The IRS is coming for your fantasy football winnings

The NFL’s regular season has come and gone: the playoffs are upon us. Fantasy football players everywhere must wait until the summer to draft their next winning teams. And the anti-fun freaks at the IRS see all of this as an opportunity to tax the hell out of Americans who just want to enjoy some football.

Soon, fantasy football commissioners will be under massive scrutiny by the feds, who are set to crack down on Venmo payments that go to the winners. These commissioners, the unheralded heroes who make their seasons happen, volunteer their time so they can spend an entire season trash-talking their best friends. Thanks to the Democrats, they’re now left to wonder if they need to hire a CPA to oversee future draft days.

Under a rule supported by every Democrat in DC — and pushed by the Biden administration — fantasy football winners will receive 1099-K forms in addition to their hard-earned winnings. And since the IRS goes after gross payments, commissioners may be on the hook to be taxed for simply holding onto everyone’s money and paying it out to the winner at the end of the season.

Some leagues are free, but many players up the stakes with either a buy-in and cash prize for the winner or a forfeit for the loser. Viral punishments for league losers have included being forced to compete in a US Open qualifier, retaking the SAT or eating dehydrated tarantulas and cheddar cheese-flavored worms.

For those who don’t have to enlist in the Army for coming in last, riches may await. Some league winners are set to receive $10 million. This is where the IRS comes in to ruin the fun, whether the league champion wins millions or just $601.

Republicans are united in both the House and Senate in their opposition to punishing our heroic fantasy football commissioners. “The IRS shouldn’t be tracking every $600 Venmo transaction,” Representative Ashley Hinson told The Spectator. “They should be going after wealthy tax cheats who are actually avoiding paying what they owe, not friends in a fantasy football league or gig economy workers.”

In 2021, Hinson and Senator Tommy Tuberville, himself a college football coaching legend, introduced bills in their respective chambers that would “prohibit any federal agency from requiring financial institutions to report on the financial transactions of their customers.”

Off the Hill, taxpayer advocates are livid at the policy changes. “Millionaires and billionaires aren’t gig economy workers using PayPal or running a fantasy football league for their friends through Venmo,” Mike Palicz, director of tax policy at Americans for Tax Reform, told The Spectator. “Biden and Democrats are coming after millions of Americans and telling them they have a new tax liability this year, even if it’s not actual income”

Top Biden administration officials are openly supportive of the requirement to snoop on Americans’ Venmo transactions. Treasury secretary Janet Yellen conceded that it’s “correct” that low-level transactions won’t fill the “tax gap” that America faces, but argued that “it’s important to have comprehensive information so that individuals can’t game the system and have multiple accounts.”

However, even the White House’s own calculations suggest that this proposal is just a drop in the bucket. Yellen estimates that the tax gap is $7 trillion over the next decade, but the White House’s own estimates — presumably a best-case scenario for how much cash it can squeeze out of Americans — put the amount it can raise from a low reporting threshold at $463 billion, which is only 7 percent of the total of the tax gap. Republican tax policy wonks are quick to point out that Yellen’s estimate of a $7 trillion tax gap assumes that every business with under $20,000 of profit is not paying taxes, which has no bearing in reality. Uber drivers, for example, automatically have their taxes withheld.

If it had its way, the IRS would have been cracking down on fantasy football payouts this season. The provision to punish low-threshold Venmo transactions was inserted into the massive omnibus bill; the IRS decided to unilaterally delay its implementation by a year, using what Representative Carol Miller calls a “legally dubious” mechanism to do so.

One tax policy expert familiar with the negotiations that led to this crackdown told The Spectator that during last year’s omnibus battle, Republicans had Democrats “on the ropes” and were close to restoring the previous threshold, but the IRS announced the one year delay to “bail out” Democrats from any political fallout.

It’s not only fantasy football commissioners who will be punished under the new IRS reporting requirements, of course. Congresswoman Miller has been trying to restore the status quo prior to the fantasy football tax for almost two years.

Miller and fellow Republicans on the House’s Ways and Means Committee have been pushing her Saving Gig Economy Taxpayers Act for almost two years, which would change the reporting threshold from $600 to $20,000 and at least 200 separate transactions. Requiring people to hit both of these thresholds, under the old system, is, if nothing else, a way to separate your neighborhood fantasy football commissioner from the bookies down the block.

Miller points out that this policy, supported by every Democrat in Congress, breaks one of Biden’s most basic campaign promises.

“Joe Biden promised he wouldn’t tax people making less than $400,000, but two months into his presidency he championed legislation that taxes people who receive $600 on Venmo? It’s absurd — even the IRS thought this was a bad idea,” she told The Spectator.

While the IRS’s delay means that fantasy football commissioners are currently scheduled to get punished after next season, it’s possible that Republican scrutiny could force the IRS to delay implementation until after the 2024 election. House Republicans are placing the IRS squarely in their sights.

“Folks shouldn’t have to worry about the IRS monitoring their family expenses or regular payments, and House Republicans will continue fighting this snooping overreach,” Hinson told The Spectator. Representative Mike Flood, who’s on the powerful Financial Services Committee, said the new House GOP majority “is gearing up for ongoing oversight to push back on the overreach of Washington Democrats who want to control even some of the smallest decisions about how you live your life.”

Representative Andy Ogles, a freshman who already secured a slot on Financial Services, has a novel theory for why Democrats seem hellbent on punishing fantasy football players across the country. “Nancy Pelosi must have lost her fantasy football league this year,” he told me.

Fantasy football commissioners can rejoice; the government isn’t going to punish you… until next season, at least.