Need Help, account is about to go down, New Tax Reform

kilode123 · #1 12-31-2010

hey Guys,
happy new year! here is my situation. I have a lot of stealth paypal/ebay accounts. A few of them are above the new IRS Tax Law. one of my stealth paypal accounts in particular has be doing great.. this is my main account. ive had it for almost 2 years now..it has been limited twice and i managed to lift the limitations..ive supplied everything except SSN or EIN. in fact..ive receieved alot of money through this paypal and havent had any issues at all lately. now that the Irs tax law will kick in tommorow, im not sure what to do...this account is dear to me. i have about 400 feedbacks. i think the account is very strong. the items im selling is from China.. if i make it an official business with tax id..im planning on mixing them up, some of suppliers here in U.S ( for tax purposes) and some from China :D. do you guys suggest i go ahead and open a DBA under for the stealth account name and get a EIN to keep using this account? and go legit and pay taxes? do you think this is a good idea?and how does this affect my other accounts under the 20,000 threshold? im stuck, i really need some help asap. thanks Guys.

cardfelon · #2 12-31-2010

Well you can't open a DBA with any sort of government agency using the stealth info on your Ebay account. Never provide ⊗⊗⊗⊗ or false information to the government or banks. That is a felony!
If you get a EIN from the IRS it will have to be in your real name and when Paypal matches the EIN against IRS records the names will have to match.
Your best bet is to just keep your account under the limits and use multiple accounts to sell the kind of volume that you desire. Best of luck to you!

kilode123 · #3 12-31-2010

Thanks Cardfelon...
i was thinking about opening an LLC with my real name.. not the stealth name..the LLC will be under my name. Obtain EIN, Then Register a DBA, "doing business as" the stealth name and address. is this going to work? is this a good idea? thanks

kilode123 · #4 12-31-2010

ive made a lot of money within the past year on this paypal account, i usually transfer money to my bank on a daily basis. i dont pay taxes, im worried about that. also, i dont want to lose this paypal account. opening new accounts and staying under the threshold is good, however paypal will still limit this accounts at one point and ask for SSN or EIN, its inevitable. even before you reach the 20,000 threshold. do you advice opening a business,LLC and Doing business as my "Stealth name and info," and pay taxes? thanks

HurricaneHuntr · #5 12-31-2010

The only answer is to never take more than 20k in on a paypal, it's simple? Make a new paypal. Don't be greedy or else you'll be in state prison. edit... probably FEDERAL.. If you go for the benzo

That benz looks hot, but your prius will get you around...

kilode123 · #6 01-01-2011

i want to start paying taxes and have a legit business... can i start a LLC with my real name and obtain an EIN, then upgrade my stealth paypal/ebay account a business account and use the EIN for it? will this work? this is a stealth account with stealth name and info. thanks

cherrqell · #7 01-01-2011

Quote:

Originally Posted by kilode123

i want to start paying taxes and have a legit business... can i start a LLC with my real name and obtain an EIN, then upgrade my stealth paypal/ebay account a business account and use the EIN for it? will this work? this is a stealth account with stealth name and info. thanks

Only one problem I can see with this. Once you go legit, and you ever get audited, they are gonna want ALL your personal financial information going back as far as 6 years. Now if anything does not add up, you may be sharing a cell with Westly Snipes!

I would get an accountant, and laywer, and go over some of this with them as it can get complicated.

You may not go to jail if you get caught, but you will have to pay back taxes, and very heafty fines.

Just pay your taxes, write off you expenses, and sleep well at night!

jeffweico · #8 01-01-2011

Always, ALWAYS pay your taxes.

They say it is best, if you have not filed for whatever reason, to file and pay before the IRS comes looking for you. I'm sure that is true. But for you to decide on a wise course of action, you need PROFESSIONAL ADVICE from a tax accountant or an attorney who specializes in this. This is beyond the scope of what the forum can provide.

jeffweico · #9 01-01-2011

Also just wanted to add a couple of FYI's...

First, it IS legal to use a stealth name as a DBA. You need to use your REAL NAME with the government and the IRS, but you CAN be Real Name d/b/a Stealth User.

Also, some people are assuming that if PayPal reports $25,000 in payments to the IRS, then they owe the taxes on $25,000. That is NOT TRUE! You would only owe taxes on the PROFITS from the $25,000. So, if you made $5,000 after expenses on $25,000 in sales, you only owe taxes on $5,000 NOT on $25,000.

Lastly, just because this information has never been reported before, it does not mean that taxes were never owed. Taxes were ALWAYS due on the profits made online. The only thing changing is that now the IRS will have records of gross income if your sales exceed $20,000.

Staying under the reporting threshold with eBay may be a good strategy for stealth, but ALWAYS REPORT AND PAY YOUR TAXES!

cherrqell · #10 01-01-2011

Quote:

Originally Posted by jeffweico

Also just wanted to add a couple of FYI's...

First, it IS legal to use a stealth name as a DBA. You need to use your REAL NAME with the government and the IRS, but you CAN be Real Name d/b/a Stealth User.

Also, some people are assuming that if PayPal reports $25,000 in payments to the IRS, then they owe the taxes on $25,000. That is NOT TRUE! You would only owe taxes on the PROFITS from the $25,000. So, if you made $5,000 after expenses on $25,000 in sales, you only owe taxes on $5,000 NOT on $25,000.

Lastly, just because this information has never been reported before, it does not mean that taxes were never owed. Taxes were ALWAYS due on the profits made online. The only thing changing is that now the IRS will have records of gross income if your sales exceed $20,000.

Staying under the reporting threshold with eBay may be a good strategy for stealth, but ALWAYS REPORT AND PAY YOUR TAXES!

One more FYI. Once the feds have your information, the state will want their cut also. This includes sales tax that you are suspossed to be collecting.

jeffweico · #11 01-01-2011

Quote:

Originally Posted by cherrqell

One more FYI. Once the feds have your information, the state will want their cut also. This includes sales tax that you are suspossed to be collecting.

True, but in most cases you only need to collect from buyers in your home state. You should be doing that anyway.

That could change as the government gets greedier and more grasping, but for now it still stands.

needhelpplease · #12 01-02-2011

So to clarify is it now just as soon as you make $20,000 or $25,000 or is it still even if you have 200 sales which ever comes first? Thanks!

jeffweico · #13 01-02-2011

Quote:

Originally Posted by needhelpplease

So to clarify is it now just as soon as you make $20,000 or $25,000 or is it still even if you have 200 sales which ever comes first? Thanks!

Your payments will be reported if you have $20,000 AND 200 sales.

BOTH criteria need to be met to trigger the reporting requirement.

But, legally, you owe the taxes on your profits whether or not they are reported.

needhelpplease · #14 01-02-2011

Legally in the state of GA you are not allowed to carry an ice cream cone in your back pocket if it is Sunday....you can actually be arrested....not joking, this is a REAL LAW....when it comes to the GOV it still pisses me off that I pay medicare tax EACH week out of my paycheck, but dont have medical insurance myself because I cant afford it... GOV and taxes and right and wrong is a great matter of opinion.....but that is neither here no there, I went to school for accounting and the WHOLE tax situation is a HUGE CROOKED mess....but I guess just to make sure I fully understand this new ebay/paypal/IRS mess......So if I sell 800 items/auctions/whatever and bring in only $13,000 then paypal wont require a SSN? That is my main concern as I dont have a useable SSN, not so much the tax situation because write offs and all that are a great pleasure.

cherrqell · #15 01-02-2011

Quote:

Originally Posted by jeffweico

Your payments will be reported if you have $20,000 AND 200 sales.

BOTH criteria need to be met to trigger the reporting requirement.

But, legally, you owe the taxes on your profits whether or not they are reported.

With all this new information being fed into the system, I can see paypal screwing up and sending the information out to the gov't even if you dont meet the requirement. I know its a longshot, but stranger things have happened when dealing with this type of data, and human error.

I dont mind paying my fair share, but I have a problem giving my SS# to 3rd party entities that give you no gaurantee that this information is safe.

jeffweico · #16 01-02-2011

Quote:

Originally Posted by needhelpplease

Legally in the state of GA you are not allowed to carry an ice cream cone in your back pocket if it is Sunday....you can actually be arrested....not joking, this is a REAL LAW....when it comes to the GOV it still pisses me off that I pay medicare tax EACH week out of my paycheck, but dont have medical insurance myself because I cant afford it... GOV and taxes and right and wrong is a great matter of opinion.....but that is neither here no there, I went to school for accounting and the WHOLE tax situation is a HUGE CROOKED mess....but I guess just to make sure I fully understand this new ebay/paypal/IRS mess......So if I sell 800 items/auctions/whatever and bring in only $13,000 then paypal wont require a SSN? That is my main concern as I dont have a useable SSN, not so much the tax situation because write offs and all that are a great pleasure.

This would not have to be reported. However, PayPal (or any other processor) will not wait until you are at $19,999 before requiring the information.

Unknown at this point is what dollar amount will trigger their demand for your SSN/EIN. Or, it could be a formula based upon monthly averages. While this DOES create some uncertainty right now, I am sure that in the coming months we WILL have this information.

So, until we know HOW this will play out, you might want to stay well under the reporting requirements.

purchasing1 · #17 01-29-2011

I hope some of you find this helpful. My girlfriend has a real premier Paypal account (8 years old) that has generated sales of 400K/year. Paypal sent the business upgrade note at $16000 a few days ago. They only are allowing me to click "upgrade to business account" to start the process. So this looks to be the magic number they are using.

And to upgrade or open business account, they required copies of State business license, EIN form from IRS, Articles of Organization filed with state, suppliers, physical address.

The TRS Ebay account is in my name and a new business account was opened on Jan 1 to get it ready to receive the sales. I have been working with a Paypal rep to make the transition and stop my girlfriend from getting 1099K by Paypal from my sales. It seems Paypal is helping. She advised that I send in all the faxes of life history (above info) prior to accepting sales and she also has noted the new account with the last Paypal account performance as very low risk and 0 problems. I am the one paying the taxes not my girlfriend. So her account will be down-graded to personal and my new business account will now be the payment account for my Ebay site. This transition was advised by Paypal as opposed to upgrading her account.

sarah74 · #18 02-03-2011

Hi
I opened a business paypal account back in 2008 but started selling in 2009 slowly.
Nearing the end of 2009 PP asked for my SSN and i gave them.
I never paid any taxes because foolishly I read somewhere you dont need to report ebay sales (which is soo wrong!!)
Now I want to start reporting my sales, can somebody please guide me how to start.
Its better before I receive any letters from the government.
I work full time 9-5 job and already pay taxes for that 9-5 job, its the ebay sales I havent paid taxes for.
where do I start and what advise can anyone give me regarding this concern.