LOS ANGELES, CALIFORNIA: The Taylor Swift law draws attention to fans of the singer who have generated income by reselling tickets to their preferred events, like the eagerly awaited 'Eras Tour,' and are now potentially subject to IRS scrutiny.
This unexpected twist is a result of a new law set to take effect in 2024. This law, embedded within the Democrats' American Rescue Plan Act coronavirus relief package of early 2021, includes those involved in the reselling of tickets such as Inter Miami matches following Lionel Messi's addition to the team.
What is the purpose and impact of the new tax law?
This new law will require ticket exchange and resale platforms such as StubHub and Ticketmaster to report information to the Internal Revenue Service (IRS) when it comes to individuals who have sold more than $600 worth of tickets within a calendar year.
The goal, as stated by The Wall Street Journal, is to make it harder for people to avoid reporting income from such ticket sales.
While this may seem like a minor inconvenience for the occasional ticket reseller, it has sent shockwaves through a fanbase that spans various interests, from soccer aficionados to die-hard music enthusiasts.
The Biden administration is keenly aware of the exceptional fiscal year that live events have just experienced, with fans paying a premium to witness some of the world's best-selling artists and sporting legends like Messi perform live.
Originally, this law was scheduled to be enforced for the tax year 2022. However, the IRS postponed its implementation until the following year. Plans for further extensions have yet to be announced by IRS Commissioner Danny Werfel.
Why have ticket prices for certain events experienced dramatic increases?
The concern arises because the prices of tickets to some events have soared to astonishing levels in recent times. For instance, tickets to Inter Miami matches skyrocketed to $255 apiece from a humble $30, marking an 11.76-fold increase per Daily Mail. This was all thanks to the addition of Messi to the team in July.
StubHub reported an "unusually high number of fan ticket resellers" this year, accounting for a staggering 70 percent of US 'Eras Tour' ticket orders—double the usual amount. The same trend holds for selling tickets to watch Messi in action on the soccer field.
This surge in ticket resale activity is not limited to major events alone. Season ticket-holders like Jon Steele and his wife, who support Orlando City SC in the MLS, have found themselves reselling their tickets to weeknight games due to busy work schedules.
Steele, in particular, has seen significant returns, selling a pair of tickets for $1,100 for the Lions' upcoming match against Inter Miami.
While Steele acknowledges the value of seeing Messi play, the ability to cover the cost of an entire season of tickets is a deal too good to pass up. As he humorously quipped, "Have you seen how much groceries cost these days?"
While many fans like Steele are willing to pay their fair share of taxes, the implementation of this new law means that individuals may have to fill out a 1099-K form, which was previously required only for users who had received over $20,000 in revenue and more than 200 transactions in ticket resales.
The IRS' new reporting requirement will trigger based on the sale price of the tickets, not just the seller's profit. This change "is meant to make it harder to avoid reporting income from such sales."
