Our platform, making their first forays into the world of selfemployment. So many understanding the level of economic triggers, quarterly estimated payment files requirements but many do not. It is taskgrabits interest to see our taskers greater flexibility and transparency with respect to tax planning would help maximize return on participation in our networks. It is their freedom as entrepreneurs. Todays topic is just one of many where our taskers could benefit from better training. Our taskers are also looking for direction on how to better market themselves and their services, Access Health care, and plan for retirement. We would like to be a resource, a partner and a collaborator for them. We urge congress and relevant Government Agencies to look at innovative approaches to support participating in the emerging platform marketplace. As a pioneer of the emerging market, taskgrabit welcomes the opportunity to work with poli policymakers as our Company Grows and matures. We became the First Technology company to announce wed follow the Congressional Black Caucus in tech 2020 initiative. Mr. Chairman and Ranking Member velazquez, we thank you for you and your committees interest in taking the time to understand our business and how its changing what we call the future of work. We appreciate the bipartisan interest in the platform economy. Most notably by the sharing economy caucus, cochaired by california congressman darrell issa and eric swalwell. We hope we can channel this toward constructive policy solutions that will further enable taskrabbit further empower Small Businessowners and entrepreneurs provide services across the country. Thank you. Thank you very much. Mr. Reed, youre recognized for five minutes. Chairman, Ranking Member verks lazquez, my name is morgan reed. Associate director of a. C. T. , App Association. Thank you for holding this important hearing. The App Association represents more than 5,000 Small Business app makers. Our Member Companies have ena e enabled the rise of the sharing economy by leveraging the connectivity of smart devices. Sharing Economy Companies have grown rapidly over the past decade. They allow instantaneous communication, secure transactions and personalized relevance to consumers. Moreover, the same factors allow Small Businesses and tens of millions of americans to earn more for their families with fwlex b flexibility and autonomy, powered by the smartphone in your pocket. These opportunities will cease to exist if federal regulations hi hinder the growth of the sharing economy. I want to highlight three things that affect our members. First congress and the Internal Revenue service should take great care to ensure federal tax code enables rather than stifles the sharing economy. Specifically the treatment of all sharing economy workers as employees under the federal tax code would be detrimental especially to Small Businesses. Second, Small Businesses need certainty and transparency in the tax resolution process. Including the ability to settle disputes with the irs in an effective and efficient manner. Legislation like that proposed by senator rob portman can help ensure that outcome. Finally, congress should ensure fairness by guaranteeing that interpr internet taxes are based on the sellers location. But beyond specific policy requests and legislative language, id like to take a moment to illustrate how the move to the sharing economy is far more than a repackaging of existing services. The popular media tends to describe the sharing economy in terms of companies that displace or disrupt an existing Business Model. Ebay replacing the classifieds or the yard sale. Uberx replacing the taxi. Vrbo replacing hotels. This is a false or limited dichotomy. The sharing economy not only replaces but also creates new con septembcepts in how people and interact. For example, a chicagobased Small Business utilizes a sharing platform to connect nutrition coaches from across the country to consumers seeking a healthier lifestyle. Using the service, dedicated coaches answer questions, set benchmarks and help consumer meet their health goals. But they do not merely connect you to a nutrition expert. Fundamentally switches the paradigm by getting users to change bad habits through ongoing relationships, not just the once a month meeting you would receive with traditional care. Users can take pictures of the food theyre eating, share it with their coach, get realtime feedback and reinforcement. Coaches get insights so they can step in before a bad decision is made. Actively working to prevent d s diabetes and other health problems. In short, creating Healthy Habits is relationship dependent. It doesnt exist without the tools that great our modern sharing economy. You would merely have individual nutrition coaches trying to change years of bad habits with static information given in isolated 60minute sessions and its no possible way that every nutrition coach and registered dietitian would create their own software to provide these new tools nor could a company writing the software afford to hire an army of nutrition coaches then hope to create a user base. The only way it works is through a sharing platform. One that allows users to find the help they use and fneed and coaches to take as many or as few clients as they want. So as you see, it replaces no existing industry. And theres a story like this in every single district in america. Each one of you received a packet of baseball cards with companies from your district. Now, not all of them are sharing economy businesses but theyre all part of the revolution fakifake i taking place. One moving hightech beyond big companies. In fact, our most recent study showed 82 of the Top App Companies are Small Businesses most of which hail from places other than silicon valley. The companiy ies you have in ha are looking to grow and succeed each with their own vision of what success looks like. The success of the sharing economy is predicated on an empowered workforce, one that can choose to drive for uber and l lyft. And platforms to attract users through better training, tools and clients without triggering a change in tax status. We urge congress to ensure that the rules we follow make sense in an age where the neighborhood yard sale is now nationwide and where a daily client may not live in the same country. The App Ecosystem empowers the sharing economy and offering incredible ben nit efits to eac every american. I look towaforward to working w you. Thank you very much. Mr. Kennedy, youre recognized for five minutes. The approach of this topic is driven by three considerations. The first is while the sharing economy is growing rapidly, it still represents only a small fraction of an increasingly c diverse labor market. Second, internet platforms are delivering tremendous value to both consumers and workers. In a survey of over 4,600 workers from 11 Platform Companies only 7 said they were dissatisfied with their experience. Workers earned an average of 7,900 over the previous 12 months which accounted for 22 of their total household income. The average Hourly Earnings was 28. The third consideration is the traditional employee and independent contractor distinction no longer serves much purpose for a growing share of todays labor market. Largely by default, the common law test has become the basis for determining whether all of the major federal and state labor laws apply. The result is a large am of uncertainty and litigation which discourages companies from supporting gig economy workers and consumers in a variety of ways. Some of the ways that companies have said that they would like to support their independent contractors include training and access to business and financial advice. Such efforts could be enormously valuable to workers who are, after all, for all intents and purposes running their own businesses. Within the tax field, help with tax advice, recordkeeping and withholding would be especially important. The tax laws are enormously complex. Workers need to make a number of important decisions including what form of business to create. Whether to set up a new savings plan and what salary to pay themselv themselv themselves. And they need to complete their tax filings in a timely manner. In a survey, 20 of online workers listed understanding tax and legal obligations as one of their top challenges. In addition, these Platform Companies could add value to both workers and consumers by setting prices, handling transactions, letting parties rate each other and conducting background checks. Yet, such activities are often used as evidence of an employer employee relationship. Public policy should encourage companies to support their workers careers. Irrespective of the work relationship. If a Company Offers withholding to all workers, or pays for access to tax or business advice, or extends benefits to independent contractors, why would we want to discourage that . Instead encourage that by insisting it must also be subject to minimum wage collective bargaining and Unemployment Insurance legislation. In a recent itif report, i argue that there are three approaches that congress can take to twin modernizing the nations labor laws. The best option would be for congress to amend each federal labor law by replacing the common law test with a clearer one specific to that particular piece of legislation. The second approach would be to define a third category of workers somewhere between an employee and an independent contractor. Finally, congress could give platforms devoted to personal services a temporary exemption from most labor laws. Theyre clearly independent contractors, anyway, under the common law test. The small size of the gig economy and the temporary nature of exemption reduce any risk to the broader labor markets. The world around us is rapidly changing. Work arrangements will continue to diversify as companies respond. Congress cannot dictate the shape of future work arrangements. It can, however, play a large role in helping workers get the kind of support they need to have good careers that fit into their increasingly complicated lives. Thank you, again, for the opportunity to appear before you. Thank you very much. We appreciate the testimony from all the panel here this morning and now well ask questions. I recognize myself for five minutes. Mr. Bruckner, ill start with you. You testified that more than 60 of your survey respondents did not receive a form 1099k or form 1 1099 miscellaneous. I think the first thing we should do is recognize that the instructions for the form 1099 miscellaneous direct people to use the form 1099k for credit card reporting or payments made by credit card and that creates a tax reporting loophole for income thats earned by less than 20,000 because there are certain income thresholds for using the form 1099k and i think the irs should immediately reconsider those instructions on the form 1099 miscellaneous and see if it can be used for credit card payments less than the income threshold for 20,000. Do you have a sense of how many folks arent complying with the tax code because its too complicated in the shared economy im talking about thats too complicated and too cumbersome versus, well, you knows, im not going to pay my taxes. Thats a good question. I dont have a hard number on that, but i can tell you anecdotedly from when we talked to folks in the sharing economy or when we talk to tax preparers that specialize in advising folks that earned income with platformrelated work, they were immediately confused as to whether or not they had to pay taxes on their income earned because in many instances they didnt get any 1099 at all. Very good. Thank you. Mr. Willey, ill move to you now. We heard a lot today about the tremendous projected growth of the sharing economy in the coming years. What are taskrabbits own sbimtsbimts estimates of the growth you might expect to see in your company, and what areas do you see as having the best Growth Potential . If history is any indication of the future, which we believe it is, year over year to date were growing on a revenue basis. Were also growing our we have 15,000 organic applications from our taskers on a month to month basis. Both of those indicate, one, were still in the very early days of what the sharing economy could look like, and, two, taskrabbit is well positioned to be a figurehead of growth. Thank you. Mr. Reed, ill move to you at this point. We discuss the complexity of all this, how hard it is to get information, how to figure out how to comply with the irs code under existing under the existing code. Very confusing. Is it possible that theres some enterprising entrepreneur out there that could come up with an app, form their own company, to kind of solve this problem rather than the government figure it out for them . Well, i think that its a twopronged test. One, yes, absolutely. In fact, there have been some early to Market Applications that attempted to make this switch. One of the real discoveries that we found is that an application that is on your device to help you with taxes is one that you likely only turn to at that moment of panic. What really were seeing now is the fact you have to do an integrated application. That you need to be able to pull in the information from taskrabbit into your Tax Preparation Software on an ongoing basis so you can keep track of it. In fact, that leads to one of the confusing elements weve all been discussing. If taxrabbit or any of these companies were to provide that kind of interactivity and that ongoing information flow in training, well, that might trigger the case of them being considered employees. So on the one hand, its very hard to put together an application that draws the right information, and on the other, our platforms are concerned about the late liability they may take on by providing us the very thing we need to satisfy the first question you asked is, how do we get people to pay their taxes . Thaunnk you. Got time for one more question. Mr. Kennedy. Even if we were able to implement a temporary legislative and regulatory moratorium on the sharing economy as you suggested, you correctly point out there are a meyriad of relevant state and local laws that bear on this sector. How would you address inconsistencies between federal action versus state and local . Yes. I say two things to that. The first is i think theres room for an increased dialogue between the federal government and the states about what the common rules should be. You know, we would like, i think, ideally for there to be consistency at the federal and state levels and so encouraging reform at the state level, manages reform at the federal level be important. And the second is that congress can, to some extent, preempt state laws using the Commerce Clause and theres room for debate about where that line is. But i think there is scope for preempting a lot of the state legislation now. Okay. Thank you very much mind ti. The Ranking Member recognized for five minutes. Thank you, mr. Chairman. Mr. Kennedy, in your testimony, you touch on this issue but id like to hear more on it. Theres a level of complexity inherent in operating a business that straddle the boundary between wage employment and selfemployment. What can be done specifically in tax law to overcome these challenges . Is it creating a new hybrid definition of an employee or amending the irs safe harbor rule . I i mean, my personal sort of inclination would be to amend the rule to create a brighter line between, you know, employee where a particular law applies and where it doesnt apply so people know which side theyre on. I think you could also for people who only make a little bit of money on these platforms you could raise the threshold so they dont need to they still need to report the income and pay taxes on it but dont need to make, say, quarterly payments. So i think there are two hopefully minor reforms that would make a difference. Thank you. And miss bruckner, there has been some concern from traditional brick and mortar businesses about the emergence of the sharing economy Business Model and how it affects fairness. While i do not advocate one Business Model over the other, how do we ensure that actions taken to foster entrepreneurship through new methods do not disadvantage businesses that invest time and money to conform to existing regulations when classifying their workers . I think that the first thing that you can do is promote understanding of what your tax filing obligations are. Because people view unfairness when they think that other people arent paying their fair share. So if we take actions on outreach and education, on what income you need to pay taxes on and really promote what your tax filing onbligations are then youre creating an opportunity for people that actually pay their fair share and creating transparency and making sure that folks be they in a sharing economy or working for a brick and mortar business are both paying their fair share. Mr. Reed, do you have any comments on that . Well, i think that i think what we all have seen, what the studies have shown from miss bruckner and mr. Kennedy, a standalone entity is almost nonexistent. Sure, theres a corner bodega that sells ice cream and sundries that will probably be very isolated. In nearly every other business, youre going to have a mixed economy. I started a bike store when i was younger. I still own part of a bike store. We sell part of our equipment online. We get rid of stuff we didnt sell in the area online. Use Services Like ebay, et cetera. Even your corner independent bike store is probably going to have an interaction in the sharing economy. And so while its important to preserve the rights and the capabilities of th