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Streamers Beware! Streaming Platform Could Cause Overreporting of Income

by | Nov 25, 2022 | Firm News, Tax |

Our client was a well-known streamer on the Twitch platform. The IRS issued a Notice of Deficiency against her for 2017 claiming she owed $16,524 in unpaid taxes, plus an accuracy penalty of $4,443, for underreported income. The IRS believed that our client had failed to report all her streaming income as reported by three different companies on Forms 1099-K. Prior to our receiving the case, our client’s team had extensive dealings with the IRS, but was not successful in proving that her income was correctly reported. By the time we were hired,  the IRS claimed the same underreporting issue for 2018 and eventually 2019, resulting in $110,982 total tax due and additional accuracy penalties of $23,335. The problem was that Patreon, Twitch and PayPal, who all had a hand in processing her streaming payments, were each reporting payments to the IRS on Forms 1099-K. We promptly filed tax court petitions for each year and were able to show that the income earned through Patreon and Twitch, processed via PayPal, was reported to the IRS by all three companies, resulting in a much higher income than actually earned. The Appeals Officers in each case accepted our analysis showing the double/triple reporting of payments and removed the excess income, as well as all tax and accuracy penalties. Moreover, we directed our client to our sister office for assistance in preparing her 2021 tax return in a manner such that the IRS’ counting of excess income should no longer be a problem.

If you find yourself in a situation like our client’s, don’t agree to the tax. Please give us a call. We will work diligently to determine the correct amount of income tax due and will tirelessly defend your position to ensure the IRS understands your situation.