Tax Evasion and Paypal

[Mafiaclan]

I am curious from the larger companies out there how you handle Paypal payments being made to and from your Paypal accounts. I understand it is against Paypal policy to send and receive payments through gifting, however, is it also a federal matter? I could see how not using goods/services for payments could be viewed as tax evasion and result in not only one's Paypal account to be closed, but also put the merchant in a bind with the IRS.

Tax season is coming up soon and I'll need to be reporting my earnings so I was wondering if anyone had any experience or insight in this matter.

 

[Apith]

There is an amount, I believe it was $20k, where if that much money has gone through and off your paypal, Paypal would report it. Im sure the bigger merchants pay their tax.

Dont quote me on that, it's to give you a rough idea till someone with experience posts.

 

[Mafiaclan]

Thanks for the reply Apith. Yeah I'm wondering about the larger merchants here and what their policy is. I do not deal in Runescape gold at all. My sales are in a different market entirely so feel free to disclose your experiences with me - I'm not competition for any of you ^^.

About the $20,000 / 200 transaction limit, I'm just worried that the customers who pay me via gifts and the payments I issue to my employees via the gift method are not counting towards my net income and expenses.

To give an example, say for this calendar year my company took in exactly $20,000. When tax season rolls around I don't want to end up paying taxes on the full $20,000 if more than 75% of that amount was paid out to my employees and I really only had a net income of $5,000 or so.

 

Your best bet would to just ring Paypal, they'll know everything you need to find out.
Also, moved to Help & Requests

 

[Azie]

most mega traders do register for VAT to avoid those type of problems.

 

[Mafiaclan]

Bump, looking for more insight. Tax season is right around the corner and I'm wondering what the other online merchants are doing Specifically those residing in the USA.

 

[MineMarkPT]

When I was scammed I contacted a consumer defense agency that exists on my country and I asked them if I should get in touch with the police to try and defend myself. They imediatly said NO because I'd have to explain why all those payments were coming throw to my side and why I wasn't reporting them to taxes. And it was about 400~500$ worth of payments so yeah.. Don't play around too much..

However I do think that the big merchants are good with their taxes, at least most of them. but you never know...

 

[TJOC]

Seeing as I have an IRL job that pays a lot more income than RS has in the past year, I'm not to worried about it. Haven't made any huge purchases that would be setting off red flags or unlikely for me to do.

There's no reason to worry unless your making a significant amount of money through RS selling, as in enough to have a comfortable lifestyle with that alone.