Usually, if you give a ticket to a friend and they reimburse you on Venmo, PayPal, CashApp, or another platform, that’s the end of the transaction. However, if those tickets were really good, and exceeded the IRS’s new reporting threshold of $600 for online sales, expect to receive a Form 1099-K, and expect to report that transaction on your taxes.
In prior years, taxpayers received an Internal Revenue Service (IRS) Form 1099-K for goods and services sold online only after they triggered two requirements — a $20,000 annual threshold and more than 200 transactions. In an effort to close the tax gap, the American Rescue Plan Act included a provision to drastically reduce this threshold to $600 and remove the transaction threshold entirely for 2022 tax returns.
The new tax-reporting requirements disproportionately impact sports fans, especially those with season tickets. Committing to an entire season is tough for most people, and many fans rely on transferring tickets to help recoup the cost. Most of these fans have never received a 1099-K. When these taxpayers receive a 1099-K for the first time early next year, many will be faced with a daunting task that is mired in conflicting information and confusion. Some will risk over-reporting income, while many will struggle as they seek to document the value of items sold, and others will be forced to hire a tax professional in order to ensure compliance.
Sports Fans Coalition supports legislative proposals to ensure that the new 1099-K tax regime does not needlessly impact individuals, entrepreneurs, and small and micro businesses. We urge policymakers to make the current law less stringent on sports fans. Luckily, several bills are making their way through Congress. We encourage all sports fans to let their Members of Congress know to support these proposals.
Cut Red Tape for Online Sales Act (H.R.7079 and S.3840)
Democratic Reps. Pappas (NH), Axne (IA), Sánchez (CA), and Horsford (NV) are leading House legislation to raise the 1099-K reporting threshold to $5,000, and Sens. Hassan (NH) and Sinema (AZ) are taking the lead in the Senate.
Saving Gig Economy Taxpayers Act (H.R.3425 and S.948)
Rep. Miller (R-WV) is leading a proposal to revert the 1099-K reporting threshold to its original level of $20,000 and 200 transactions. Sen. Scott (R-FL) introduced a similar proposal in the Senate.
Stop the Nosy Obsession with Online Payments (SNOOP) Act (H.R.6913 and S.3546)
Rep. Steel (CA) and Sen. Hagerty (TN) are also leading legislation to reinstate the 1099-K reporting threshold to its original level.
Any one of these proposals would go a long way to helping sports fans this upcoming tax season, and SFC encourages Congress to advance these policies before the year ends.