New IRS Rules Require Ticket Resellers to Report Earnings
The IRS has announced new rules that will affect individuals who earn money from reselling tickets to concerts or sporting events. Starting in 2023, resellers will be under increased scrutiny when filing their taxes.
Under the new law, e-commerce platforms like Ticketmaster and StubHub will have to report sellers’ proceeds to the IRS if their ticket sales in 2023 amount to more than $600. Previously, the reporting threshold was set at $20,000 in revenue and more than 200 transactions. However, the new threshold can be triggered with just one transaction if the sale exceeds $600.
The reporting requirement will apply to sellers’ proceeds of $600 or more, regardless of whether the seller made a profit. The platforms will send sellers a 1099-K form, and additional taxes will only be owed if the seller made a profit by selling a ticket for more than its purchase price.
The change in the reporting threshold may cause confusion among concertgoers and sports fans who participated in ticket reselling in 2023, given the high demand for live events. The new rule was included in legislation enacted by the Biden administration, which derived from the American Rescue Plan Act—a stimulus package passed in early 2021. The enforcement of the rule was initially set for 2022 but was postponed to allow the IRS more time to implement the change.
To assist taxpayers who may receive 1099-K forms and owe taxes on their ticket sales proceeds, the IRS plans to issue guidance. However, lawmakers in Congress are currently considering potential changes to the reporting threshold. Two proposed bills suggest restoring the previous threshold of $20,000 in revenue and more than 200 transactions, or setting a new threshold at $10,000 in revenue and 50 transactions.
IRS Commissioner Daniel Werfel has indicated that a change in the threshold would be easier for the agency to administer but did not express a policy preference. However, any alterations to the reporting threshold could have implications for federal revenue. One analysis estimates a reduction of approximately $9.7 billion over the course of a decade.
At present, it remains uncertain whether any changes will be made to the threshold, and the outcome of the proposed bills is still unknown. It is essential for ticket resellers and buyers to stay informed and prepared for potential changes as the 2023 tax filing season approaches.
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