  among platform workers. The strategy focuses on two challenges for  platform workers: (1) raising awareness about federal tax obligations, and  (2) easing burden by identifying improvements to instructions, guidance,  or forms that platform workers are likely to use. As part of the strategy,  IRS developed a communications plan that includes a redesign of IRS  web pages for platform workers and companies, outreach activities to the  workers and various stakeholders, and a review of IRS guidance and  related forms or instructions.

		IRS Redesigned Its Web Pages to Improve the User Experience for Platform Workers and Companies

The IRS Communications & Liaison office is managing the  communications plan to educate platform workers and companies about  their tax and reporting responsibilities. A key component of the plan is to  redesign IRS web pages that provide tax information for platform workers  and companies. IRS changed the name to the Gig Economy Tax Center  (previously it was called the Sharing Economy Tax Center) and launched  it in January 2020 before the start of the filing season (see fig. 3).
As part of this effort, IRS is working to make web pages more user  friendly for platform workers as well as platform companies. IRS’s Online  Services (OLS) conducted research on the expectations, behaviors,  motivations, and needs of self-employed individuals. According to OLS  officials, IRS used insights about platform workers from the research  coupled with user testing of the new web pages to inform the redesign  effort. IRS’s steps to redesign the web pages align with selected leading  practices for improving the online user experience, such as taking steps  to make the pages useful and findable (see table 1). It is too soon to  know whether the intended users find the new pages useful, usable,  findable, and credible, as envisioned by the practices.

		IRS’s Outreach Activities for Increasing Awareness among Platform Workers and Companies Lack Key Details for Monitoring Their Feedback

IRS’s communications plan included outreach activities to raise  awareness. For example, to publicize the redesigned web pages, the plan  envisions targeting audiences such as platform workers and companies,  news media, national tax publications, tax professionals, government  agencies, IRS employees, and other groups. IRS created and distributed  products such as a national news release about the new web pages and  articles for newsletters and other products for tax professionals, small  businesses, and payroll providers. IRS created a one-page electronic  brochure to inform platform workers about their tax obligations and  available tools to help them (see fig. 4). IRS intends to encourage  platform companies to provide the brochure to workers.
IRS is also using social media such as Twitter and Instagram to target  platform workers and direct them to the redesigned web pages through  posts such as those seen in figure 5.
To assess the effectiveness of its efforts to increase awareness, including  whether outreach efforts are driving people to the new web pages, IRS  plans to compare data analytics for the redesigned site with the previous  site. OLS plans to analyze changes in website traffic volume and taxpayer  behavior—such as click patterns and how long users stay on the page—3  months after the launch of the redesigned pages and again 6 months  later, and make changes as warranted.
IRS’s office of Tax Outreach, Partnership, and Education (TOPE) is  supporting awareness efforts by building relationships with partners, such  as platform companies and organizations that advise platform workers.  The communications plan provides a high-level description of efforts to  engage with partners. Goals are to increase partner use of IRS social  media, develop more industry-specific content, and increase TOPE  involvement in virtual and face-to-face partner events and conferences,  among others. IRS also plans to leverage these new partnerships to  solicit feedback on its communication efforts to ensure they meet the  needs of platform workers and companies.
However, the communications plan lacks details about how IRS will  monitor feedback from stakeholders. Specifically, IRS does not have a  process for documenting and evaluating feedback based on the various  communications efforts and products tailored for platform workers.  According to federal standards for internal control, management should  establish two-way reporting of quality information to achieve its  objectives. Management should monitor activities and periodically  evaluate the quality of information received to achieve its objective.  According to IRS officials, they do not have the time or staff to document  all feedback received. Further, they said the value of responding quickly  to stakeholder comments supersedes the value of documenting and  evaluating feedback.
Given limited resources, IRS could choose to do something simple like  creating a spreadsheet that captures feedback received, such as  stakeholder emails, and document whether it led to changes. IRS has  dedicated time and resources to better understand platform workers’ tax- related challenges and has undertaken multifaceted communication  efforts to address them. Without a process to monitor feedback, IRS may  miss opportunities to find better ways to drive platform workers toward the  redesigned web pages, to ensure the redesigned web pages are meeting  platform workers’ needs, or to strengthen communication efforts to  enhance tax compliance. These opportunities could become more  important as the platform worker population grows and evolves.

		IRS Guidance and Instructions Do Not Always Clarify Tax Obligations for Platform Workers

IRS identified changes to forms, guidance, and other publications that  could make it easier for platform workers to understand which forms apply  to them. According to IRS officials, the Gig Strategy Team reviewed tax  forms, publications, instructions, and training materials relevant to  independent contractors, including platform workers. The team concluded  that it did not need to create new forms or publications, although it  identified 10 forms, instructions, guidelines, and publications that could be  updated to be more helpful to platform workers.
For example, the team suggested that IRS make several changes to  update the instructions for Form 1040, such as adding a reference to  Form 1099-K and clarifying that platform economy work can be a trade or  business. The team also suggested that IRS revise the Form 1099-K  instructions for payees to indicate how this form could clarify information  on business gross receipts. IRS did not approve the gig strategy team’s  requested changes to clarify the instructions for Forms 1040 and 1099-K  for 2020. However, IRS is considering making these changes in 2021.  According to IRS officials, they want to ensure these changes  complement each other and the guidance is clear for taxpayers.
According to federal standards for internal controls, management should  communicate both internally and externally information necessary to  achieve the entity’s objectives. Moreover, research based on behavioral  insights has shown that introducing small interventions or removing small  obstacles can significantly improve effectiveness.For example,  interventions should be attractive (to draw people in) and easy (use  simple, plain language). Leading practices suggest that people respond to  information that is relevant to them. One way to do this is to include  examples that help people recognize when information is relevant. For  example, adding a brief reference to the gig or platform economy to the  Form-1099 K payee instructions, along with a simple description of what  the taxpayer should do, such as “show total payments from a company  that facilitated a match, transaction, and payment for goods or services,”  could help platform workers understand that the forms apply to them.
By not including plain language for the Form 1099-K and 1040  instructions, platform workers are less likely to recognize which  information applies to them. Simplifying one aspect of the tax system for  platform workers by making the forms easier to understand could lead to  enhanced tax compliance.

	IRS and Congress Have Options to Improve Voluntary Tax Compliance, but Tradeoffs Exist

According to our prior work, a good tax system should be equitable,  economically efficient, and simple, transparent, and administrable.  However, the challenges we have discussed—such as the lack of  awareness and information—are complicating the tax system for platform  workers and limiting IRS’s ability to more effectively collect taxes. We  identified nine options from our literature review and stakeholder  interviews to address these challenges and enhance tax compliance for  platform workers (see table 2). For each option, we analyzed available  data on the potential design and tradeoffs, including the potential costs  and benefits. We discuss two options related to reporting and two options  related to withholding in the sections below. For five options related to  simplifying the reporting and filing processes, we found that the available  data and research did not support a full assessment of potential pros and  cons. We discuss those five options in appendix II.

		Increasing Information Reporting on Payments Made to Platform Workers Could Help Improve Tax Compliance

Many platform workers are not receiving a Form 1099 on their self- employment income, and therefore may be unaware of their tax reporting  obligations. It is difficult to estimate how many workers are not receiving  these forms because of limitations in available data. However, IRS found  that the number of workers receiving Forms 1099-K or 1099-MISC from  known labor platform companies dropped more than 30 percent from  2016 to 2017. Such a decline in information reporting for platform workers  can be attributed to three factors.
First, reporting thresholds for TPSOs were set at a high level to prevent  unnecessary information reporting to IRS. When Congress enacted the  Housing and Economic Recovery Act of 2008, TPSOs applied mainly to  online marketplaces for goods, like eBay, and companies that facilitated  payments, like PayPal. The act required information reporting by TPSOs  for payments made through their payment networks only if those  payments exceed both $20,000 and 200 transactions annually.  Individuals who were generally not engaged in business or not producing  a profit, such as casual sellers of goods, would likely fall below these  thresholds.
Second, IRS created a “tie-breaker rule” to avoid duplicative reporting  which also led to no Form 1099 being filed in some cases. Businesses,  including TPSOs, are in general required to report certain transactions on  Form 1099-MISC, while TPSOs are also required to report certain  transactions on Form 1099-K. IRS instituted a rule to break the “tie” that  exists when a TPSO is required to report the same transactions on both  Forms 1099-MISC and 1099-K. Specifically, the rule states that payments  made through a TPSO’s payment network are not required to be reported  on Form 1099-MISC, subject to an annual $600 threshold. Instead,  TPSOs’ payments are required to be reported on Form 1099-K, subject to  the annual $20,000 and 200 transactions thresholds.
Third, since 2008, new platform companies have emerged that fit the  TPSO designation but that facilitate payments for workers providing  services rather than goods. These payments often fall below the  combined annual $20,000 and 200 transaction thresholds.
Options to increase information reporting for platform workers would help  raise awareness about their tax obligations while lowering their burden.  As a result, platform workers would be more likely to comply with tax  obligations. The following sections discuss our analysis of two options.

			Amend the “Tie-Breaker Rule” for TPSOs

The “tie-breaker rule” could be amended to reverse the rule for payments  made through a TPSO’s payment network. This would result in more  reporting on Forms 1099-MISC under Internal Revenue Code (IRC)  Section 6041, rather than on Forms 1099-K under IRC Section 6050W.  Given the much lower threshold for the Form 1099-MISC versus the  thresholds for the Form 1099-K, more workers would receive reports on  their payments and IRS would receive more reports, too.
Information reporting under the regulations related to IRC Section 6041  would generally increase for TPSOs that facilitate the provision of  services. If the TPSO makes a payment for a service on behalf of another  and performs management or oversight for the payment, then that TPSO  would generally be responsible for filing a Form 1099-MISC, subject to  the annual $600 threshold. Also, TPSOs that facilitate payments of  rentals and also provide management or oversight of those payments  would likely be subject to the $600 threshold.
Reporting would remain unchanged for some types of companies.  Because payments for goods are generally not reportable under IRC  Section 6041, reporting would not change for online marketplaces that  facilitate the sale of goods only. Because of the management and  oversight requirements of IRC Section 6041, TPSOs that only facilitate  payments would also generally not be affected by a change to the tie- breaker rule (see fig. 6).
IRS Counsel has discussed amending the tiebreaker rule, but has yet to  take action. According to IRS, Counsel has had to address other  priorities, such as reviewing rules and publishing guidance related to  Public Law 115-97, commonly known as the Tax Cuts and Jobs Act of  2017. Without amending this rule, the lack of information-return  reporting for many workers complicates their efforts to comply with their  tax obligations and IRS’s ability to ensure that these workers are correctly  reporting their income. When workers do not receive forms related to their  self-employment income, they have more difficulty determining how much  money they made for computing taxable income. IRS analysis indicates  that taxpayers are more likely to report their income that is subject to  some information reporting (an estimated 83 percent compliance)  compared to little or no information reporting (an estimated 45 percent).  Sending more information returns may add costs for some companies;  however, stakeholders had differing views on how significant those costs  would be.

			Determine Appropriate Form 1099 Reporting Thresholds

In addition to amending the tie-breaker rule, stakeholders, as well as our  literature review, discussed changing the various reporting thresholds.  IRS and the Department of the Treasury (Treasury) have unique access  to tax data and could analyze whether the 1099-K and 1099-MISC  reporting thresholds are set at levels appropriate for tax administration.  The 1099-MISC threshold was enacted in 1954 and the 1099-K reporting  threshold was enacted in 2008; neither reflect the development of the  platform economy. These changes include the emergence of companies  that facilitate workers’ earning income by renting their houses or by  providing transportation services, among many other activities.
Informed stakeholders suggested that the current 1099-K thresholds may  be appropriate for some TPSOs, such as online marketplaces that  facilitate the sale of goods or companies with a primary function of  facilitating payments. Different thresholds may be more appropriate for  other activities facilitated by platform companies, such as renting houses  or other assets. For example, a lower dollar threshold and no transaction  threshold may be appropriate for home rentals because substantial  income could be generated from even one transaction and provider costs  may be limited. However, some service providers incur significant costs,  such as drivers who must pay to own and operate a vehicle. Some  stakeholders suggested that a threshold of $600 was more appropriate  than a threshold of $20,000 and 200 transactions. Even so, some  stakeholders suggested that typical costs to service providers may justify  a threshold higher than the $600 threshold set in 1954.
We found no available analysis of tax or other data showing whether the  reporting thresholds for Forms 1099-MISC and 1099-K are appropriate for  today’s economy or what the thresholds should be. The NEW GIG Act of  2019, which was introduced in Congress in March 2019, would raise the  Form 1099-MISC reporting thresholds from $600 to $1,000. It would also  lower the Form 1099-K reporting threshold from $20,000 and 200  transactions to $5,000 or 50 transactions for TPSOs making payments to  those primarily engaged in the sale of goods, among other actions.  Aligning reporting thresholds with today’s economy would support tax  administration for IRS, as IRS studies have shown that information  reporting increases tax compliance. It would also help reduce compliance  burden for workers, since they would have clear information on their  earnings.

		Withholding Estimated Taxes Owed Could Ease Burden for Platform Workers

Platform workers can be burdened in estimating, saving, and remitting  quarterly payments for income, Social Security, and Medicare taxes.  Companies are not allowed to withhold and remit these taxes for platform  workers who are treated as independent contractors and who want to  participate in voluntary withholding—except where backup withholding is  required.  Voluntary tax withholding that satisfies quarterly tax payment  requirements could reduce the workers’ burden and promote their tax  compliance. We identified two actions that IRS could take on voluntary  tax withholding.

			Implement Voluntary Withholding

IRS could work with Treasury to implement voluntary withholding on  payments to independent contractors for services. Voluntary withholding  would be an option where it would be voluntary for companies to  participate; for those companies that choose to participate, it would be  voluntary for the independent contractor to participate. According to IRS  Counsel, IRS has the statutory authority to take this action if the  Secretary of the Treasury finds that withholding would be appropriate and  would improve tax administration, and if the company and independent contractor agree to such withholding. According to IRS officials, IRS and  Treasury have not determined whether they intend to pursue such an  action.
Voluntary withholding could be implemented by adjusting existing  procedures and using the existing requirements for paying estimated  taxes each quarter as a foundation. For example, to enable companies to  solicit workers’ choices on when and how much to withhold, IRS could  create a form similar to the Employee’s Withholding Certificate, Form W- 4, which employees complete so that employers can withhold the correct  estimated federal income tax from employees’ wages. Workers could  choose to vary the amounts withheld and the frequency of withholding as  long as they met the quarterly estimated tax requirements. Alternatively,  IRS could create guidance similar to what exists for workers who opt-in to  electronically receive tax forms from their companies. Companies could  use the existing procedures for tax withholding on wages paid or for  backup withholding to withhold and remit the taxes to IRS. Companies  would need to develop other design features, such as how they inform  workers about participation.
If the withholding is voluntary for companies, any burden is limited to  those companies that choose to participate. For workers who choose to  participate, they would still have the burden of estimating the amount of  taxes owed for each quarter, but their burden to save and remit those  taxes could be reduced. If some workers find that withholding is not  appropriate for them, they could continue to use the existing system for  quarterly tax payments. As long as workers choose withholding amounts  that satisfy these quarterly estimated tax requirements, IRS would not  need to design default percentages or dollar amounts to be withheld.
While withholding could potentially help all types of independent  contractors, voluntary withholding would specifically address some  challenges that platform workers face. For example, platform workers  have had challenges meeting the quarterly estimated tax requirements  when their work is part time or sporadic. Giving workers and the  companies the flexibility to structure tax withholding would better ensure  that these challenges are addressed and the taxes are paid.
Furthermore, this voluntary withholding regime would help those workers  who choose to participate set aside a sufficient amount of money for  taxes throughout the year, reducing the likelihood of an unanticipated  large tax bill and tax penalty at the end of the year. Tax withholding plays  a critical role in supporting voluntary compliance. IRS’s analysis indicates  that withholding helps induce higher compliance in reporting income;  higher compliance can help to reduce the tax gap—the difference  between tax amounts the taxpayers should have paid and what they paid  voluntarily and on time.

			Assess Requiring Companies to Offer Voluntary Withholding to Workers

Another option we reviewed involved Congress requiring companies to  offer the withholding of taxes for remittance to IRS. That is, the  companies must offer withholding; it would still be voluntary for the  independent contractor to participate. Given that IRS does not currently  allow for voluntary withholding on payments to independent contractors,  we could not determine the need for such a requirement. If IRS  implements withholding that is voluntary for companies, it would have the  opportunity to collect and assess information on the need for such a  requirement. For example, IRS could determine whether workers who  volunteer to participate in withholding are able to better meet their  estimated quarterly tax payments. IRS also could determine whether  companies are offering withholding. If IRS finds that voluntary withholding  bolsters compliance while reducing burden for workers, but that platform  companies are not offering it, IRS could recommend that Congress take  action.
In considering which platform companies could be required to offer  voluntary withholding, a starting point would be TPSOs. Focusing the  requirement on TPSOs would likely be less burdensome than on other  platform companies. TPSOs already settle payments to multiple parties;  withholding and remitting taxes to IRS would only be one more type of  payment that the TPSOs would process.
This requirement would benefit platform workers who wished to  participate in voluntary tax withholding and who work for TPSOs. More  workers would have the option to have their taxes withheld. Because  worker participation would remain voluntary, the need to determine  default percentages or dollar amounts for withholding could be avoided as  long as the worker met the quarterly requirement for paying estimated  taxes.
Some stakeholders suggested the option of mandatory withholding for  platform workers to help them avoid a tax penalty. However, mandatory  withholding could be burdensome for workers who need to balance cash  flow and other spending priorities. Additionally, if participation in  withholding is mandated, IRS would need to determine minimum  withholding amounts. Because different businesses involve different  typical expenses, it may be difficult to create an appropriate withholding  rate across all business types. Creating multiple withholding rates for  different types of businesses instead could be complicated and  burdensome.

	Conclusions

The platform economy is still relatively new but available evidence  suggests that it is growing and presenting tax-related challenges for both  workers and IRS. While IRS has addressed some of these challenges, it  could do more to promote voluntary compliance among platform workers  by further raising awareness and easing taxpayer burden. IRS developed  a communications plan to raise awareness among platform workers of  their tax responsibilities; however, the plan lacks details about how IRS  will monitor stakeholder feedback. Having a process for documenting and  evaluating feedback would help assure that IRS’s communications efforts  are addressing platform workers’ tax-related challenges, even as the  population grows and evolves. Additionally, IRS could better understand  the platform workforce if it had a straightforward way to collect data to  identify platform workers.
IRS has identified changes to forms, guidance, and other publications that  could make it easier for platform workers to understand which forms apply  to them. However, IRS has not yet taken actions such as adding plain  language to instructions and publications that clearly indicate when a form  applies to a platform worker. Making instructions and publications easier  to understand by adding a simple description could help platform workers  comply with their tax obligations.
IRS could help ease taxpayer burden by taking steps to increase  information reporting for these workers. Platform companies that act as  TPSOs do not have to report income information on many workers  because reporting thresholds are much higher than what most workers  earn. Amending IRS rules to require such reporting at lower thresholds  would provide workers with more information to comply with their tax  responsibilities and would give IRS additional information to support  enforcement efforts.
Taxpayer burden could also be eased through a voluntary withholding  program for platform workers. IRS and Treasury have the statutory  authority to take such an action if the Secretary of the Treasury finds that  withholding would be appropriate; however, IRS and Treasury have not  determined whether they intend to pursue it. Voluntary withholding could  help platform workers save and remit their taxes to IRS. This would  address specific challenges platform workers face, such as low or  fluctuating income. Once a voluntary withholding program is created, IRS  would be able to assess its impacts and, if warranted, work with Treasury  on a proposal to Congress to require TPSOs to offer voluntary  withholding on payments for platform workers and other independent  contractors.

	Recommendations for Executive Action

We are making the following seven recommendations to IRS:  The Commissioner of IRS should change Schedule C or Form 1099-NEC  so that taxpayers can identify if they received payment for platform work.  (Recommendation 1)
The Commissioner of IRS should develop a process for monitoring  feedback on its communications efforts and products tailored for platform  workers, which should include documenting and evaluating feedback.  (Recommendation 2)
The Commissioner of IRS should clarify the instructions and publications  for Forms 1040 and 1099-K by adding plain language to clearly indicate  to platform workers that the forms apply to them. (Recommendation 3)
The Commissioner of IRS should work with the Secretary of the Treasury  to amend the 6050W “tie-breaker rule” that applies to duplicative reporting  requirements so that payments made through a TPSO’s third party  payment network are reportable under Section 6041, rather than under  Section 6050W. (Recommendation 4)
The Commissioner of IRS should work with Treasury to determine what  thresholds would be the most appropriate for payment information  reporting and, if warranted, recommend that Congress adjust the  thresholds. (Recommendation 5)
The Commissioner of IRS should work with the Secretary of the Treasury  to implement withholding that is voluntary for companies making  payments for services to platform workers and other independent  contractors who choose to participate. (Recommendation 6)
The Commissioner of IRS should assess the impact of withholding that is  voluntary for companies, once implemented, and if warranted, work with  the Secretary of the Treasury on a proposal to Congress that would  require TPSOs to offer tax withholding to platform workers and other  independent contractors who choose to participate. (Recommendation 7)

	Agency Comments

We provided a draft of this report to Treasury and IRS for review and  comment. IRS provided written comments, which are reproduced in  appendix III and summarized below. Of our seven recommendations, IRS  agreed to implement or consider two recommendations, said it could not  agree with two recommendations due to other priorities, disagreed with  two, and said it could not implement a recommendation that flowed from  another recommendation. IRS also provided technical comments, which  we incorporated as appropriate.
IRS agreed to refine its process for monitoring feedback on its  communication efforts and products but was silent on documenting and  evaluating the feedback (Recommendation 2). The value of monitoring  feedback will be minimized unless IRS has a process for documenting  and evaluating it over time. In addition, IRS agreed to consider clarifying  the language in the instructions and publications for Forms 1040 and  1099-K (Recommendation 3). We revised this recommendation by  deleting the word “examples” from the clarifications to make.
IRS stated that it could not agree to work with Treasury to (a) amend the  6050W “tie-breaker rule” and (b) determine appropriate thresholds for  payment information reporting and, if warranted, recommend that  Congress adjust the thresholds (Recommendations 4 and 5). For both  recommendations, IRS said it cannot commit to implementation dates  because of higher priority guidance projects, especially in light of the  many new tax provisions enacted by Congress. We acknowledge IRS’s  need to prioritize guidance projects, but we do not understand why it does  not agree to address problems that will persist into the future absent  corrective actions or why IRS believes it cannot agree unless it commits  now to a future implementation date. In fact, IRS stated that it has a long- term guidance project under development for amending the rule to clarify  definitions. IRS said it would consider our recommendation on amending  the rule as it develops its 2020-2021 plan for guidance priorities. As for  our recommendation on determining reporting thresholds, IRS said it is  willing to meet with Treasury officials to discuss the need to analyze the  current thresholds.
IRS disagreed with our recommendation to change Schedule C or Form  1099-NEC so that taxpayers can identify if they received payments for  platform work (Recommendation 1). IRS said it has no evidence that  platform workers pose a greater compliance risk and that the platform  worker designation, by itself, would not be a selection factor for  compliance actions. We found that IRS has not measured this risk, in  part, because it cannot easily identify the workers. Further, we did not  intend that IRS use the data to initiate compliance against the workers;  our report discussed using the data to identify workers and their reporting  behaviors to improve services and voluntary compliance. IRS concluded  that the additional taxpayer burden and its costs were not warranted at  this time. IRS did not identify the level of burden or costs, and the burden  from checking a box on Schedule C does not seem high. We asked about  the costs to revise the forms to add a checkbox but IRS did not provide  them. As for IRS’s costs to capture the data, we note that IRS’s costs to  transcribe the data would be zero for returns filed electronically. Individual  taxpayers (including platform workers) electronically filed 138 million of  156 million (89 percent) tax returns—which includes the Schedule C— during 2019. If IRS intends to help these workers become more aware  and reduce their taxpayer burdens to comply, identifying them and their  tax behaviors would enhance those efforts.
IRS disagreed with our recommendation to work with Treasury to  implement withholding that is voluntary for companies making payments  for services to workers who choose to participate (Recommendation 6).  IRS said that its role is to administer tax law rather than propose tax  policy changes. As we discuss in the report, IRS has the authority to take  this action if the Secretary of the Treasury agrees that the action would  improve tax administration and our recommendation focuses on working  with Treasury officials. IRS also stated that it cannot commit to an  implementation date for publishing guidance on a voluntary withholding  program due to higher priorities, including implementing various COVID- 19 relief programs. As stated above, we do not understand why current  higher priorities would prevent IRS from taking future corrective actions or  why IRS believes it must commit to an implementation date at this time.  We continue to believe that voluntary withholding has potential to improve  compliance and reduce taxpayer burden   Finally, IRS said it would not assess the impact of such voluntary  withholding and thus not work with Treasury on a proposal to Congress  that would require third party settlement organizations to withhold taxes  for workers who choose to participate (Recommendation 7). IRS’s  rationale was that it disagreed with the voluntary withholding  recommendation. As stated above, we believe this proposal has potential  to improve compliance and an assessment would help inform  Congressional deliberations about additional statutory changes that could  enhance tax compliance among platform workers.
As agreed with your office, unless you publicly announce the contents of  this report earlier, we plan no further distribution until 30 days from the  report date. At that time, we will copies of this report to the relevant  congressional committees, the Secretary of the Treasury, the  Commissioner of IRS, and other interested parties. In addition, this report  is available at no charge on the GAO website at https://www.gao.gov.
If you or your staff has any questions about this report, please contact me  at (202) 512-9110 or mctiguej@gao.gov. Contact points for our offices of  Congressional Relations and Public Affairs are on the last page of this  report. GAO staff members who made major contributions to this report  are listed in appendix IV.

Appendix I: Objectives, Scope, and Methodology

You asked us to review issues related to platform workers and tax  compliance. This report (1) examines what is known about the platform  workforce and what can be done to improve the available Internal  Revenue Service (IRS) data, (2) identifies challenges platform workers  face complying with federal tax obligations, (3) assesses IRS actions to  promote tax compliance among this population, and (4) assesses  additional options to promote tax compliance.
This sector and its workers are referred to by different names including  sharing, on-demand, gig, and platform. We selected the term platform  because it was the most comprehensive and relevant to online work  arrangements. For example, neither sharing nor gig communicates that  the work could be full time and for income. Platform worker also clearly  communicates that workers are using an online app or other platform to  find and secure work. While platform workforce does not have a standard  definition, for the purposes of this report we defined it as workers who  provide goods or services to customers through an online platform  operated by a company that facilitates the match, transaction, and  payment.
To identify what is known about platform workers, we conducted a  literature review of peer-reviewed material; trade and industry articles;  government reports; conference papers; general news; association,  nonprofit, and think tank publications; hearings and transcripts; and  working papers that described the platform economy in the United States  and related tax issues. We searched publication databases such as  Proquest and Dialog for keywords like gig, contingent, sharing, or  platform, and tax, IRS, or compliance to identify studies that were relevant  to our research objectives.
We also conducted semistructured interviews with selected stakeholders  and reviewed documents provided by them to obtain information on and  descriptions of platform workers. Through these interviews, we obtained  stakeholder views on (1) the use of the term “platform workforce,” (2) its  size and composition, (3) workers’ understanding of and compliance with  tax obligations, and (4) federal, state, and private-sector-level efforts and  policy proposals to help workers comply with their tax obligations.
We conducted close to 30 interviews with knowledgeable individuals that  we selected to represent varied areas of expertise and perspectives  including Department of the Treasury and IRS officials; academics and  other researchers; state government tax and revenue officials from the  Massachusetts Department of Revenue, the California Franchise Tax  Board, the Maryland Department of Labor & Regulations, and the  Vermont Department of Taxation; private-sector and nonprofit tax  preparers; tax software developers; and platform company  representatives and workers. We interviewed representatives from four  companies–Airbnb, Thumbtack, Etsy, and eBay; and two representatives  from professional associations, Technet and Internet Association, that  include platform companies among their members. Company  representatives from Uber, Lyft, Taskrabbit, Upwork, Snag, and  Postmates participated in the Technet group interview. We also  interviewed representatives from organizations that work directly with  platform workers such as the Freelancers Union, Center on Budget and  Policy Priorities and Creating Assets, Savings and Hope Campaign of  Maryland, National Association of Self-Employed, and the Independent  Drivers Guild (IDG). IDG also set up 30-minute phone calls for us with five  full-time drivers who use mobile apps to connect with customers.
We were also invited to attend a panel from the National Academies of  Science on the platform workforce. The panel included experts from the  Aspen Institute, JP Morgan Chase, the Federal Reserve Board, the  Census Bureau, and various think tanks and universities.
We identified potential interviewees through a literature search, and  recommendations from our initial interviews. We selected interviewees  based on their relevance to the scope of our review. We also aimed for  balance between those who could serve as a proxy specifically for low- income platform workers, and those who work with people across the  income spectrum. Although the results of these interviews are not  generalizable to the views of all stakeholders, they still provide important  insight into and illustrative examples of the challenges platform workers  face understanding and complying with federal tax obligations.
To assess IRS actions to promote tax compliance, we reviewed IRS  research on the platform workforce and other documents describing  current and planned actions to identify taxpayers who are platform  workers and to promote their tax compliance, including the Gig Economy  Compliance Strategy. We also interviewed IRS officials from the Small  Business/Self-Employed Division; Research, Applied Analytics, and  Statistics Division; Communications & Liaison Office, including officials  from the Offices of Online Services and Tax Outreach, Partnership, and  Education; and the Office of Chief Counsel about their efforts to develop,  implement, and assess the impact of the new strategy. We identified  criteria for assessing elements of IRS’s strategy such as its research,  communication materials, and evaluation plan. We based these criteria  on Standards for Internal Control in the Federal Government and leading  practices for designing web materials to improve the user experience.  The relevant internal control principles focus on information and  communication and monitoring. The leading practices posted at  usability.gov describe principles for creating a meaningful and valuable  online user experience.
To assess options to promote tax compliance, we identified options from  our literature review and our interviews of stakeholders and selected  those that were commonly cited as potential solutions for the challenges.  We then sent 39 stakeholders a list of the potential solutions to solicit  their views on these options, including whether they supported or  opposed the option. Twenty-eight stakeholders, including those from  academia, the research sector, government, platform companies, tax  preparation firms, and worker advocacy, provided their views. We  analyzed their responses to help us identify strengths, weaknesses, and  other considerations associated with each option. We also assessed each  option using “criteria for a good tax system” described in our prior work.  These criteria state that a good tax system should be equitable,  economically efficient, and simple, transparent, and administrable. We  focused on whether individual options would increase simplicity by  reducing compliance burden; enhance transparency by helping taxpayers  better understand their tax obligations; and improve tax administration by  helping IRS more effectively collect taxes. We found that the available  data and research for some options did not support a full assessment of  the pros and cons that might be offered by the option. We describe these  options in appendix II.
We conducted this performance audit from February 2019 to May 2020 in  accordance with generally accepted government auditing standards.  Those standards require that we plan and perform the audit to obtain  sufficient, appropriate evidence to provide a reasonable basis for our  findings and conclusions based on our audit objectives. We believe that  the evidence obtained provides a reasonable basis for our findings and  conclusions based on our audit objectives.

Appendix II: Other Options to Help Platform Workers Comply with Their Federal Tax Obligations

One set of options we identified focused on simplifying aspects of the tax  system to help platform workers comply with their tax obligations. For all  of them, sufficient evidence did not exist on how the option would be  designed or on the tradeoffs such as costs and benefits. Some of the  options require legislative action, and other options could be costly for the  Internal Revenue Service (IRS) to implement. Balancing the pros and  cons is a policy decision for IRS and the Department of the Treasury  (Treasury) or Congress to make and more research would be needed.  The following discusses our analyses of these options including what  information would be needed to design the option and compare the  tradeoffs.

	Create a Standard Business Deduction

According to some stakeholders, properly tracking and deducting  expenses from gross income can be burdensome for self-employed  workers, including platform workers. A common feature of platform work  is using an asset, such as a car or house, for personal and business use;  for example, a car owner may use his or her personal car for occasional  ride-hailing work. Stakeholders and several articles from our review  discussed how the rules for apportioning expenses for personal and  business use and determining which ones are deductible can be  complicated, especially for part-time or short-term drivers or renters.
Some stakeholders as well as some articles mentioned that Congress  could consider creating a standard business deduction that platform  workers could use. Platform workers, especially those who may not have  the necessary knowledge or experience, may not track all eligible  business deductions and overpay income and self-employment taxes.  They may improperly overstate their expense deductions to offset  income, contributing to the tax gap. Creating a standard business  deduction could reduce the complexity associated with the current  system.
However, different businesses involve different expenses, and it may be  difficult to create an appropriate standard deduction across all business  types. Creating multiple standard deductions for different types of  businesses could be complicated and burdensome, and could ultimately  reduce tax revenue if the standard deduction exceeds actual expenses  for many platform workers. Additionally, a standard business deduction  limited to only platform workers would be difficult to design because no  regulatory or statutory definition of the term platform worker exists.  Further, providing the standard deduction option only for platform workers  would raise disparate treatment concerns. Given the limited data on the  number and tax reporting characteristics of platform workers, we could  not analyze the potential benefits and costs of creating a standard  deduction.

	Require Platform Companies to Inform Workers about Federal Tax Obligations

Because platform workers may be unaware of their federal tax  obligations, Congress could consider requiring platform companies to  inform workers who are classified as independent contractors about their  tax obligations. While platform companies may incur some burden to  inform platform workers, some could leverage existing processes to  inform their workers. For example, when platform companies hire such  workers, they could inform them about their tax obligations.
Officials at platform companies we contacted raised concerns about the  legal risks for them to develop the information provided to the workers.  Platform companies would not necessarily need to develop the  information provided. IRS developed a one-page publication that platform  companies could provide to workers to inform them about tax obligations  (see fig. 4). The publication is available in an electronic format for sharing  with workers.
However, no statutory or regulatory definition of a platform company  exists. Without a definition, IRS could not equitably enforce the  requirement. Alternatively, the requirement to provide the information  could be limited to third party settlement organizations (TPSO) which  have been defined. However, even a well-designed requirement could  have limited impact on awareness. IRS is collaborating with partners such  as platform companies to better inform workers about their tax  obligations. To the extent that this collaboration as well as other IRS  actions help make workers more aware, Congress may not need to  consider requiring platform companies to inform their workers.

	Require Platform Companies to Provide Expense Information

Congress could require platform companies to provide available payment  and expense information to platform workers who are independent  contractors. Multiple stakeholders suggested that sharing this information  is a best practice for raising awareness and helping workers comply with  tax obligations.
Some platform companies already provide a dashboard to workers  showing total payments and other data, like miles driven. Platform  companies have visibility over the full range of payments and some  expenses for workers. While some companies would be providing data or  providing online access to data that they already have, requiring  information-sharing may increase their administrative burden to at least  some extent.
However, we did not find information on how much more burden would be  created, which could vary based on the type of platform company.  Further, given no statutory or regulatory definition of a platform company,  a legal definition would need to be created or the requirement to provide  the information could be limited to a subset of companies, such as  TPSOs.
Because several prominent platform companies already provide expense  information, Congress may not need to add a legal obligation on the  companies. We did not find sufficient evidence to show that this legal  requirement would benefit most platform workers. Likewise, IRS  considered adding information to its website encouraging platform  companies to provide available payment and expense information their  workers, but decided not to do so. IRS officials explained that many  platform companies are already providing workers with this information.  They also expressed concerns that platform workers might rely on this  information, and not maintain their own records, which could cause  challenges if platform companies do not track all available expenses or  income. According to IRS officials, they will continue to update the  website to include tips for platform companies to help workers comply  with their tax obligations.

	Clarify Form 1099-K Definition of Gross Amount

The Internal Revenue Service Advisory Council (IRSAC) found that the  definition of “gross amount” for reporting purposes on Form 1099-K  includes items that are not part of the economic transaction between the  purchaser and the seller or service provider. This includes refunds, fees,  discounts, and other items. IRSAC recently recommended that the  definition of “gross amount” for the purposes of reporting on Forms 1099- K should exclude these items, which are not taxable income for the  platform worker, and include only payments to the workers for their  service.
IRS officials have identified some practical drawbacks to implementing  this proposal. For example, determining what is includable and what is  excludable from the “economic transaction” can vary from industry to  industry and from taxpayer to taxpayer. Depending on the industry or  activity, the gross transaction amount may not be itemized to specify what  is included; for example, many payment settlement entities would not  know whether sales tax is included in a transaction amount. IRS officials  stated that it is not clear whether this proposal would provide any value to  the worker or IRS given the variations.

	Make Electronic Delivery of Forms 1099 the Default

IRS could work with Treasury to allow for electronic delivery of Forms  1099 by default. The default delivery method is mail, and workers must  opt-in to receive forms electronically. When a worker receives the form  electronically, the worker may receive an email notification that the  electronic form is available for download in a secure online account.  Platform company officials with whom we spoke said sending forms by  mail can be burdensome due to mailing costs and the costs of finding  accurate mailing addresses. However, they generally have accurate email  addresses because that is how they exchange information with platform  workers. Allowing electronic delivery of Forms 1099 by default could  reduce the burden for companies, while ensuring that more workers  receive their forms.
However, new rules would be needed to ensure that workers are easily  able to opt-out of electronic delivery, and receive the forms on paper if  they wish. We were not able to collect sufficient data on the cost or  savings for companies and barriers for workers.

Appendix III: Comments from the Department of the Treasury

Appendix IV: GAO Contact and Staff Acknowledgments

	GAO Contact Staff Acknowledgments

James R. McTigue, Jr. (202) 512-9110, mctiguej@gao.gov  Key contributors to this report include: Julie Anderson, Rob Gebhart,  Sarah Gilliland, Gina Hoover, Jesse Mitchell, Ed Nannenhorn, Jessica  Nierenberg, Robert Robinson, Eden Savino, Tom Short, AJ Stephens,  and Peter Verchinski.