What Does PayPal's New Tax Reporting Rules Mean For Sellers?

Fiver

Fiver

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Jan 30, 2009
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We'll use your tax ID number to send tax Form 1099-K to you and the IRS if the payments you receive in a calendar year go above both of these levels:

  • $20,000 USD in gross payment volume for goods or services
  • 200 payments for goods or services
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So now PayPal wants your tax ID number so they can 1099 you at the end of the year. Why are they doing this and what does it mean for sellers who use their site for taking payments?

Upsides? Downsides?
 


Fiver said:
So now PayPal wants your tax ID number so they can 1099 you at the end of the year. Why are they doing this and what does it mean for sellers who use their site for taking payments?

Upsides? Downsides?
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It means you need to make a stealth account when you've reached $19,999 in payments.
 
It means the IRS has another rock to look under if you are audited, and they don't see a "matching" number in your tax filing to what Paypal reported as being paid out to your SSN.
 
This isnt just a paypal thing This is due to the new laws requiring credit card reporting on federal returns. Last year they added a new line to the tax returns but didn't require a separate breakout for the CC sales. Not sure if they are going to require it on this years returns but it's comming.
 
It's not Paypal's fault, It's the IRS. Being a partner in a merchant bank, I can tell your that this passed 3 years into law/irs rules. EVERY merchant processing company in the US now has to provide 1099 on ALL merchants/businesses they process for to the IRS now. It was suppose to go into effect at beginning of 2012, but the they delayed it one year, till 2013. All processing companies did, or should have done, a dry run at the beginning of last year. It officially starts this year though. If paypal is just now asking you to fill out a 1099, they are pretty fucked. We had to hire 2 new employees just to become compliant and go through 40k merchants and find out which ones we needed to get 1099 from, cause their tax ID may have been blank. Been on this IRS initative for two years now, fucking headache.

You ask why? Cause now if you owe back taxes to the IRS they can take it straight out of your merchant processing!!! Good luck bros!
 
CCarter said:
You ask why? Cause now if you owe back taxes to the IRS they can take it straight out of your merchant processing!!! Good luck bros!
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I wonder how many companies will go bankrupt because of that.
 
Rodent said:
Any that have been hiding income and so committing tax fraud, hopefully.
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Here is a little gift you may soon find very useful:

vaseline.jpg
 
It means absolutely NOTHING. At least for those doing business LEGALLY....as this income should have been reported anyway, 1099 or not.
 
JMan1234 said:
It means absolutely NOTHING. At least for those doing business LEGALLY....as this income should have been reported anyway, 1099 or not.
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To most businesses yes. But what you also fail to realize is the merchant processing company is taking on extra work, on behalf of the IRS, with no extra compensation. Why would you care as a merchant? Cause eventually, there will be additional merchant processing fees tacked onto your merchant processing statement. "IRS Processing fee".

How long do you think a processing company is just going to take on free work? Not very, so you as a merchant are going to get more and more fees, and this also means, there will be even more scrutiny in the approval process.

Now, those slightly gray business are going to be under more pressure and given higher rates. Shit like this trickles down, the top never absorbs the cost...
 
Rodent said:
Apologies. Clearly I mistook you for someone who believed in democracy!
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The term moral tax payer is an oxymoron and if you want to call me selfish for not wanting to pay taxes I'll take that as a compliment. If you say I have a social obligation to help everyone (altruism) I'll call you a hypocrite.

Who here lives in a democracy? Also, you're talking to a forum with vocal anarcho capitalists. :xmas-smiley-022:
 
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