New IRS rule 6050W concerning reporting of online income by PayPal..
Here comes a new tax law for online sellers / merchants. Starting in January of 2011, all U.S. payment providers including PayPal will be required by the IRS to report sales information about certain merchants.Â This new law basically applies only to those receiving $20,000+ and at least 200 payments per year. I suggest everybody takes some time to read what it’s all about and get familiar with it if you do a lot of business via PayPal.
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.
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.
Big changes coming without a doubt… You can read more about this new law right over here.