A federal court in California has granted the Internal Revenue Service (IRS) permission to issue a John Doe summons to JustAnswer LLC, a digital platform headquartered in Covina, California. The summons seeks information on U.S. taxpayers who earned income by providing expert services through JustAnswer between 2017 and 2020.

The order, issued by U.S. District Judge Dolly M. Gee of the Central District of California, enables the IRS to gather records identifying individuals who earned income on the platform and may have failed to comply with federal tax laws. The court emphasized that there is no suggestion of wrongdoing by JustAnswer itself.

IRS Targets Gig Economy Tax Compliance

JustAnswer operates as part of the growing gig economy, where individuals earn income by offering services or goods through digital platforms. Participants on JustAnswer include professionals such as doctors, lawyers, veterinarians, engineers, and tax specialists who are paid to answer questions from the public.

The gig economy has expanded significantly in recent years, driven by the rise of smartphones and online platforms that connect service providers with customers. Other well-known gig platforms include Uber, Airbnb, Etsy, and TaskRabbit.

Deputy Assistant Attorney General David Hubbert of the Justice Department’s Tax Division highlighted the IRS’s focus on ensuring tax compliance among gig workers:

“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.”

John Doe summonses allow the IRS to obtain information about individuals whose identities are unknown but who may have violated tax laws, such as failing to report income. In this case, the IRS seeks records from JustAnswer to identify taxpayers who earned income on the platform during the specified years.

IRS Commissioner Danny Werfel reiterated the importance of tax compliance for all income earners:

“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. The world is getting smaller for tax cheats, and we will work collaboratively with our partners to vigorously enforce the nation’s tax laws.”

The investigation leading to the court’s order was supported by the IRS Small Business Self-Employed Division and the IRS Office of Fraud Enforcement. The summons represents a broader effort by the IRS and the Justice Department to address tax compliance issues in the rapidly growing gig economy sector.

This article, “Court Authorizes IRS to Seek Identities of Gig Economy Workers on JustAnswer Platform” was first published on Small Business Trends