Paypal and SSN

[HistoryTeacher]

So I just buy and sell stuff on ebay as a hobby. Today, I got an email from Paypal demanding my SSN or my account would be restricted. They claimed the IRS required it. I was under the impression that this would only occur if seller hit 200 transactions and $20,000 is sales. I am nowhere near that (especially the $20,000). Anyone know if this is normal or have a similar experience?
Thanks

 

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[Oddjob]

Never happened to me and I have not heard of it; but you could always call paypal and ask or just google it, and in these times if it is a scam they normally do not make it 24 hours before people start posting it.

 

[Keppy]

Sounds like a scam to me do not give your number,

 

[galenrog]

If the message is legitimate, it will be included in messages accessible from your PayPal homepage.

Still time for more coffee.

 

[HistoryTeacher]

If the message is legitimate, it will be included in messages accessible from your PayPal homepage.

Still time for more coffee.

Yeah. It is on my homepage. So it is legitimate. It just seems to violate their own FAQ on the issue.

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

 

[Drmad7]

They hit me up a couple years ago. They are REQUIRED to report your earnings to the IRS if you meet the $20K/200 threshold, but they can report you for ANY amount. They sent me a 1099 for $15K and 167 transactions...and they have sent me and the IRS one every year since. We call it a hobby but Uncle Sam thinks if people pay you...it’s a business. I’m currently looking at other ways to sell(barter for cash) to reduce my eBay/Paypal footprint.

 

[HistoryTeacher]

They hit me up a couple years ago. They are REQUIRED to report your earnings to the IRS if you meet the $20K/200 threshold, but they can report you for ANY amount. They sent me a 1099 for $15K and 167 transactions...and they have sent me and the IRS one every year since. We call it a hobby but Uncle Sam thinks if people pay you...it’s a business. I’m currently looking at other ways to sell(barter for cash) to reduce my eBay/Paypal footprint.

Thanks for the reply. I suspect since they are asking then they will be sending in a 1099 for me as well.

 

[Drmad7]

I jinxed myself! Just got a notice from the IRS that I owe $1700 from additional taxes from a previous year. They state that Paypal had me down for two accounts and I only reported one income from them. Guess what? It was the $15K! I had started a new eBay and PayPal account early on the year and didn’t realize I had made another $5K from the old eBay/Paypal account. Paypal only sent me one 1099 but apparently reported both to the IRS. So THAT is why they reported to the IRS...total between the accounts met the threshold. So they probably won’t send you a 1099 at all! Guess I better get my pennies together to send it to Uncle Sam!

 

[HistoryTeacher]

That is unfortunate! Not a fun notice to get during the holidays.

 

[Xraywolf]

Yeah. It is on my homepage. So it is legitimate. It just seems to violate their own FAQ on the issue.

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

Doesn't look like they violate their faq to me

I am an individual seller. Do I have to provide my SSN?
If you have a SSN or eligible to have a SSN then you are required to provide that to PayPal for Form 1099-K reporting. If you are not eligible to have a SSN, you should obtain an ITIN from the IRS and provide it to PayPal. Please visit the IRS website (https://www.irs.gov/uac/about-form-w7 ) for information on the ITIN application process.


You gave them bank info to sign up, why shy away from SS ?
Considering the nature of their service, the more they know about you probably the better.

 

[HistoryTeacher]

I suppose my main concern was that after ten years or so of having a Paypal account, they sent me a email that mentions "IRS requirements" and threatening to restrict my account unless I complied. It came across as, threatening or, at least very poor customer service in the way it was expressed. I wanted to see if this was a new policy that others were all experiencing or if it was just me. It gave me nightmares of getting IRS bills for a couple of hundreds of dollars of stuff I may have sold in 2002 or something like that. A bank can close an account. The IRS can ruin a life.

 

[Indigo Knight]

As others have mentioned, always check it's legit by logging in separately to your PayPal account (never click on an email link).

PayPal can, and will freeze or close your account for any reason without notice. It's in their TOA. I have had my account frozen before.

They also can, and will ask for personal information including your SSN/EIN. It's in their TOA. I have also had to provide receipts and letters explaining where my inventory was purchased from. Others have had to provide scans of their driver's license or other government issued ID.

They are not subject to banking laws and regulations. Know this whenever you do business with them.

 

[WaterScoop]

Someone (most likely a competition) ratted you to IRS. IRS wants to include $20K(or whatever actual $ amount) as part of your income so that they can “ding” you with their tax.

This has happened to someone I know who was selling CDs on eBay. They would buy large Gaylord’s of CDs at Salvation Army auctions and resell 100 CD lots on eBay.

I HATE PayPal I refuse to use their services. They always side with the buyer. They screwed up my bank account numerous times when unscrupulous buyers made claims. They automatically withdraw the disputed money out until the dispute is resolved. I can’t float PayPal for $1000+ when I am a small business. I Have buffers in my bank account balances for different things so that I do not overdraft but not in the $1000’s.

One of the reasons I am not a Charter member here on this forum yet is because PayPal is the only online option for payment of a fee even if I use a credit card it has to go through PayPal.(I am sending a money order to an address for my $20) so that way I will become a Charter Member.

To say I HATE PayPal would be an understatement.

Iam sorry this is happening to you HistoryTeacher

 

[Paleo_joe]

So I buy a used microphone from guitar center online and it was DOA. I could not get them to refund my money (after I returned it) due to their whacky process - it went on for well over a month. Since I had paid with paypal, I filed a not as described claim with paypal, AND IT WORKED. Guitar Center paid right up.

 

[cyberdan]

I filed a not as described claim with paypal, AND IT WORKED. Guitar Center paid right up.

What do you want to bet Paypal just took the money from guitar center and put it in yours. They have the right to do that, a lot less work than trying to contact somebody over there and explaining everything, probably several times.

 

[catherine1]

Taxes are voluntary. The worst thing you can do is send paypal your SSN.......

 

[Treasure_Hunter]

Only 2 things are certain, death and taxes. Income Taxes are due on ALL income over $400, if you make more than $400 from a side job or hobby the government wants thair cut and you owe taxes on that money, doesn't, matter if it is $20,000 or $500. I suggest you start an S-corp and pay your self dividends once a month, anything less than every 4 weeks would be considered wages. I have been audited twice believe me you want to avoid the audit if at all possible, if not you want the tax attorney to represent you.

A tax attorney is best over a CPA to set up the S-corp, cost little more but you are far better off, you have the same privileges with a tax attorney as you do with a criminal attorney, with a CPA you do not and they can in fact testify against you in tax court.

 

[WaterScoop]

What do you want to bet Paypal just took the money from guitar center and put it in yours. They have the right to do that, a lot less work than trying to contact somebody over there and explaining everything, probably several times.

Great for the buyer, nightmare for the seller. The original post I believe is from a seller NOT a buyer.

 

[HistoryTeacher]

I did give my SSN to PayPal. If I want to use their service, then I don't really have another option. Besides, I am not opposed to paying my fair share and always do to the best of my ability. This is the first time I have made enough sales to be more than a hobby--I guess that is what got PayPal's attention.

 

[WaterScoop]

It’s the $ amount that triggered an algorithm to send you a notification. If more then a certain amount th n generate this piece of communication. That was based on IRS guidlines. I still stand by the PayPal is pro buyer and anti seller statement.

Sellers have zero choice...in my book that is called a monopoly. They cover it by saying they accept credit cards as payment however it needs to be set up in PayPal... it’s a catch-22

For those members that do not understand the catch-22 concept. More here