From what I was reading a while back, they actually report your "earnings" to the IRS after a certain point. I'm curious as to how and why Paypal is considered a fucking bank now. Follow me here. If I receive a wire transfer or check from Paypal, it's obviously traceable income. However, If I'm simply spending my Paypal balance back on ebay, it's no different than trading games for store credit at Gamestop. Is Gamestop going to start reporting my trades to the IRS next?