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Old 12-20-2018
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Default How much does the IRS know before I hit 200 sales-20K

Hello Folks, first time poster.

I have a legit business physical where I pay a heft tax bill every year.

On the side I have a online business where I sell here and there, I have my company info as I have it tied to my bank.

Now I never hit 20 K sales there, but since I have my legit info tied to the Paypal and ebay acct, does the IRS "know" what is coming in and out of that Paypal? Or is that against laws, etc and they're only informed once I meet the thresholds?

Any advice would be greatly appreciated!
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Old 12-20-2018
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Default Re: How much does the IRS know before I hit 200 sales-20K

Quote:
they're only informed once I meet the thresholds
This.

But if you're ever audited they would be able to pull your bank records and see Paypal deposits coming in over the years, and you may have some 'splaining to do then. The chances of that happening are probably minuscule unless you're evading taxes on a large scale by using 50 accounts or something.
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Default Re: How much does the IRS know before I hit 200 sales-20K

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Originally Posted by phaz0rz View Post
This.

But if you're ever audited they would be able to pull your bank records and see Paypal deposits coming in over the years, and you may have some 'splaining to do then. The chances of that happening are probably minuscule unless you're evading taxes on a large scale by using 50 accounts or something.
Ok thank you! I have only once ever done a "dump" from PP to my account for around 4K but I know I paid tax on it as it was in my returns to my CPA later that year.

But I usually keep the 10-12 K I generate in Paypal to buy more stuff for the business (PC's, printers, toner, misc).
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Default Re: How much does the IRS know before I hit 200 sales-20K

Another thing that made me a bit nervous was that it was asking me to confirm my EIN number even though I had added it when I opened the acct years ago. is that cause for concern?
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Default Re: How much does the IRS know before I hit 200 sales-20K

No, not really, but that usually means you've passed both thresholds (maybe just one..). I think that's what that means.
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Default Re: How much does the IRS know before I hit 200 sales-20K

That is what I was told earlier this year, that they wanted to reconfirm the info was correct because I had passed 10K and over 100 sales early on in the year.

I was spooked because I got paranoid thinking that the IRS had flagged my account or something. Another thing that happened is they had me confirm and I would still have the red icon saying I needed to confirm, it went on for a week or two until I spoke to PP and they had it shut off (the red notice icon that is). I was out of commission the last few months due to health so I passed 200 sales but topped out at $16,000. And all of that money is still in PP I have not transferred or anything like that.

I have always been transparent with my taxes outside of my online business so I got scared as my legit info is on my Paypal.
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Default Re: How much does the IRS know before I hit 200 sales-20K

If you'll be reporting that $16k on your own then you certainly have nothing to worry about. But with you only passing 1 of the 2 thresholds they won't be sending out a 1099 for you.

There was an update to Paypal which started taking effect in April of this year that requires users to verify their SSN in order to use their Paypal balance for purchases. Accounts impacted by that update would get a message saying "confirm your info to continue using your Paypal balance." If you don't SSN-verify your account then you can only withdraw your balance to your bank account.

Perhaps when they asked you to re-confirm your EIN it was the business account equivalent of this TOS update.
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Default Re: How much does the IRS know before I hit 200 sales-20K

Quote:
Originally Posted by phaz0rz View Post
If you'll be reporting that $16k on your own then you certainly have nothing to worry about. But with you only passing 1 of the 2 thresholds they won't be sending out a 1099 for you.

There was an update to Paypal which started taking effect in April of this year that requires users to verify their SSN in order to use their Paypal balance for purchases. Accounts impacted by that update would get a message saying "confirm your info to continue using your Paypal balance." If you don't SSN-verify your account then you can only withdraw your balance to your bank account.

Perhaps when they asked you to re-confirm your EIN it was the business account equivalent of this TOS update.
Any idea why they wanted confirmation of SSN? My big problem is that since I never reported the stuff in PP except for the one time it hit my bank, IDK I was worried the IRS had asked PP to step in and flag it or something. And to be frank if wasn't on planning on reporting the 16K since it just sits in the PP and I use it for stuff I can buy on eBay.
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Default Re: How much does the IRS know before I hit 200 sales-20K

Quote:
Originally Posted by CSLewisJr View Post
Any idea why they wanted confirmation of SSN? My big problem is that since I never reported the stuff in PP except for the one time it hit my bank, IDK I was worried the IRS had asked PP to step in and flag it or something. And to be frank if wasn't on planning on reporting the 16K since it just sits in the PP and I use it for stuff I can buy on eBay.

If you use it all for office supplies anyway then there's no reason to report it since you're (presumably) deducting all of those office supply purchases. That's what I would do, anyway.

The SSN-related update has to do with eBay making the switch to Adyen for payments from what members on this forum have been able to piece together. By the time eBay only allows sellers to accept payments through Adyen (AKA eBay managed payments), all buyers will have had to SSN verify their Paypal account in order to pay with Paypal on the Adyen system. It's complicated.
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Default Re: How much does the IRS know before I hit 200 sales-20K

Good advice, but to circle back, the IRS does not know of any of the funds even if I have my info logged into PP because I didn't hit the 200/20K mark and because it doesn't ever hit my bank, correct?

And thank you for your help!
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Old 12-21-2018
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Default Re: How much does the IRS know before I hit 200 sales-20K

Yes, correct.


Things got convoluted quickly.
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Old 12-21-2018
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Default Re: How much does the IRS know before I hit 200 sales-20K

Welcome to the forum - all the best as you master stealth phaz has counselled you well OP
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Default Re: How much does the IRS know before I hit 200 sales-20K

Thank you! This freaking IRS thing is no joke so I don't want to get in their crosshairs!
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