From Showtime to Tax Time: How the New IRS Ruling Impacts Ticket Resellers

This past summer has proved to be a banner year for live events such as the explosion of Taylor Swift’s “Era Tour” or Lionel Messi bringing his talents to the U.S. The average price for Taylor Swift tickets sold in the U.S. was over $1,000, the price of Inter Miami CF matches shot up to $250 apiece with the addition of Lionel Messi, and the average tickets for Beyonce and Harry Styles respectively clocked in around $400. These sky-high ticket prices led to huge markups in the secondary ticket market, brought the ticketing resale market under a microscope, and led to hefty profits for anyone peddling in-demand summer event tickets. The surges in prices have also coincided with an unusually sharp increase in the number of fan ticket resellers this year. For the U.S. “Eras Tour,” fan sellers, as opposed to professional ticket brokers, accounted for roughly 70% of ticket orders. StubHub, an online market for the buying and reselling of tickets, reported that this is double the proportion of what the company normally sees. 

However, if you sold tickets for a profit, get ready to pay taxes. A newly implemented law as part of the American Rescue Plan Act, will now require ticketing companies to report to the IRS if customers sold more than $600 in resale tickets in 2023, irrespective of the number of transactions. Previously, ticketing sites had to send a 1099-K form to sellers who made over $20,000 through 200 or more transactions. Additionally, this IRS reporting requirement is triggered by the sale price, not the seller’s revenue such as in the old threshold. This reported gross transactional amount equals the total amount of your combined sales, meaning the price you sell your tickets for, plus fees and any other amounts related to the ticket sales. 

Selling tickets at a profit has always counted as taxable income, but this new threshold means the IRS will have an easier time seeing that income and collecting taxes. Sellers will only need to pay taxes if they made a profit off of the tickets, so the fan-to-fan resale market likely won’t be severely affected. However, it will be up to the sellers to calculate their profits for the applicable tax year. The IRS estimates that under the new reporting regime, it will receive 44 million forms from ticketing companies covering the 2023 tax year, up from 11.1 million in 2021. 

There are lawmakers in Congress who are supporting or considering changes to the reporting threshold, but it is unclear whether any changes would be made before the filing season for the 2023 tax season arrives. A bill introduced known as the Small Business Jobs Act would restore the old reporting threshold of $20,000 in revenue, and there is a separate bipartisan proposal in the Senate that would set the threshold at $10,000 in revenue. While the future outlook of the current $600 threshold is unknown, taxpayers who have resold event tickers will have to rely on their records to calculate what they paid for tickets and their earnings from reselling them. 

If you have questions regarding the potential tax consequences to you, do not hesitate to contact attorney Ted McGinn at tmcginn@lavellelaw.com or 847-705-7555.