My PayPal account was limited for "filing" purposes a year or two ago. It was a very silly procedure. I had to fax a letterhead, a copy of my passport, birth certificate, latest 3 bank account statements, a detailed explanation of the last 10 payments that were sent/received, a detailed explanation of the last 5 withdrawals that I had made and make $42 worth of overseas phone calls speaking to people of different nationalities who really couldn't care less what I had to say, let alone understand me. This all over a period of 3 weeks, with the inability of being able to send/withdraw money from my account. Stressful times.
To answer your question... PayPal could limit your account at anytime, with no justification whatsoever. I'd recommend connecting your PayPal account to a debit/credit card or bank account, and storing very little money in the account.