OnlyFans content creators who fail to pay taxes while earning income may face barriers to leaving the industry, according to tax attorney Steven Chung.
Content creators on OnlyFans and similar platforms are treated as independent contractors, meaning no taxes are withheld from their earnings. They must pay income taxes on net income after business expenses and self-employment taxes of 15.3% on net income up to $184,500 combined with any W-2 wages. Many creators do not pay estimated taxes during the year, resulting in large tax bills.
Creators who want to transition to regular employment at lower pay levels may struggle to repay tax liabilities. The IRS offers several settlement options. A partial-payment installment agreement (PPIA) bases monthly payments on income and reasonable living expenses, continuing until the tax bill becomes uncollectible at the 10-year statute of limitations. Creators can also submit an Offer in Compromise for Doubt as to Liability if tax returns were prepared incorrectly, or for Doubt as to Collectibility if the IRS believes a standard installment agreement will not result in collection. An Offer in Compromise for Effective Tax Administration allows settlement based on special circumstances and public policy considerations.
However, Chung states the IRS will not treat adult content creation differently under public policy grounds. "The IRS is not authorized to act as an arbiter of the social acceptability of legal income sources." Treasury Regulations limit public-policy compromises to cases involving senior citizens with fixed income and people with serious health problems, and do not provide special treatment based on occupations or former occupations. Creators who did not plan for taxes generally will not receive preferential treatment and must use existing settlement programs based on demonstrated inability to pay.