R Sheet on Rental Car Taxes
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BACKGROUND
As long as Americans have owned cars, citizens have made money renting them to each other—from one-off transactions between friends and neighbors to the advent of formal rental car businesses. For almost as long, governments have taxed and regulated these transactions to protect public safety and raise funds for infrastructure like roads.
Typically, governments focused their tax and regulatory efforts on rental car firms. This makes sense, because historically, formal businesses with stationary car lots have administered these transactions more easily than individual citizens. But with the advent of internet rental platforms and cheap, camera-equipped phones, the rental car market is decentralizing. This creates problems for legacy tax and regulatory regimes, forcing decision-makers to consider how best to adapt rules to fit the new rental car economy.
