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Paypal wants EIN but won't send it until >$20k
 

Paypal has requested an EIN from me, and said they'll limit my account if I don't provide it "as per IRS regulations". Not exactly sure why they requested it, since I'm nowhere near 20,000$ in sales (more like $3000 right now), and I make sure my monthly sales are under 1500 (so they can't extrapolate annually to say I'm on par to do over 20k).

Anyway, the email says that they want my EIN now and will forward it to the IRS when I surpass the required threshold. Does that mean I can provide a bogus EIN to PayPal for now, make sure I stay under 20k in sales, and they'll be none the wiser?

My understanding is that once you surpass the threshold, they send your EIN info to the IRS, and if it doesn't match their records, PP gives you one more chance to fix the documentation you submitted. So can I just submit some bogus info now, stay under the radar (under 20k), and then submit the corrected documentation IF I do happen to slip over 20k?

Re: Paypal wants EIN but won't send it until >$20k
 

Did you sell 200 items to equal your cost?

Just make an EIN and give it to them. The IRS doesn't require the LLC be open to get an EIN for it.

Re: Paypal wants EIN but won't send it until >$20k
 

You're most likely approaching 200 sales. They request a tax ID if you approach 200 sales or $20,000 in sales, because they're required to send a 1099 if you pass both thresholds.

I honestly can't say for sure if tax ID's are checked even when a 1099 isn't sent out for an account. What you're proposing is a bad idea though. If they do somehow find out your tax ID isn't real they're going to make it impossible to restore your account - because they'll request all the documents they can think of.

Like Gladiator said, just get a real EIN. If you don't pass $20,000 AND 200 sales then Paypal won't send a 1099 for your EIN. If a 1099 isn't sent for your EIN then it's not entirely necessary to form an LLC with your state, since your business won't report income.

Note that this discussion constitutes tax fraud and I do not recommend doing any of this. It's best to just form a business, report your income, and sell all you can. Limiting yourself to $20k annually is a waste of an account.

Re: Paypal wants EIN but won't send it until >$20k
 

So let me get this straight, i don't have to have an LLC to have an EIN i can register with paypal??

Re: Paypal wants EIN but won't send it until >$20k
 

That's right. Generally you get the EIN first.

If your EIN is going to be reporting taxable income then you'll need to register your company with your state (form an LLC).

Re: Paypal wants EIN but won't send it until >$20k
 

That was extremely helpful.