Ebay/Paypal's Tax policy

NoLifeDGenerate

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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? 

 
Paypal and eBay definitely didn't want this to happen, it was forced upon them.

It's also for people who sell more than 200 items and more than $20,000 worth of stuff. So to do both of those you are more than just your average person selling games back online after you buy them. You'd have to sell 400 games at $50 each to trigger it.

I'm guessing this only happened because the internet has been pretty much the Wild West of avoiding taxes so far. Buy online and don't pay taxes and then sell online and don't pay taxes. I'm sure when this was put into place it was mostly for the people selling $100,000 a year and never paying a dime of taxes on it (probably getting government handouts for being unemployed on the other side).

 
^ So in other words things really didn't change too much as that 20k thing has always been around at least as long as I've been selling on there. They're just being press ganged into actually enforcing it by being forced to share the numbers if they weren't already.

 
Paypal isn't technically a bank though, right? What I'm trying to determine is if you can get around that by never actually receiving funds from Paypal. Paypal can claim what they want, but if they're no checks or wire transfers coming my way, it shouldn't mean shit. Right? Sounds like a legal loophole to me. It's like someone writing you a check and deducting it/whatever on their taxes, but if you didn't cash the check you didn't actually receive the money. Doesn't matter that they wrote it. Say it's a cashier's check and you sign it over to someone else. Then there's nothing connecting your SS# to that check when the person you signed it over to cashes it.

 
PayPal at the very least is a merchant account (payment processor). If you're receiving payments you are required to pay taxes as that is considered income. The government as recent as a year or two ago REQUIRED that paypal generate 1099-K forms (online sales) for anyone that meets certain thresholds which I believe as stated above was agreed to be 200 sales and $20,000.

Doesn't matter if they are a bank or not.

Edit: If the funds go into your paypal account as a payment they are considered income and will be reported as such. Doesn't matter if those funds are later transfered out, refunded or lost due to dispute or chargeback. It is up to you to properly declare that on your taxes.

 
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