Ronn TorossianRonn Torossian

Once the beloved unicorn of the tech world, Uber’s string of PR woes got even worse this week with the news that it’s currently under investigation by U.S. tax authorities over past returns. According to a Tuesday filing with the Securities and Exchange Commission, Uber is under investigation by the Internal Revenue Service for its 2013 and 2014 taxes, in addition to other tax-related queries “by various state and foreign tax authorities.” The company added that its taxes for 2010 through 2019 remain subject to adjustments, including in its major U.S., Mexican, British, Australian and Indian markets.

In the filing, Uber declared that it’s “highly uncertain” when the investigations will be finalized or resolved, adding that it may be possible for the balance of gross unrecognized tax benefits to “significantly change” in the next year. Uber said it expects the gross amount of unrecognized tax benefits within the next year to be reduced by “at least $141 million.”

The period in question appears to have been as much a horror-show behind the scenes as it was for Uber’s public image. During that time, the firm was being run by controversial co-founder and CEO Travis Kalanick, who would later step down in 2017 amid a string of public relations disasters.

In 2014, for example, the ride-hailing giant faced allegations of sexism and misogyny, a public disregard for its workforce of controversially designated “independent contractors” and a campaign that employed smear tactics against the firm’s critics, including journalists.

Then, an MIT study published last year alleged that half of Uber’s drivers earn no more than $3.37 per hour after accounting for vehicle ownership and operating costs. The study further concluded that 74 percent of rideshare drivers earn less than the minimum wage in their state, while 30 percent of drivers are actually losing money and 74 percent of whatever driver profits there are could go untaxed if drivers claim the standard IRS deduction for vehicle operating costs. By all accounts, the report was particularly alarming in that driver net income was shown to be considerably less than half of even the most pessimistic prior estimates.

Indications that the firm is in trouble with the tax authorities, then, couldn’t come at a worse time. Indeed, a very public drivers’ strike last month timed to coincide with Uber’s initial public offering was—by PR accounts—a raging success. Uber’s more than 7 percent decline in value since hitting the New York Stock Exchange was “bigger than first-day dollar losses of any prior IPO in the U.S.”

For a company that’s struggling to claw back its credibility after years of public relations scandals, this week’s news might be the straw that breaks the app-using, ride-sharing camel’s back.


Ronn Torossian is CEO of NYC based 5WPR.