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Paypal, Your Accounts, and The IRS (200/$20,000) (USA ONLY)
 

As 2010 draws near a end, a little over 3.5 months away, you will need to STOP and remember that in 2011 Paypal will start reporting your income to the IRS.

Here are some useful links I read today:
paypal and IRS - Google Search
Ebay Paypal Users Beware Here Comes the IRS
INFORMATION FROM AUCTION BYTES
PayPal to Report Payments to IRS, Modifies User Agreement
IRS to Track Online Sellers' Payment Transactions Beginning Next Year
What Every Merchant Should Know about New IRS Reporting Requirements


Basically it seems like Paypal will be asking for some of your Social Security Numbers some time in 2011.
You MUST do these things together in order to be reported to the IRS:

1. Receive more than $20,000 in payment volume in a single year and
2. Receive more than 200 payments in a single year

So if you folks have STEALTH accounts that are working wonderfully you will NEED to keep track of your sales income.
If you get near $20,000 or 200 sales you will probably want to move to a different account.

If your Paypal account is in your legal given name then you are fine.
You can keep selling..... But don't be surprised when Paypal asks for your SSN out of the blue.
You can provide them a EIN if you do not want to give Paypal your SSN.
But in order to get a EIN you have to provide the IRS your SSN.
That will be pretty hard to do with a STEALTH Account

US FEDERAL GOVERNMENT LINKS
Employer ID Numbers (EINs)

Just a little food for thought for those who like to think ahead.



.

HWGA does this mean all checkout (Google etc...) will report a 1099? How about Amazon?

Plus I thought it starts in March of next year. Paypal reporting

Well, at least it looks like stealth accounts aren't useless. :clap:




:heh:

I report all my income legally. Honestly I still have several stealth accounts but I am no longer banned from ebay. I keep using the stealth accounts in case one gets banned again for some reason.

Will paypal be able to verify an EIN with the registered information with the IRS? I'm assuming yes. I guess my stealth accounts will most likely be linked to me now..Oh well. At least I won't be filing taxes against several different EIN's in 2012.

BTW Thanks for the post "Here we go again." This has some awesome information in it!

It's not paypal reporting.... It's all merchant processors. Google checkout, propay, all of them. Even direct merchant credit card processors. Read the links.

Of course you should pay your income tax. I believe the OP is trying to reiterate the importance of the fact that new legislation will affect stealth in the next calender year.


Also, this is not new. We've known about it for some time. Thanks for the reminder! I can't believe it's almost 2011..... ugh. Shouldn't we have landed on IO by now?

I don't know if HAL is homicidal, suicidal, neurotic, psychotic, or just plain broken.
I'm completely operational, and all my circuits are functioning perfectly.

My God! It's full of stars!

Well, selling 200 items is not hard, but selling $20,000 / year I think is quite a feat.

You emphasized "AND", so to be clear, even if say we sell 500 items a year, but make less then $20k it should still be ok, correct?

it's the $20k part that matters.

being okay...

who knows... paypal may want ssn's on EVERYONE just to be sure.


This issue has been discussed time and time again. Only time will tell.

I don't think that the IRS will "verify" the validity of an EIN or SSN to anyone who requests it. Whatever faults the IRS may have, giving out personal information is not one of them, at least not in my experience.

On the other issue, I don't think the IRS will care if you have ONE EIN or a hundred of them. They only care that the income is reported, and that the taxes are paid. A firiend of mine owns 3 small restaurants and has EIN's for each, to keep everything separate for tax purposes. I have to believe that is normal.

Each business entity and person is entitled to it's own EIN.

That being said.....


What's going to stop you from making 1000 businesses?

nothing

The potential problem is that PayPal may accpet the EIN, and also report under the EIN, but demand the SSN for verification purposes.

I don't think there will be an issue of HOW they report (EIN vs. SSN) as all they will care about is being in compliance with the IRS rules.

This thread is looking short from input from other members. I guess there all focused and busy rushing making money until this takes place.


Who's making unlimited paypal accounts with me?

I honestly don't think the age of the paypal account will matter.

The Age of the Account Will NOT Matter,,,,The Law is the Law,,,One thing to Look at Payment Processors OUTSIDE the USA,,,,Like Paymate Maybe,,,They Will NOT Be Required to report to Uncle Sam

Shouldnt be an issue. I never reach the $20k mark before I end up losing an account anyway, ha. The 200 payments thing is easy to reach. Hell, I average about 40 payments a month. But both criteria have to be done together, so I think I should be ok.

As for the SSN thing. I doubt Paypal will ask for SSN upfront from everybody. Think about it. What happens when everyone who signs up for paypal provides a SSN, then for some reason, their account becomes limited? And we ALLL know, 9 times out of 10, it WILL happen! In theory, they are done with paypal for ever, theyre SSN is in the system and they can never get back on. They can't make another account b/c they will be asked for a SSN which has already been used on the previous account. Thats just the beauty of stealth, an unlimited amount of accounts and be made and you can stay in the game. eBay knows people have multiple accounts, I don't think they would shoot themselves in the foot like that.

Ebay will eventually be dead if they enforce a SSN from everyone. SSN's aren't infinite.

even then, an EIN is a simple way around it... always has been :)

i heard that you dont necessarily have to stay under 20k in order to avoid the irs... i heard that after you reach in 600 dollars worth of sales paypal will report to the irs to cover there own butts....

paypal does not care who has to pay there taxes, because they are still making there own money...

actually.....

if you pay someone more than 600 dollars, you are required to file a 1099 to the irs, simply reporting that you paid an income. However, that's typically someone who works for you, such as an attorney for example.

YOU CAN NEVER AVOID THE IRS UNDER ANY CIRCUMSTANCE!!!

The point of making people aware of the changes is how this will afffect ebay stealth in the future. If you're not paying taxes, first of all, shame on you, second, I'd start working out now. The federal penal system is brutal

there have been many battles over privacy with paypal and ebay, involving the IRS. They've actually been quite resilient and on the consumer side with tax reporting, which is kind of shocking considering how much we get raped on a daily basis

I just want to point out the obvious.

ALWAYS REPORT YOUR INCOME AND PAY THE TAXES!

Making 1,000 stealth accounts to get by PayPal is OK. But if you then decide that you do not need to pay the taxes on the money they generate, that is VERY ILLEGAL! If the IRS were to find out, their position would be that the accounts were created to evade taxes, rather than to be in stealth mode with PayPal. And then you WILL GO TO JAIL!

Stealth methods ARE necessary. Tax evasion is NOT.

Thank you for the info. I have a question though. Most of my stealth accounts get limited waaaaaaay before the $20,000 mark and usually far less than 200 sales. Do I have anything to worry about?

That is ONLY True for Improperly Managed Stealth Accounts,,,,,,,


I Have Stealth Accounts that are Waaaaaaay Past $20,000 and/or 200 Transactions

Wow really? I never knew that! Thanks!!

I've never done taxes for eBay before (only taxes for work, which I quit a couple months ago).

So they'll never ask what you're selling?

And this following question may be out of the scope of this thread, but... for possible audits that may happen, what kind of records do you usually put in your bookkeeping?

Sorry for the dumb questions about taxes. Thanks for all the new knowledge!