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Unfair, unethical fees over 'expense reimbursements'

dantas
Active Member
Abel D Member Since: Jun 26, 2017
11 of 18

> Abel, do you have any idea how many freelancers try to cheat Upwork out of fees every single day?

 

That is upwork's problem, not mine.


Well actually it might be kind of my problem, from the responses I've gotten here it seems that the consensus is that upwork is swarming with scammers, and that it's not worth it to trust anyone, because everyone is a scammer.

Which makes me wonder if upwork is even the place for honest people. From your responses it doesn't seem to be.

You've just compared upwork freelancers to a mob of shoplifters. As a client I don't want to hire from a mob of shoplifters.

 

> What you suggest is akin to saying that an electronics store should just leave the doors open around the clock and leave out a bucket for people to deposit the correct amount of money in if they choose to take something. 

No, I didn't suggest that, I can't see how your metaphor relates to the problem.


The only thing I said is that it is unfair and unethical charge a value added tax on tools that I need to do my job. A job that is very profitable for upwork. I'm not talking 50$ fixed price contracts here, I'm talking about long term hourly contracts.

tlsanders
Community Guru
Tiffany S Member Since: Jan 15, 2016
12 of 18

@Abel D wrote:

> Abel, do you have any idea how many freelancers try to cheat Upwork out of fees every single day?

 

That is upwork's problem, not mine.

 

Yep. And Upwork has found a solution that works for it. 

kochubei_valeria
Community Manager
Valeria K Community Manager Member Since: Mar 6, 2014
13 of 18

Abel,

 

The Service Fee applies to all payments made on Upwork including bonuses and expense reimbursements for reasons Preston and Heaven have already mentioned. There are no plans to change the Fee structure in the near future. 

 

Thanks for your feedback.

~ Valeria
Upwork
james-tenser
Active Member
James T Member Since: Mar 8, 2018
14 of 18

Hey Upwork team -

You folks totally blew it on this subject.

Trustworthiness is not the issue when it comes to reimbursement for legitimate expenses. It's your utter absence of a verifiable process for filing properly documented expense reports. You don't or won't trust your clients and contractors, yet you won't implement a secure process for fixing this. Laziness and paranoia pure and simple.

By the way, under your present approach Freelance contractors would also have to pay income and self-employment taxes on the net proceeds of any bonus payments made in lieu of a proper expense reimbursement. You take your profit off the top. We lose.

Not only do you fail your honest and hardworking freelance contractors in this regard but you prevent your clients from properly documenting their tax deductions for these expenses.

I wonder what the IRS would say about this? Have your lawyers discussed it with them?

bobafett999
Community Guru
Prashant P Member Since: Sep 29, 2015
15 of 18

Well there are several ways to eat the cake.

 

1. Have the buyer buy it.

2. You buy it, but tell buyer it cost you $YY ($XX+20%).

3. If you are going to use that tool in future think of it getting the tool at 80% off.

4. Eat the cost.

 

There are mny freelancers wo would love to work off platform and mind you there are many buyers also who will be happy to oblige if they think there getting a good deal.  The "$" sign inspires people to be very creative.

james-tenser
Active Member
James T Member Since: Mar 8, 2018
16 of 18

Thanks Prashant -

But my concern is primarily regarding business travel expenses associated with long-duration engagements. The reimbursement would be taxable as income. An IRS minefield for both client and contractor.

Also there is no Upwork mechanism for properly documenting and submitting legitimate expenses. This would require communications outside the platform. Isn't that what you are trying to discourage?

Policy aside, this is a troubling gap in the Upwork system that I believe needs to be addressed at the highest level.

tlsanders
Community Guru
Tiffany S Member Since: Jan 15, 2016
17 of 18

@James T wrote:

Hey Upwork team -

You folks totally blew it on this subject.

Trustworthiness is not the issue when it comes to reimbursement for legitimate expenses. It's your utter absence of a verifiable process for filing properly documented expense reports. You don't or won't trust your clients and contractors, yet you won't implement a secure process for fixing this. Laziness and paranoia pure and simple.

By the way, under your present approach Freelance contractors would also have to pay income and self-employment taxes on the net proceeds of any bonus payments made in lieu of a proper expense reimbursement. You take your profit off the top. We lose.

Not only do you fail your honest and hardworking freelance contractors in this regard but you prevent your clients from properly documenting their tax deductions for these expenses.

I wonder what the IRS would say about this? Have your lawyers discussed it with them?

 

James, I can't speak for every freelancer, but I strongly suspect that I am not alone in preferring to deal with the occasional fee on a reimbursement rather than pay 30% fees or more so that Upwork can hire a large staff to review expense reports and manage disputes over fraudulent ones.

 

I don't even know how to respond to your IRS gobbledygook, as there is nothing in this process that prevents (or even makes it difficult for) a client to document deductions.

 

ETA: The problem you raise in response to Prashant simply doesn't exist. The IRS clearly provides for the option of a company including reimbursements in the 1099 total and the contractor deducting them as business expenses or the company leaving them out of the total and the contractor not deducting them. There is absolutely no legal or practical problem with either method.


kochubei_valeria
Community Manager
Valeria K Community Manager Member Since: Mar 6, 2014
18 of 18

James, please refer to my reply to your post about the same topic here.

~ Valeria
Upwork
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