Paypal 1099 Limitation & Tax ID

[markz]

Hello, first time on this forum, I read a few posts by KingRay and hopefully I can get some answers.

Paypal has limited an account in my real name after reaching 200 transactions & 20,000 rev. They've sent notices initially for a few months and then finally limited the account end of Nov. They still let me withdraw money into a bank account but Paypal debit card is blocked and all subscriptions are cancelled, clients cannot make payments to that account. Paypal wants my Tax ID and I do not have SSN. I do have EIN, but that where it gets interesting:

1. The business name used with Paypal is factious, account holder name is real. If Paypal reports 1099K with that name and provided EIN - this information will not match.

2. I will have to report income for 2011 if I provide EIN - no choice. While I don't have a problem with that, I am concerned that once EIN is linked to that account than IRS may go far beyond 2011 into the past and I really don't have a plan how to deal with any past due taxes.

3. My plan is to leave alone this account, and then set up a fresh account in Jan 2012, with a new business name, a proper EIN, etc. The only concern I have is leaving that income unreported by myself as the account holder, while it is reported by Paypal. Will they include my account holder name? My bank account info? Everything is possible.

4. Also, I do not have a SSN, and I am concerned that once I open a new account they will eventually limit it after a certain revenue threshold. I had this issue on a different account. Also, I read somewhere that Paypal no longer issues debit cards without a SSN.

So I am undecided what to do. The account has a mailing address that I no longer control. I was thinking to change the address and see what info Paypal includes in the 1099K form and then take action. My major concern is 2011 taxes - If I do not pay, I may have a problem because of reporting. If I pay (and provide EIN) I may have a bigger problem if IRS goes back in time to, several years before, when the account was set up. Than my tax bill maybe unbearable.

So my conclusion so far is to forget this account and hope nothing happens. Open a new one properly, provide EIN and from 2012 start filing proper returns. Any advice is greatly appreciated.

[SUVE]

1.You have NOT exceeded the IRS thresholds & you have NOT got the Form 1099-K from PP so far due to this.

2. Do NOT use this EIN number again.You need to exercise due diligence & forward thinking from this point onwards.

3.PP & other payment processors are required to report the total of all transactions & will not distinguish (nor would they be able to distinguish) between personal & business transactions.The law was created to help the IRS identify under-reporters - if someone is processing large volumes of payments but is not recording income, that's likely to trigger a red flag. I can't really extend my answer beyond to say that if the IRS really wanted to find out things about you & they knew about you, they could. A US based seller will be in a better position to advise than me on this.

4.You are a US national/citizen (???) but do NOT have a SSN ??? Please clarify if possible.

Note that the law does not change sellers' existing obligation to report income. In the end, you were always required to report your income, 1099 or not. I'd strongly suggest that you speak to a financial services, legal, or tax professional for more personal advice.

I'd hate to say it but you let this situation develop to its present state bearing in mind that this PP IRS reporting first flashed up in 2008. You do not appear to have got your house in order in all this time. Why ??? The current precariousness & difficulties you have are self inflicted to a large extent & avoidable.

[newjerseymax]

Dump it all.... the info the accounts and move on.... Stealth style... real stealth...

Also, There are tax professionals that can help you lower the taxes owed. Especially if your up front about it first.

Are you illegal alien?

[SUVE]

I agree with newjerseymax, go STEALTH style with a NEW PP/EB setup & with regards to the current funds on there, seek professional advise on that.

[jeffweico]

SUVE is right, speak with a tax professional, preferably an attorney.

TRUST ME - getting legal is the best way to go. Yes, it will cost you some money, but you will have peace of mind. Not to mention, if you don't get legal, and they catch you, the consequences will be FAR WORSE than if you went to them. A tax attorney will know the best way for you to proceed.

[GreenBean]

You claim to have read the forum, then you will have read the advice to seek the services of a tax professional.

That's the bottom line.

You are earning money. Tax is payable.

See an attorney or tax professional.

This is an issue been in the public media since 2009.
http://www.aspkin.com/forums/paypal-...-usa-only.html

Read the above thread for yourself.

Further discussion is not going to happen

See a tax professional for assistance to garner the best tax breaks possible.