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Old 12-26-2015
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Default New TAX law for online sellers IRS 6050W (Questions)

When I logged into my PayPal account last night, I informed by PayPal that this new law will require my Tax ID/SSN #.

hxxps://www.paypal.com/us/webapps/mpp/irs6050w


Only problem is, I bought both the ebay and PP account on here, and it's not under my name. I don't have an issue providing my Tax ID/ SSN #, but I don't want there to be any legal issues in the future, since I never changed the name back to mine.

Also, if I do the name under the PP acount back to mine, then aren't I at risk of my NEW ebay/PP account being linked to my old ebay/PP account? (ebay account is active but can't sell anymore)

Any help would be greatly appreciated!

Last edited by aspkin; 12-28-2015 at 09:18 AM.
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Old 12-26-2015
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Default Re: New TAX law for online sellers IRS 6050W (Questions)

What is new?

This has been around since 2010

Literally thousands of threads about it.

Your options are:
Add an EIN
or leave the account until sometime after the first of the year when it gets reset.

Basically spread sales across multiple accounts to never break the thresholds or make companies. No other options.
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Old 12-26-2015
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Default Re: New TAX law for online sellers IRS 6050W (Questions)

You can get an EIN from the IRS. It is free. But, at some point you will have to set up an LLC. You don't have to do it before you apply for the EIN, but at some point you must either set up the LLC or relinquish the EIN.

Setting up an LLC in most places is easy and cheap. In a few states, such as California, it is very expensive. But most states charge between $50 - $200 so it is just a cost of doing business.

The only other way to do it is to set up multiple accounts and never go over the reporting threshold on those accounts. But if you do that, you MUST still pay your taxes, because if you don't pay the taxes and the IRS finds multiple accounts for you, they could make the case that you were doing it for tax evasion, rather than just trying to get back on eBay. And that is the one thing you DON'T want. Because I have been audited before and the agent was very nice and found nothing wrong (I was scared to death at the time, even though I had reported everything) but told me that the IRS is really NOT out to play "gotcha" with people, but that when they found one who was obviously cheating the government AND doing it knowingly, they absolutely REJOICED in making that person's life a living hell.
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Default Re: New TAX law for online sellers IRS 6050W (Questions)

Quote:
Originally Posted by jeffweico View Post
You can get an EIN from the IRS. It is free. But, at some point you will have to set up an LLC. You don't have to do it before you apply for the EIN, but at some point you must either set up the LLC or relinquish the EIN.
So, you can get an LLC-based EIN without actually having an LLC? I got an EIN for my etsy account and it was a pretty straightforward process that took 10 minutes. Is it that easy/fast for the LLC EINs if you don't have an LLC, yet? (Don't really want to screw up a government form having first hand experience with how punitive they tend to be about mistakes.)

Also, if anyone can advise on the most cost-effective viable state to setup an LLC remotely, that'd be fantastic. I've figured out the states on the west coast (California, oregon, washington) are pretty expensive to setup. Idaho has a low cost to setup, but they charge some 1% on revenues which seems unusual.

Last edited by swbluto; 12-28-2015 at 07:08 AM.
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Old 12-28-2015
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Default Re: New TAX law for online sellers IRS 6050W (Questions)

Quote:
Originally Posted by jeffweico View Post
The only other way to do it is to set up multiple accounts and never go over the reporting threshold on those accounts. But if you do that, you MUST still pay your taxes, because if you don't pay the taxes and the IRS finds multiple accounts for you, they could make the case that you were doing it for tax evasion, rather than just trying to get back on eBay. And that is the one thing you DON'T want. Because I have been audited before and the agent was very nice and found nothing wrong (I was scared to death at the time, even though I had reported everything) but told me that the IRS is really NOT out to play "gotcha" with people, but that when they found one who was obviously cheating the government AND doing it knowingly, they absolutely REJOICED in making that person's life a living hell.
Interesting.. the IRS found your stealth accounts?
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Default Re: New TAX law for online sellers IRS 6050W (Questions)

We are going to get hundreds of tax questions that non of us can answer and at least half of the questions will be from people who do not grasp the concept of how taxes work at all.

So my one and only piece of advice is going to be this:

IF you withdraw funds to anything attached to your SS such as a prepaid or bank account etc.... then YES the IRS can find out if they so happened to want to snoop around. State DORs are a lot better at this and far more aggressive.

If you really dont want anyone to know how much money you collected, never attach the income to a bank, prepaid, savings account, retirement fund, trade account or insurance policy/accounts.

With all of this being said, if you are collecting large sums of money, hopefully you are making a decent profit and can structure your business with the aid of a good business CPA and eliminate most of these fears and worries you may have.
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Default Re: New TAX law for online sellers IRS 6050W (Questions)

Quote:
Originally Posted by swbluto View Post
So, you can get an LLC-based EIN without actually having an LLC? I got an EIN for my etsy account and it was a pretty straightforward process that took 10 minutes. Is it that easy/fast for the LLC EINs if you don't have an LLC, yet? (Don't really want to screw up a government form having first hand experience with how punitive they tend to be about mistakes.)

Also, if anyone can advise on the most cost-effective viable state to setup an LLC remotely, that'd be fantastic. I've figured out the states on the west coast (California, oregon, washington) are pretty expensive to setup. Idaho has a low cost to setup, but they charge some 1% on revenues which seems unusual.
Can't seem to find any official papers, but I can find an abundance of conflicting opinions between what you /should/ do and what you /can/ do, but I did find this on the IRS site.

https://www.irs.gov/Businesses/Small...g-Your-Account

Quote:
Once an EIN has been assigned to a business entity, it becomes the permanent Federal taxpayer identification number for that entity. Regardless of whether the EIN is ever used to file Federal tax returns, the EIN is never reused or reassigned to another business entity. The EIN will still belong to the business entity and can be used at a later date, should the need arise.

If you receive an EIN but later determine you do not need the number (the new business never started up, for example), the IRS can close your business account.

To close your business account, send us a letter that includes the complete legal name of the entity, the EIN, the business address and the reason you wish to close your account. If you have a copy of the EIN Assignment Notice that was issued when your EIN was assigned, include that when you write to us at:
Seems to imply you have upto 3 years to use the EIN before actually needing to file the paperwork for the LLC and file a Tax Return (And presumably organize). I mean, once the sales start flowing, of course you'd soon register the LLC before filing taxes but it doesn't seem like the IRS expects you to start the LLC and use the EIN for tax filing within the next month or else they're going to get you. (Which is how the military would be, I'm sure.)

Now, if I were to register the LLC EIN under my real name and my real address with the IRS, would paypal see the name/address furnished to the IRS if I haven't started the LLC, yet? Or can I just make up whatever address I intend on using for the LLC yet to be with paypal, and paypal can't tell the difference (As the IRS doesn't divulge your-actual-first-and-last-name/address on the EIN to paypal?)?

However, if one were to file for the LLC later, I'm not sure what you'd answer for the following required questions for the LLC EIN.

-LLC start date
-State where articles of organization will be filed
-State where LLC is located (And county)
-Legal name of LLC (needs to match articles of organization)

Especially LLC start date. Is the IRS kosher with a date a year in the future? I assume if I specified a year in the future, the articles of organization wouldn't be needed until after the LLC start date so the only thing I need to know ahead of time is the state/LLC-name I intend for the LLC.

Edit: After extensive searching, I've found this ( http://www.aspkin.com/forums/paypal-...s-100-t-2.html ):

Quote:
The EIN business and address must match exactly. So if you have a stealth address on your Paypal account that must be the same address you supply to the IRS for your EIN.

What I did was use the stealth address when applied for the EIN. Then put in a mail forwarding address with the post office. It worked just fine as when the IRS sent out the confirmation letter it ended up at my house but was addressed to my stealth address.
It doesn't seem like the LLC actually needs to be registered when Paypal tries to confirm a match with the IRS's records. Of course, when paypal reports your $20,000+ in sales to the IRS, the IRS is probably expecting tax paperwork and an actual LLC behind it.

Last edited by swbluto; 12-28-2015 at 05:01 PM.
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