Did You Resell Some Tickets? Well, The IRS Wants Their Cut.

You know what really gets the people going? Blogs about taxes. Okay, not really, but a new IRS rule about reporting income from online transactions will potentially affect a good amount of casual ticket resellers . This change caught my attention and I want to share with others in hopes that I can maybe help one or two people getting caught in the crosshairs of the IRS.

Before continuing further, I want to make it clear that I am not a tax professional, nor should any information below be literally considered tax advice. I am, however, a ticketing professional, who earns income as an independent contractor not only from event-industry clients, but also from other sources like online sales and real estate. This is to say that my taxes are complex, and I like to think I have a good understanding of how they work.

So, what exactly is going on?

Previously, there was no reporting requirement for individuals making under $20,000, with less than 200 transactions from online sales. This means that platforms such as eBay, Etsy, along with ticket resale sites like StubHub and SeatGeek did not have to issue 1099s to people below these thresholds. (A 1099, or more specifically in this case, a form 1099-K , is the document issued by the IRS for payments received via credit card companies or third-party payment processors like PayPal and Venmo. This form is used to complete yearly income tax returns, similar to a W2 that most wage earners receive).

Starting with the 2023 tax year, the IRS has lowered the reporting threshold from $20,000 to $600. This means that anyone earning $600 from any type of online sales, will now receive a 1099-k and be expected to report that income on their taxes. Technically speaking, all income has always needed to be reported on individual tax returns. However, there has been a de facto exemption for online transactions, as represented by the previous $20,000 threshold. Presumably, this was because there isn’t an easy way to determine if the money was actually income. It could be argued that the $1,000 PayPal transaction was just one friend paying another one back for something. Even if there was an online sale for $500, what was the acquisition cost of that item and/or was some type of tax already paid on it? It was not to be expected that somebody was keeping a ledger for their side hustle.

This situation is related to ticketing for a few reasons. First, with several high-profile, high-demand concerts touring over the last year (Taylor Swift, Beyonce, Bruce Springsteen, etc.), a lot of people resold tickets, making hundreds, even thousands of dollars in the process. I’m not talking about professional ticket brokers, just regular people that may, given the high demand for tickets, bought as many as they could if the opportunity presented itself. Maybe they purposefully overbought in hopes that they could sell the additional tickets to defray the costs of attending the show. Or maybe other people in the group backed out and wanted to resell tickets to get their initial investment back, and then some. At any rate, the amount of casual resellers has been unusually high in the last year or so. StubHub reported to the Wall Street Journal that 70% of all sellers of Taylor Swift tickets to be fans rather than brokers .

The second ticketing situation has to do with season ticket or subscription packages. Many fans resell some of their tickets because they just can’t make 100% of the games of the games or events. Major League Baseball teams have 81 home games from the beginning of April through the end of September. It’s a lot to ask an individual to attend every single game. Reselling tickets to games or events you’re unable to attend is a way to help defray the overall cost of the ticket package. Let’s say somebody spends $10,000 on a MLB season ticket package. They only attend about 50% of the games, which is still over 40 games, and then try to resell as many other tickets as they can, even at a loss and the proceeds from those sales is $2,000. It is now expected that taxes will be paid on that $2,000, even though it is really an $8,000 loss.

In both situations, I would imagine that the majority of these casual ticket resellers have regular wage jobs and as such, do not itemize their taxes, opting for the standard deduction instead. I would also imagine that the deductible business expenses of casual resellers are not going to be enough even bother with itemizing their taxes. The bottom line is that this new policy from the IRS is going to lead to people owing more than their fair share in taxes.

Hopefully the IRS will not crackdown too hard, at least at first, and dragnet a bunch of people who aren’t professional ticket resellers and were probably unaware of this rule change anyway. People should pay their taxes obviously, and maybe the old $20,000 reporting standard was too high, but I feel like the pendulum swung too fast and too far in the opposite direction.