Source: PayPal

Summary:
Starting in 2011, all U.S. payment providers including PayPal will be required by the Internal Revenue Service (IRS) to report sales information to the IRS about certain customers who receive payments for the sale of goods or services through PayPal. We want to help you understand these changes.

• Applies to sellers receiving over $20,000 in gross payment volume AND over 200 payments
• Applies only for sales on or after January 1, 2011

Questions? Log in to your account or call 1-888-221-1161

Beginning in 2012, sellers who pass the reporting threshold will receive a 1099-K Form for their 2011 transactions either electronically or by mail. Transactions occurring prior to 2011 will not be reported.

In 2011, PayPal will ask impacted sellers to update their account(s) by providing a Tax Identification Number such as a, Social Security Number (SSN), or Employer Identification Number (EIN). PayPal will also ask impacted sellers to verify their name, physical address and email address to ensure we report accurately to the IRS.



If your account(s) exceed both thresholds, PayPal will send Form 1099-K electronically or by mail for the 2011 tax year in early 2012.

No. Personal payments that are not payments for the sale of goods or services will not be counted in the total to be reported. However, all payments received for the sale of goods and services will be used to calculate the gross payment volume to be reported.

My comments: Well I paid mine before. Did you? Are you going to pay now? lol Let me see if there's any info specifically about virtual goods.

So no reporting for $100,000 and 199 payments?
BTW, here's a reason why multiple payments is bad if you're getting near the 200 counter.

With gift payments, and other sources of income not related to business, this could be messy reporting. It looks like gift payments are not included, but if the personal payment was "payment owed" specifically for commercial goods and services then it would be I assume.

Looking at this phrase, "$20,000 will be calculated by looking at a seller's gross payment volume for sales of goods and services. Gross amount means that any adjustments for credits, cash equivalents, discount amounts, fees, refunded amounts or any other amounts will not be netted out." I predict a lot of number fudging in terms of virtual goods.

Also like to point out if you can see that a PayPal account has tax info then it's obviously a lot more secure, but that doesn't stop "then bane of all PayPal uers" unauthorized Paypal disputes.

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