The IRS Gets It's Hooks Deeper Into PayPal
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:
- Receive more than $20,000 in gross payment volume in a single year, AND
- 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.
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.
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.
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 merchant’s gross sales volume.
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