A federal court in California has authorized the Internal Revenue Service (IRS) to issue a John Doe summons targeting JustAnswer LLC, a digital services platform based in Covina, California. The summons aims to collect information on U.S. taxpayers who generated income by providing expert services on JustAnswer between 2017 and 2020.
This order, issued by U.S. District Judge Dolly M. Gee of the Central District of California, empowers the IRS to identify individuals who utilized the platform and may have neglected to adhere to federal tax regulations. Notably, the court indicated that there is no implication of misconduct by JustAnswer.
IRS Intensifies Gig Economy Tax Compliance Efforts
JustAnswer functions as a key player in the expanding gig economy, enabling individuals to earn income through the provision of services via digital platforms. Experts on JustAnswer encompass a variety of fields, including medical professionals, legal advisors, veterinarians, engineers, and tax consultants, all of whom receive compensation for answering inquiries from the public.
The gig economy has seen remarkable growth in recent years, largely fueled by the proliferation of smartphones and online platforms that facilitate connections between service providers and clients. Similar platforms have also gained traction in this evolving market.
Deputy Assistant Attorney General David Hubbert from the Justice Department’s Tax Division underscored the IRS’s commitment to ensuring compliance among gig workers:
“This John Doe summons signifies our determination to use every available resource to guarantee that all U.S. taxpayers accurately report their income and fulfill their tax obligations. Those engaged in the burgeoning gig economy must remain cognizant of their responsibilities in this area.”
John Doe summonses are a tool that allows the IRS to obtain details about individuals whose identities remain unknown but who may not have fulfilled their tax duties, such as failing to report earnings. In this instance, the IRS is pursuing records from JustAnswer to identify taxpayers who received income from the platform during the specified timeframe.
IRS Commissioner Danny Werfel reaffirmed the criticality of tax compliance for all earners:
“Similar to those who receive income through conventional employment, U.S. taxpayers earning from digital platforms within the gig economy must contribute their fair share of taxes. The landscape is becoming increasingly challenging for those who attempt to evade tax responsibilities, and we are committed to enforcing tax laws rigorously.”
The investigation that led to the court’s ruling was bolstered by the IRS Small Business Self-Employed Division and the IRS Office of Fraud Enforcement. This summons reflects a comprehensive initiative by the IRS and the Justice Department to tackle tax compliance challenges within the rapidly evolving gig economy sector.
