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PAYPAL~info just released for PAYPAL users/sellers

PAYPAL~info just released for PAYPAL users/sellers

Old 11-19-2010, 07:32 PM
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What Is IRS 6050W?

Under the new legislation, PayPal will be required to report to the IRS the total payment volume received by PayPal customers in the US who:
o Receive more than $20,000 in gross payment volume in a single year, AND
o Receive 200 or more payments in a single year.

The IRS changes will apply to all payment providers, including PayPal. They will take effect on January 1, 2011, with the first reports going to the IRS in early 2012. Our goal is to help PayPal merchants to understand and comply with the new requirements.

If you meet the stated thresholds, you will be required to verify your identity by adding a SSN/TIN/EIN to your existing account. If you are currently using a Personal or Premier account, you will be required to upgrade to a Business account.
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When Do the IRS Changes Go into Effect?

IRS 6050W covers all transactions in the tax year 2011 and each tax year that follows. Beginning in 2012, qualifying merchants will receive a 1099-K Form either electronically or by mail. Transactions occurring prior to 2011 will not be affected by this legislation.
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Will All Merchants Receive 1099s?

No. Only merchants who receive over $20,000 in gross payment volume AND receive 200 or more payments in a calendar year will receive Form 1099-K electronically or by mail.
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How Will I Know if IRS 6050W Impacts Me?

If a merchant meets both thresholds by receiving over $20,000 in gross payment volume AND 200 or more payments in a calendar year, PayPal will send Form 1099-K electronically or by mail for the 2011 tax year. This document will be made available in January 2012.
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What does PayPal need from a Merchant as a result of the IRS changes?

Starting in 2010, PayPal will be asking impacted merchants to update their account by adding their SSN/TIN/EIN to their existing account(s). This information will only be requested from merchants that are potentially impacted by these requirements. If you are required to add this info, we will notify you via email and include an alert in your Account Overview.
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How Do I Read a 1099?

PayPal is working with its merchants to help them understand the new requirements. Please refer to the links section on this site for more info on the process and forms. Also keep an eye out for upcoming information updates.
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Will I Be Affected by the 2011 Tax Changes if I Only Meet One of the Thresholds?

No. A merchant has to pass BOTH thresholds ($20,000 in gross sales volume and 200 transactions) in 2011 to qualify for the new requirements. A business receiving $10,000 in payments per year would not be affected by the new requirements.
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Will PayPal Help Me with My Tax Return?

While we're committed to helping our customers understand the 2011 tax changes, PayPal is not qualified to give you specific tax guidance. Please contact a tax professional.
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What can I expect from PayPal?

This is an important legislative change for online sellers, so we want to provide clear and helpful information. We'll update this site frequently with more FAQs and resource links to help you make sense of IRS 6050W.
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Are non-profit organizations affected by the new IRS Tax Law 6050W?

Non-profits are treated the same as for-profits. Non-profits will be required to submit their SSN/TIN/EIN as well. Non-profit merchants will need to work with their tax professional to determine how they will need to file their taxes going forward, if they arenít already.
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Are personal payment transactions received counted in the total that will be reported to the IRS?

Yes. All payments received by an account will be used when calculating the total payment volume received.
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How is the $20,000 calculated? Will it be calculated based on net or gross transaction earnings?

The $20,000 will be calculated by looking at a merchantís gross sales volume.
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Who is the Business Contact Name?

The Business Contact Name is the individualís name that was provided to the IRS when applying for your TIN or EIN. This is the name that should be listed on your account when verifying your identity. If the name listed on your account is not correct, please upload or fax your documents by following the links on your account.
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What is a SSN/TIN/EIN?

SSN = Social Security Number
TIN = Tax Identification Number
EIN Ė Employee Identification Number
Depending on your business type, all three of these numbers can be used to verify your identity with the IRS.
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Will I have to upgrade to a business account?

If you meet the thresholds outlined by the IRS and are currently using a Personal or Premier account, we ask that you upgrade to a Business account. The upgrade process is quick, easy and free and provides you with more access to helpful PayPal features and products. Upgrade now.
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What happens if I donít verify my identity?

If you do not verify your identity, a restriction will be placed on your account until you do so. You will be unable to send, receive or withdraw funds from your account until you verify your identity.
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If I have multiple accounts that, when combined, meet the thresholds, but individually they donít, will I still qualify?
Yes. PayPal and all other payment processors will report sales and transaction volume to the IRS by SSN/TIN/EIN.

For example, if you have two accounts tied to the same SSN/TIN/EIN with the following payment levels:
o Account A - $18,000 in sales and 180 transactions
o Account B - $2,000 in sales and 20 transactions

Your accounts will qualify under the new regulation.

IRS 6050W
The PayPal Blog

The latest news, views, and insights about the 2011 tax changes.
General Tax Info
IRS Virtual Workshop

Video-based tax instruction for the small business and self-employed.
Business.gov

Small business tax advice, resources, and publications from the IRS.
Microsoft

How-to articles on taxes, expenses, and more.
Yahoo

Tax answers for the home-based business.
About.com

Tax tips, accounting procedures, and more.
TurboTax

Small business tax software, tax deductions, and tax preparation.
Convey

Tax reporting software for Forms 1099, 1098, 5498, and W2.
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Old 11-19-2010, 07:57 PM
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OK I am cancelling my paypal account as of 12/31/10 Thanks for the heads up. I won't ever make that much but will go to checks and cash. This is so sad. We already paid taxes on it when we bought it, now paying again.
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Old 11-19-2010, 08:27 PM
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We pay too many taxes already. This is just crap!
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Old 11-19-2010, 08:39 PM
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wow, i can't believe they can't leave things alone. i just opened a paypal but looks like too much trouble, will have to rethink paypal now. thanks for the info.
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Old 11-19-2010, 08:48 PM
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I didn't read the whole thing word-by-word, but from the information at the top, it probably won't affect anyone here, unless you're an actual business or are a serious, serious destasher. ;)

o Receive more than $20,000 in gross payment volume in a single year, AND
o Receive 200 or more payments in a single year.

"And", not "or". That "and" helps the average destasher or casual seller a lot. :)
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Old 11-19-2010, 10:04 PM
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Originally Posted by debbieumphress
OK I am cancelling my paypal account as of 12/31/10 Thanks for the heads up. I won't ever make that much but will go to checks and cash. This is so sad. We already paid taxes on it when we bought it, now paying again.
This does not mean you have to pay taxes on the entire amount reported by Paypal. It means you need to keep records of what you paid for the items you're selling and keep track of your other business expenses and file a schedule C with your tax return.
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Old 11-19-2010, 10:43 PM
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Originally Posted by Scissor Queen
Originally Posted by debbieumphress
OK I am cancelling my paypal account as of 12/31/10 Thanks for the heads up. I won't ever make that much but will go to checks and cash. This is so sad. We already paid taxes on it when we bought it, now paying again.
This does not mean you have to pay taxes on the entire amount reported by Paypal. It means you need to keep records of what you paid for the items you're selling and keep track of your other business expenses and file a schedule C with your tax return.
Thank you. I read your post and re-read it and I don't think it will affect the destashers. Thanks for sharing. YOu seem very knowledgeable in the taxes. ANd thanks Dreamer2009 to.
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Old 11-19-2010, 10:59 PM
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Good Information, don't have a pay pal account but can understand how taxes should be applied to all sales.
not that I don't agree we pay alot now:)
Thanks for Sharing
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Old 11-19-2010, 11:08 PM
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guess the irs wants taxes on any income we earn, no matter if we paid tax on it originally
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Old 11-19-2010, 11:46 PM
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Don't think I'll ever have to worry about doing 20 grand worth of business on paypal. Not even if I sold my whole stash!
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