Tuesday, September 26, 2023 – In my IRS news feed today, there was a deluge of articles – count them, 15 – all spotlighting a fresh IRS rule concerning the resale of concert and sporting event tickets. Normally, when you see a spike in stories around a particular IRS subject, it screams of a new revelation, report, or directive by the IRS. I did a bit of digging but found nothing new.

But, let’s cut through the fog – this isn’t groundbreaking news. I’ve been on this story for some time now. This tax-related stipulation was slipped into the American Rescue Plan Act of 2021, amidst a maze of other budgetary components. It modifies the reporting standards of IRS Form 1099-K, a change that took some digging to unearth.

To bring you up to speed: In the past, Third-Party Settlement Organizations (TPSOs), think Ticketmaster and StubHub, were required to issue 1099-K reporting forms only to users raking in $20,000 in revenue AND logging more than 200 transactions. So, the paperwork was minimal. The new regulation mandates reporting for anyone pulling in over $600 in revenue, no matter the number of transactions, widening the net considerably.

This piece of regulation was scheduled to roll out in the 2022 tax year. But the IRS, seemingly playing it wise, put the brakes on it on December 23, 2022, right when the 2022 filing season was knocking on the door, labeling this delay a “transition period.”

Now, as the transition period wraps up, the new regulation is on deck for the 2023 tax year. There’s legislative maneuvering in progress to amend this rule. The Small Business Jobs Act is gunning to overturn the new rule and reinstate the old ones. Meanwhile, the Red Tape Reduction Act wants to boost the threshold to $10,000 in revenue and 50 transactions.

The final resting point of the threshold is yet to be seen. But what’s clear as day is that the IRS is poised to be swamped, seemingly unprepared for the impending avalanche of forms expected with any tweak to the current setup. It’s time to stay informed, be proactive, and always remember, in a world full of red tape and regulation, knowledge is your greatest ally and weapon.

Thursday March 23, 2023 – On this show, I have spoken openly about the new 1099-k information reporting rules for Third party settlement organizations – I think they stink. Recently, the IRS updated their “frequently asked questions about Form 1099-K. We all remember the empty promises made by supporters of this expansion. “This really doesn’t change anything, as these transactions are already taxable.” And “Only payments for goods and services will be effected.”

Now we know, and the IRS has acknowledged, that almost all transactions involving third-party settlement organizations will come under scrutiny and require “Accounting” to explain close to every transaction.

For example, The FAQ page provides guidance on how to report the sale of personal items on Form 1099-K, as well as how to report multiple Forms 1099-K and Forms 1099-K received in error. Taxpayers can report offsetting entries on Schedule 1 for each Form 1099-K they receive separately, or they can combine the Forms 1099-K they’ve received.
The FAQ also address the question “During the year, I sold my personal guitar for $800 on a social media platform’s marketplace and I received Form 1099-K. I purchased the guitar several years ago for $3,000. How do I prove how much I paid if requested by the IRS?” This is what I have been saying from the beginning, and why I thought the explanations given by the IRS, Congress, and their media mouthpieces were, shall we say, disingenuous.

In 2021 the IRS processed 4.7 Billion (with a B) information returns. In 2020 the IRS destroyed 30 million without processing them, because they did not have the resources. With this HUGE increase, look for more delays. Although the delays generally come from paper returns, and the IRS is doing all they can to BAN paper returns.

Attorney Steven A. Leahy looks over the new 1099-K FAQ sheet on Today’s Tax Talk.

https://www.accountingtoday.com/news/irs-issues-new-guidance-on-form-1099-k

https://www.irs.gov/pub/taxpros/fs-2023-06.pdf