WEEKLY BNA INSIGHTS: RENTING YOUR NEIGHBOR'S CAR COMES WITH ITS SHARE OF TAX ISSUES

From the 10/14/16 edition of the Weekly State Tax Report:

Ten years ago, the term “sharing economy” would have had little meaning to most people. Fast forward to today and sharing economy business models have seemingly taken the business world by storm. Of course, with this new economic model come new issues regarding taxation.

When most people think of sharing economy business models, companies such as Airbnb and Uber immediately come to mind. You can now add Getaround to your list if you haven't already. Getaround is a car rental startup offering peer-to-peer car sharing and local rental service. Using Getaround, vehicle owners can offer their vehicles to others for rent, (in the same way you might offer your home for rent on Airbnb) and using the company's unique technology, Getaround Connect, owners can locate and unlock their cars without a key in addition to adding security features such as GPS tracking. The company most recently launched in Washington, D.C. and already operates in San Francisco, Berkeley, Chicago, Oakland and Portland.

Like Airbnb, Lyft and Uber, Getaround may soon find itself confronted with the challenge of deciphering whether sales tax is due and determining who has responsibility for collecting the tax. With respect to car rental transactions in many states, sales tax applies to the car rental fees. If you live in one of those states, and you decide to rent your car under a peer-to-peer rental program, the next question is who is liable to calculate, collect and remit that tax in states where such businesses operate?

Stephanie Cangialosi, tax law editor at Bloomberg BNA discusses tax issues surrounding the “sharing economy” in this week’s BNA Insights article, available here (subscription required). Or sign up for a free trial to the Weekly State Tax Report.

Compiled by Chreasea Dickerson