The IRS Won't Make Taxpayers Report Taylor Swift Ticket Sales (and Other Online Transactions Over $600)
For now, at least.
The IRS will once again postpone enforcement of a new provision in the tax code that requires online sellers to report as little as $600 in annual income.
So if you sold Taylor Swift concert tickets this year, congrats: the feds won't come after you for not giving them a cut.
In a statement on Tuesday, the IRS said the decision to postpone the new rule was made "following feedback from taxpayers, tax professionals, and payment processors and to reduce taxpayer confusion." Instead, tax officials will rely on the old standard, which required taxpayers to report miscellaneous online sales only if they exceeded $20,000 in revenue or 200 transactions.
The IRS now plans to transition in stages toward the new $600 threshold, which was created by the American Rescue Plan (a bill ostensibly meant to provide pandemic relief). It plans to use a $5,000 threshold for tax year 2024.
"Taking this phased-in approach is the right thing to do for the purposes of tax administration, and it prevents unnecessary confusion," IRS Commissioner Danny Werfel said in a statement.
That's a surprisingly rational decision for the IRS to make, given the potential for mass confusion about the new rules, which would require Americans to disclose transactions few people would consider being subject to IRS scrutiny. Still, the better approach would be for Congress to scrap this plan to require tax payments on mostly minuscule transactions—a plan that will undoubtedly affect low-income Americans without access to professional tax assistance more than anyone else.
"All of the problems and concerns that led the IRS to delay implementing it a year ago remain in place today, which is why it is a relief for taxpayers that it has been delayed for another year," Joe Bishop-Henchman, vice president of the National Taxpayers Union Foundation, said in a statement. "While the threshold change was a law passed by Congress, every expert (including those charged with administering it) is saying that lowered threshold is unworkable."
When the American Rescue Plan was passed, Democrats argued that the lower reporting threshold for 1099-K income would generate a mere $8.4 billion over 10 years. Former tax officials went on the record at the time to say that enforcement would be difficult and costly—especially for workers who end up caught in the IRS' crosshairs.
"Workers who are under-reporting their income now will become guilty of nonpayment next year and subject to penalties and actions by the agency," Nina Olson, a former head of the IRS taxpayer advocacy office, told Roll Call as the bill was being debated in Congress, adding that an IRS collection action "can destroy a person's life."
It's great that the IRS has once again decided to postpone its efforts at destroying those lives. Unfortunately, it seems likely to try again next year.
