App-based Drivers and ServicesIncome Reporting

Section § 7464.5

Explanation

A company that acts as a platform for app-based drivers in California must send a tax form to both the drivers and the California tax agency if the drivers earn $600 or more in a year. This is required even if the platform doesn't have to report the earnings to the federal government. The form must include the driver's name, address, and tax ID, as well as the total amount they earned. This must be done within 30 days of when it would usually be due to the IRS. The company can submit this information using IRS Form 1099-K or a similar state form. However, this obligation doesn't apply if a driver earns less than $600 or is not an app-based driver.

(a)CA Business & Professions Code § 7464.5(a) A network company that is acting as a third-party settlement organization shall prepare an information return for each participating payee who is an app-based driver with a California address that has a gross amount of reportable payment transactions equal to or greater than six hundred dollars ($600) during a calendar year, irrespective of the number of transactions between the third-party settlement organization and the payee. A third-party settlement organization must report these amounts to the Franchise Tax Board and furnish a copy to the payee, even if it does not have a federal reporting obligation. The information return shall identify the following:
(1)CA Business & Professions Code § 7464.5(a)(1) The name, address, and tax identification number of the participating payee.
(2)CA Business & Professions Code § 7464.5(a)(2) The gross amount of the reportable payment transactions with respect to the participating payee.
(b)CA Business & Professions Code § 7464.5(b) Within 30 days following the date such an information return would be due to the Internal Revenue Service, a network company shall file a copy of any information return required by subdivision (a) with the Franchise Tax Board and shall provide a copy to the participating payee.
(c)CA Business & Professions Code § 7464.5(c) A network company may fulfill this requirement by submitting a copy of Internal Revenue Service Form 1099-K or by submitting a form provided by the Franchise Tax Board that includes the same information as that on Cal-1099-K.
(d)CA Business & Professions Code § 7464.5(d) For purposes of this section:
(1)CA Business & Professions Code § 7464.5(d)(1) “Participating payee” has the same meaning as provided in Section 6050W(d)(1)(A)(ii) of Title 26 of the United States Code.
(2)CA Business & Professions Code § 7464.5(d)(2) “Reportable payment transaction” has the same meaning as provided in Section 6050W(c)(1) of Title 26 of the United States Code.
(3)CA Business & Professions Code § 7464.5(d)(3) “Third-party settlement organization” has the same meaning as provided in Section 6050W(b)(3) of Title 26 of the United States Code.
(e)CA Business & Professions Code § 7464.5(e) This section shall not apply in instances where the gross amount of reportable payment transactions for a participating payee in a calendar year is less than six hundred dollars ($600) or where the participating payee is not an app-based driver.
(f)CA Business & Professions Code § 7464.5(f) This section shall apply to reportable payment transactions occurring on or after January 1, 2021.
third-party settlement organization app-based driver information return