People who have made money from reselling tickets to concerts or sporting events this year will face new scrutiny from the Internal Revenue Service (IRS) when it comes time to file their 2023 taxes.
A newly implemented law lowered the tax reporting thresholds for users of e-commerce platforms, including event ticketing websites like Ticketmaster and StubHub, by requiring those platforms to provide information on sellers’ proceeds to the IRS if their ticket sales in 2023 were worth more than $600. The previous reporting threshold applied to users with $20,000 in revenue and more than 200 transactions, but the new threshold can be triggered with just one transaction if it tops $600.
Under the rule, ticketing platforms will be required to report sellers’ proceeds of $600 or more over the course of the year and send them a 1099-K form regardless of whether they earned a profit. However, sellers will only owe additional taxes if they made a profit by selling a ticket for more than they paid for it.
The lower threshold and reporting changes may cause confusion among concertgoers and sports fans who have bought and sold tickets over the course of 2023 – which has seen strong demand for live events that range from professional and college sports to Taylor Swift’s Eras Tour.
The rule change stems from a provision included in legislation enacted in the early months of the Biden administration that was phased in to take effect in 2023.
The tax provision was included as a revenue-generating measure in the American Rescue Plan Act – a $1.9 trillion stimulus package enacted along party lines by Democrats in early 2021 through the budget reconciliation process. It was initially poised to take effect for the 2022 tax year, but the Biden administration opted to delay the rule for a year to allow the IRS more time to implement the change.
IRS Commissioner Daniel Werfel has said that the agency is planning to issue guidance on the subject for taxpayers who may receive 1099-K’s due to their proceeds from ticket sales and could owe taxes.
Lawmakers in Congress are considering changes to the reporting threshold, although it’s unclear whether any changes will be made before filing season for the 2023 tax season arrives.
A bill known as the Small Business Jobs Act would restore the old reporting threshold of $20,000 in revenue and more than 200 transactions. It was advanced by the House Ways and Means Committee earlier this year, but it faces an uncertain fate in Congress and would reduce federal revenue by about $9.7 billion over a decade, according to an analysis by the Joint Committee on Taxation.
A separate bipartisan proposal in the Senate known as the Red Tape Reduction Act would roughly split the difference between the new and old standards by setting the threshold at $10,000 in revenue and 50 transactions.
During a House Ways and Means Committee hearing this spring, Werfel was asked about whether the IRS would support the restoration of the old threshold. He said that while he declined to comment on a policy preference, he indicated it would likely be easier for the IRS to administer a revised threshold.
"I cannot opine on the wisdom or the preference of a particular policy outcome, but I will share that a change in the threshold would be easier to administer, and so at my seat of the table, I’d say the IRS would have an easier time of administering it," Werfel said.