I've known people who did get inquiries from the IRS; they just had to provide a lot of evidence that they were actually going to markets to try to sell their stuff, actually making stuff to sell, etc. Generally, the IRS are more interested in people who make a bunch of income, then have a fake business to charge expenses against. Plus, there are many cosplaying businesses far too large to ever worry about the IRS accusing them of being a hobby.
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Thought businesses that don't make any money are at risk of being labeled a "hobby" by the IRS.
I've known people who did get inquiries from the IRS; they just had to provide a lot of evidence that they were actually going to markets to try to sell their stuff, actually making stuff to sell, etc. Generally, the IRS are more interested in people who make a bunch of income, then have a fake business to charge expenses against. Plus, there are many cosplaying businesses far too large to ever worry about the IRS accusing them of being a hobby.