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by amenghra 4474 days ago
Without judging if it's a good thing or a bad thing, some of these services (e.g. Lyft in some cities) use "suggested donations" instead of payment. It changes the legal & tax consequences.
1 comments

No, it really doesn't, especially not for tax purposes.

The law (and especially tax law) looks at the substance of the transaction, not its form. Calling a payment for commercial services a "donation" doesn't make it a donation. If it did, every business would ask for "donations" instead of payment. Indeed, as a matter of tax law, calling the Lyft fees "donations" actually makes it worse for the drivers--they can't offset the "donation" income with their Lyft-related expenses. (Lyft can't recharacterize the donations it receives on behalf of the drivers as fee compensation when it remits payment to the drivers because it takes the position that they're independent contractors and it is merely acting as a collection agent.)