2023 has been monumental for the ticket resale market, especially in the United States. Blockbuster shows like Beyoncé's Renaissance tour and Taylor Swift's Eras tour skyrocketed ticket resale prices. Add to this the recent surge in soccer match ticket prices due to Lionel Messi's association with Inter Miami, and it's clear the resale market has exploded.
The massive expansion hasn't gone unnoticed by the government. A new law is about to throw a curveball to those involved in this lucrative business.
The Changing Tax Landscape for Resellers
Ticketing platforms, from 2023 onward, have to report any individual who has sold more than $600 in tickets to the Internal Revenue Service (IRS). This regulation aims to ensure that those profiting from reselling tickets pay the appropriate taxes on their income.
Previously, the IRS's interest was only piqued if a reseller had transactions over $20,000 and more than 200 transactions in a year. This change in legislation means that the threshold has lowered dramatically, meaning more resellers will find themselves accountable. This transition was supposed to take effect in 2022 but got deferred to the 2023 tax season.
What Sparked the Change?
Two significant factors contributed to this legislative change. First, the astronomical prices that tickets were fetching on resale platforms. For instance, the average price of a Taylor Swift ticket on StubHub was reported to be $1,095 — far surpassing the new $600 threshold. Similarly, soccer tickets, particularly those involving Messi, witnessed massive price hikes, increasing by almost 11.76 times from their original price.
Second, the sheer volume of resellers became impossible to ignore. StubHub noted that its platform saw an unusually high number of fan ticket resellers, accounting for a staggering 70% of U.S. Eras Tour ticket orders.
Impact on the Resellers
While this law doesn't mean that every ticket sold above $600 will be taxed, it does create an obligation on the part of the seller to report their profits and pay taxes on them. This stipulation brings a potential administrative burden, as many might struggle with how to calculate their actual profits, especially if they're occasional sellers and not regular businesses.
Future Implications and Reactions
This change in taxation is not without its critics. The House Ways and Means Committee has already approved a bill that might revert the 1099-K threshold back to $20,000 from the existing $600 threshold. Though this bill hasn't gained significant traction, a similar bipartisan proposal in the Senate could adjust the threshold to $10,000 and 50 transactions. These potential changes suggest that the debate on the issue is far from over.
Moreover, there are financial implications for the federal revenue, with a potential reduction of $9.7 billion in taxes paid over a decade if the bill passes.
The ticket resale market has evolved into a significant industry, with both fans and opportunists looking to capitalize on high-demand events. However, with great financial opportunity comes greater scrutiny. The new tax rules may be the government's way of ensuring everyone gets a fair share, but for many casual resellers, this might mean a new, unexpected financial and administrative accountability. As with all things related to tax, the landscape is continually shifting, and only time will tell if these new regulations will stick or be adjusted in response to public and political pressures.