Quote:
Originally Posted by doL
(Post 681437)
SSN Verified Stealth? I imagine that's the only way to get around the 200/2k annual limitation through PP, right? Curious how we can push those kinds of monthly numbers without getting hit with the dreaded email. Also, if it is SSN verified, does the ssn that its attached to get tax penalties?
|
The only way to run more than $20,000 per year through an account is to provide an SSN or an EIN.
Providing an SSN is impossible. Well, not impossible, but very, VERY illegal. It is called identity theft. The NAME and the SSN must MATCH what is in the IRS records. So, if you found someone who had your stealth name and used their SSN, you would probably end up in prison. NOT a good outcome!
It is better to provide an EIN. That is a tax number attached to a BUSINESS. Since the IRS will, in this case, match the BUSINESS NAME with the EIN, you can still stay under PayPal's radar AND be in compliance with the tax laws. The IRS does NOT provide any additional information to ANY payment processor, including PayPal. PayPal simply sends the BUSINESS NAME and the EIN to the IRS and the IRS returns a response of MATCH or NO MATCH.
And, YES, if a SSN or EIN is provided to PayPal and you have more than $20,000 in sales, then the IRS will be expecting that the amount listed on the 1099k to be reported as gross income on either your personal tax return, or the LLC's tax return. Gross income and profit are two different things and you will only have to pay taxes on your PROFIT, NOT ON YOUR GROSS SALES! So, just because $20,001 is reported does NOT mean that you owe taxes on $21,000 - only on the PROFIT PORTION of the $21,000. 10% is a normal profit margin. Of course your profits could be more or less and you should NOT fudge these numbers, because in the event of a tax audit, the IRS is going to ask for receipts to prove the numbers out. Maybe not on EVERYTHING, but they COULD. In my case, they picked certain transactions and asked me to provide the receipts on those particular transactions. If I couldn't do that, or if the numbers didn't match up, then they probably would have done a deeper audit and looked at EVERYTHING. NOT a situation that you want to be in!
If you provided an SSN that does not belong to you, eventually the IRS will send a letter to whomever owns that SSN demanding that they report their earnings and pay their taxes. When that person calls the IRS to tell them they do not sell anything and they have no idea what the IRS is talking about, then all hell will break loose. The IRS will start an investigation and then you are in for a WORLD OF PAIN! DON'T DO IT!
All you have to do is file your tax returns properly and pay the taxes on your profits and you will be fine.
