Forum

Paypal Tax ID Number Request HELP
 

Ok so I am a stealth vet, and have spread my sales over three accounts over the past year as to not get limited on anything and it has worked really well. Much to my disappointment today I got this email from Paypal.
We're asking for your tax ID number due to new IRS rules. Your tax ID
number is one of these:

- Your Social Security number
- Your Individual Tax Identification Number
- Your Employer Identification Number

We'll use your tax ID number to send tax Form 1099-K to you and the IRS
when the payments you receive exceed both of these milestones in a calendar
year:

- $20,000 in gross payment volume for goods or services
- 200 payments for goods or services

Now my question is this. It doesn't appear the Paypal account is limited yet? How long before it is fully limited? Can I still withdraw the money in it there is around $500 in it? What do I have to do here? I currently have two auctions still going can I still send and receive payments? Ship things? I figured I would log in and it would be limited and the money frozen, but it doesn't appear so.

This is the first account I have ever had hit with the IRS thing so I am not sure what to do. Is this a standard case of the Paypal and ebay account are junked and I need to just move on to the next? Is there anyway to get an EIN number for a fully stealth account? Just wondering again this is the first time it has happened to me. Any steps would be appreciated.

If you are a vet than you should have been prepared for this, as it is discussed multiple times on a daily basis.

I mean I am a vet that has spread it out over 3 accounts over almost three years to avoid this. I HAVE done it correctly, but eventually it is inevitable. This is the first time it has ever happened so again, its not in the stealth book that I purchased 6 years ago and these forums are so vague on what to do if anything at all.

/quote

How long before it is fully limited? Can I still withdraw the money in it there is around $500 in it?

Unless limited in any means, you can still operate but it's only matter of time - I cant say exactly how long but anywhere from 2-4 weeks is a workable figure.

Ok then I should definitely withdraw the money immediately. Also, what about just holding off on using the account to the new year? Would that roll it over and avoid it?

You can not avoid the earning money & needing to pay taxes....

Dont forget that.

:juggle:

Ok so again, is there anything I can do? I would pay taxes on it but its a stealth account? Just wondering if there is anything I can do to prolong the account or if I should just move on to my others.

I personally have 5 of my stealth accounts asking for this information. I received my first request in April and that account has not been limited yet. None of my others have been either. Most of my accounts just sold over the 200 mark but are no where near the $20,000 mark.

Moral of the story, there really is no clear answer for when a paypal will get limited.

It is a case by case basis. But the ideal situation would be to stop selling once you are between 17-18k. Also if you rack up too much in sales very quickly looking like you are going to go way over for the calendar year they are more likely to limit you for good. I do know one person who has paypal limitations on one account and they can withdrawal the funds they can no longer receive payments anymore. It is anyone's guess if it will be reset at the beginning of the year.

I would suggest to get an EIN number and upgrade to a business account. Anybody can get a tax id online and PayPal can only match the Company name and Business address attached on the IRS file. (possibly the name but not business there)

This way it's a legal process, take extra precautions, as you said your a vet use your instinct. My 2¢ here, I would move $419.99 with CCNOW of the 500 on there right away but this tax ID law which all online ecommerce acquirers is are taken into effect and they are strictly.

I wouldn't delay this for too long. Accoring to the IRS rules, they must EITHER collect your tax-id information OR start withholding 30% of your gross sales as soon as the threshhold is reached. Last year, the IRS delayed that requiement for a year because a lot of people were complaining there was too little time to implement everything. They are VERY UNLIKELY to delay that requirement again.

PayPal will not likely start withholding money from people, it is more liikely they will just stop the account from receiving funds.

Getting an EIN is very easy, but you might need some advice from a tax professional on how to structure yourself as a business. It is not that difficult, but everyone's situation is different and what works for one person will not necessarily work for everyone.

...Why not make another paypal account and close that one? I do that often and when PayPal start withholding funds I will create an EIN for them if required.

I am assuming it is your Real name on the Paypal otherwise the EIN comment is absolutely wrong. If you get a 1099k from paypal after adding and EIN and it is some bogus name you will be likely to get and audit and or have questions about employees, Social Security & Medicare withholdings for them etc.

The EIN tax id number can only get you so far, but you should know that anybody within your business structure could use the EIN as a user or if authorized by the ower (you).

I worked with hundreds of business clients helping their processing needs at TD, and even if you are dba sole- proprietorship, home business or partnership if you authorized per se your accountant, payroll company, wife or anybody to file irs documents for your business structure and authorized by you; then theres your answer.

You should not get audited as long as you dba name's register within that body of your company. Now doing this over and over and having 3-6 ein floating around will get you audited fast! - So keep it simple, the IRS is no joke and if this is for your business but your using mismatched names does not mean you will be in trouble as long as you operate legally within the taxing brackets; tax id in your name and business ofcourse.

This seems like a play for paypal to get your SSN. I can understand asking for an SSN if you make 20K, but 200 items? Give me a break! For some people that could just mean 1k.

Does anyone know what the rules are if you just collect money thru paypal but it's unrelated to ebay sales? Does it still have the 200 item and 20k limit? I know I have a 3 year old paypal that has gone past both limits and I was never once asked for an EIN.

I think what I am going to do is hold off, sell one more bigger item on the account then let it sit till the new year. See if that works. It would be too my advantage to see if it rolls over.

Do you think they actually take the time to match up the business EIN with your name and address that is on your paypal?

Definitely not on a business account because you are saying the account is owned by the business (so they only have the right to check on the business) while the person on the account could just be someone you hired to run the paypal account or he could be an elected officer within your company. The only person listed with the EIN is the tax liability partner or sole owner (shareholder).

If you are talking about using it in place of a social on a personal account, I'm positive they do. If the IRS is asking them to collect this information, they are providing them with access to a system to do so or paypal is immediately providing the information to the IRS for verification. That is irrelevant because I doubt anyone here is stupid enough to provide a false social to Paypal.

I have been championing the idea of upgrading to a business account and providing an EIN to meet this requirement but let me be very clear on one point:

You must identify the account as a business account with the correct business name. You must not try to provide an EIN when your account is a personal account. This will get you in a lot of trouble.

See my thread from a few days ago:

http://www.aspkin.com/forums/subscri...porations.html

I have one more big item I am going to sell this calendar year. Hopefully make a few hundred on it then bounce until the new year on this account. I will let you guys know what happens. I am really hoping I can start again new in January and be ok with it. However, I drained the Paypal account accordingly, so if it goes it will go without problems.

Couldn't you create any stealth to spread out the sales?

this is what I'm planning to do, I already registered ein on my business name. Just waiting for my ebay account to be more solid before I upgrade my pp to business. Or do you suggest I should upgrade right now, thanks.

I say you give it a little time and build up some feedback. This way you look like someone who started on ebay selling as a hobby and realized there is a business in it. I think there are two ways you can play it initially:

1) The above mentioned hobby that you decided to turn into a business. This is when you are transforming a personal stealth account to a biz stealth account to meet the IRS requirement

2) You initially set everything up as a business because you are already a legitimate brick and mortar biz that is trying to expand into the online selling/ebay realm. You start out with accounts that already meet the IRS requirement by being biz accounts with the EIN provided from the very beginning.